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DEBT | 9 Months Ended
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Sep. 30, 2024
Debt Disclosure [Abstract] |
DEBT | 6. DEBT On September 30, 2020, we, Hercules Capital, Inc., or Hercules, and Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)), or SVB, entered into a term loan facility, or the Original Loan Agreement, consisting of up to $75.0 million aggregate principal amount available to us, as amended in August 2021. On June 30, 2022, or the Effective Date, we entered into a second amendment to the Original Loan Agreement, or as amended, the Hercules Loan Agreement. Under the second amendment, the aggregate principal amount available to us increased from $75.0 million to $125.0 million, with such principal being available in a series of tranches, subject to certain terms and conditions. On December 14, 2023, we entered into a third amendment to the Hercules Loan Agreement. As of September 30, 2024, a total of $80.0 million had been drawn under the Hercules Loan Agreement. On the effective date of the second amendment, we paid $100,000 as a facility charge that we recognized as a debt discount and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Additional facility charges applied to future drawdowns will be treated similarly. We also incurred legal fees in connection with the second amendment, which we recognized as debt issuance costs and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Under the third amendment, the aggregate principal amount drawn down and remaining available to us under the Hercules Loan Agreement remained at $125.0 million at September 30, 2024, with such principal available in a series of tranches, subject to certain terms and conditions. The third amendment also provided that (i) the fourth tranche of the Hercules Loan Agreement was increased from $10.0 million to $30.0 million, (ii) the commitment period for the fifth tranche of the Hercules Loan Agreement of $20.0 million, which was made available due to achievement of a regulatory milestone and satisfaction of certain capitalization requirements and was extended through December 15, 2024, (iii) the variable annual interest rate on the outstanding loans was decreased to the greater of: (x) 9.0%, or (y) the sum of (A) the Prime Rate (as reported in The Wall Street Journal) minus 4.5%, plus (B) 9.0%; and (iv) the interest only period of the Hercules Loan Agreement was extended from June 30, 2024 through December 31, 2024, due to regulatory approval of RYTELO and satisfaction of certain financial and capitalization requirements. In connection with the third amendment, on the third amendment effective date, we borrowed and received the entire fourth tranche of the Hercules Loan Agreement in the amount of $30.0 million. After giving effect to such borrowing, the outstanding principal amount under the Hercules Loan Agreement was $80.0 million at September 30, 2024. On the effective date of the third amendment, we paid $300,000 as a facility charge that we recognized as a debt discount and are amortizing such cost to interest expense over the life of the loan using the effective interest rate method. Additional facility charges applied to future drawdowns will be treated similarly. We also incurred legal fees in connection with the third amendment, which we recognize as debt issuance costs and amortize such cost to interest expense over the life of the loan using the effective interest rate method. The third amendment of the Hercules Loan Agreement was not substantially different as compared to the Original Loan Agreement, and accordingly, we treated the amendment as a modification of the debt in accordance with ASC 470. On September 15, 2023, the third tranche of $20.0 million of the Hercules Loan Agreement expired and was no longer available for us, but was added to the fourth tranche as part of the third amendment to the Hercules Loan Agreement. Under the Hercules Loan Agreement as amended, the Hercules Loan Agreement matures on October 1, 2025, or the Loan Maturity Date, which was extended from April 1, 2025 upon regulatory approval of RYTELO. The Hercules Loan Agreement bears interest at a floating rate per annum equal to the greater of either (i) 9.0% or (ii) the sum of (A) the Prime Rate (as reported in The Wall Street Journal) minus 4.5%, plus (B) 9.0% (12.5% as of September 30, 2024). The interest only period of the Hercules Loan Agreement was extended from June 30, 2024 through December 31, 2024. due to regulatory approval of RYTELO and satisfaction of certain financial and capitalization requirements. Following the expiration of the interest-only period, we are required to repay the Hercules Loan Agreement in equal monthly amortization payments of principal and interest until the Loan Maturity Date. Upon full repayment of the Hercules Loan Agreement, we are also obligated to pay an end of term charge in an amount equal to 6.55% of the amount of the Hercules Loan Agreement actually borrowed. Such end of term charge is being accrued to interest expense over the term of the Loan Agreement using the effective interest rate method. At our option, upon at least seven business days’ prior written notice to Hercules, we are able to prepay all or any portion greater than or equal to $5.0 million of the outstanding loan by paying the entire principal balance (or portion thereof) and all accrued and unpaid interest. There was no prepayment charge for prepayments of drawdowns under Tranche 1 or Tranche 2. Prepayments of drawdowns under Tranche 3, Tranche 4, Tranche 5 or Tranche 6 are subject to a prepayment charge of 1.5% of the prepayment amount, if the prepayment is made prior to June 30, 2025. Thereafter, any prepayment of Tranche 3, Tranche 4, Tranche 5 or Tranche 6 is not subject to a prepayment charge. We were in compliance with the covenants under the Hercules Loan Agreement as of September 30, 2024. As of September 30, 2024, the net carrying value of the debt under the Hercules Loan Agreement was $83.8 million, which includes the principal amount of $80.0 million less net unamortized debt discounts and issuance costs of $258,000 plus accrued end of term charge of $4.1 million. The carrying value of the debt approximates the fair value as of September 30, 2024. The debt discounts and debt issuance costs are being amortized to interest expense over the life of the outstanding loan amounts using the effective interest rate method. The following table presents future minimum payments, including interest and the end of term charge, under the Loan Agreement as of September 30, 2024 (in thousands):
Remainder of 2024 |  | $ | 2,548 |
2025 |  |  | 89,955 |
Total |  |  | 92,503 |
Less: amount representing interest |  |  | (7,263 | )
Less: unamortized debt discount and issuance costs |  |  | (258 | )
Less: unaccrued end of term charge |  |  | (1,145 | )
Less: current portion of debt |  |  | (71,562 | )
Noncurrent portion of debt |  | $ | 12,275 |
Subsequent to September 30, 2024, all obligations outstanding under the Hercules Loan Agreement, amounting to $86.5 million, were repaid in full by us in connection with our entry into and funding under a new loan agreement, with BioPharma Credit PLC and the lenders party thereto. See Note 9 on Subsequent Events in Notes to Condensed Consolidated Financial Statements of this Report for additional information.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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