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Borrowings

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Borrowings

Borrowings

The Company had $39.1 million and $39.0 million of outstanding debt, net of debt discounts, as of June 30, 2019 and December 31, 2018, respectively. The outstanding debt is related to a term loan entered by the Company with Biopharma Credit Investments IV Sub LP, or Pharmakon, in October 2017 for total loan proceeds of $40.0 million. The total debt issuance costs of $1.3 million were recorded as a direct deduction from the carrying amount of the term loan on the consolidated balance sheet, and are being amortized over the period of the term loan using the effective interest method to interest expense in the consolidated statement of operations. The term loan includes an interest-only period for 35 months through September 2020 and is then repaid in equal quarterly principal payments plus interest through December 2022, and is classified as long-term borrowings on the consolidated balance sheet. The term loan carries a fixed interest rate of 11.5% and a closing fee of 1.5% of the funded amount, or $0.6 million. The term loan includes a pre-payment fee equal to the remaining interest due for the first 30 months of the agreement if it is prepaid within the first 30 months, a 2% prepayment penalty for months 31-48, and a 1% penalty for months 49-60. The term loan requires the Company to maintain a minimum cash balance of $5.0 million and beginning with the three months ended March 31, 2019, the Company is required to meet either minimum net sales or trailing 12-month consolidated EBITDA targets as discussed in detail in Note 7 of Notes to Consolidated Financial Statements in the Annual Report on Form 10-K filed with the SEC on March 14, 2019. The loan is a senior obligation secured with a blanket first lien on the assets of the Company. The effective interest rate for the three months ended June 30, 2019 and 2018 was 12.3% and for the six months ended June 30, 2019 and 2018 was 12.2%. The Company was in compliance with all debt covenants as of June 30, 2019.

The table below summarizes annual future minimum principal payments under the loan agreement as of June 30, 2019 (in thousands):

Remainder of 2019	$	—
2020	4,444
2021	17,778
2022	17,778
Total future minimum payments	40,000
Less: Amount representing debt discount	(907		)
Long-term borrowings	$	39,093

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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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI http://asc.fasb.org/topic&trid=2208564

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