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Convertible Notes | 6 Months Ended
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Jun. 30, 2026
Debt Disclosure [Abstract] |
Convertible Notes | Convertible Notes On May 7, 2026, the Company issued $115.0 million aggregate principal amount of 6.75% Convertible N otes due July 15, 2034. In connection with the offering of the Convertible Notes, the Company granted the initial purchaser of the Convertible Notes a 30-day option to purchase up to an additional $15.0 million aggregate principal amount of the Convertible Notes on the same terms and conditions. On May 14, 2026, the Company issued an additional $15.0 million aggregate principal amount of Convertible Notes, pursuant to the exercise in full of such over-allotment option, for the total aggregate principal amount of $130.0 million. The net proceeds the Company received from the issuance of the Convertible Notes was $112.5 million, after deducting the purchase discounts and commissions and offering expenses payable by the Company. The Company used approximately $32.7 million of the net proceeds from the offering of the Convertible Notes to fully repay the outstanding obligations and prepayment fee under the Loan and Security Agreement (see Note 10) and to terminate that facility, with the remaining net proceeds to be used for general corporate purposes. The Convertible Notes are the Company's senior unsecured obligations and mature on May 15, 2034 (the “Maturity Date”), unless earlier repurchased or converted into shares of common stock as described below. At the time that holders elect to convert, which is further described below, the Convertible Notes are convertible into shares of the Company’s common stock, can be repurchased for cash, or a combination thereof, at the Company’s election, at an initial conversion rate of 372.7866 shares of common stock per $1,000.00 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $2.68 per share of common stock, subject to adjustment. The Company will pay interest on the Convertible Notes semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2026. The Convertible Notes are not convertible prior to the earlier of May 15, 2027 and the Reserved Share Effective Date, the first date on which the Company has increased its authorized and unissued shares and reserved the maximum number of conversion shares solely for issuance upon conversion of the Convertible Notes, as such term is defined in the indenture that the Company entered into with the U.S. Bank Trust Company, National Association, as trustee (the "Indenture"), and unless and until the Reserved Share Effective Date occurs the Company is required to settle conversions solely in cash. As a result, the Convertible Notes, encompassing both the debt and derivative liability will remain classified as current liabilities on the balance sheet until the Reserved Share Effective Date. The Company committed to seek the stockholder approval necessary for the Reserved Share Effective Date at a meeting to be held on September 21, 2026. In addition, until stockholder approval is obtained under Nasdaq Listing Rule 5635(d), the maximum number of shares of common stock issuable upon conversion by physical settlement is limited to 67,629,947 shares (the "Exchange Cap"), with any conversions that would otherwise exceed the cap settled in cash. The conversion rate for the Convertible Notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption in respect of the Convertible Notes, the Company will, in certain circumstances, increase the conversion rate of the Convertible Notes for a holder who elects to convert its Convertible Notes in connection with such a corporate event or convert its Convertible Notes called (or deemed called) for redemption during the related redemption period (as defined in the Indenture), as the case may be, to 540.5405 shares of common stock per $1,000 principal amount of Convertible Notes, subject to customary anti-dilution adjustment provisions. The Company may not redeem the Convertible Notes prior to May 15, 2029. The Company may redeem for cash all or any portion of the Convertible Notes (subject to certain limitations), at its option, on or after May 15, 2029 and prior to the 41st scheduled trading day immediately preceding the Maturity Date, if the last reported sale price of the common stock has been at least 130% of the conversion price for the Convertible Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. However, the Company may not redeem less than all of the outstanding Convertible Notes unless at least $25.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related notice of redemption (and after giving effect to the delivery of such notice of redemption). Holders of Convertible Notes may require the Company to repurchase for cash all or any portion of their Convertible Notes on May 15, 2032 at a repurchase price equal to 100% of the principal amount of Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, May 15, 2032. In addition, if the Company undergoes a “fundamental change” (as defined in the Indenture), then, subject to the terms of the Indenture, holders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the fundamental change repurchase date. The Indenture includes customary terms and covenants, including certain events of default. The Company incurred approximately $17.5 million of issuance costs (including $13.0 million of debt discount) related to the issuance of the Convertible Notes. Of the $17.5 million of issuance costs, $16.3 million were recorded as a reduction to long-term debt on the condensed consolidated balance sheet and are amortized over the six-year period to May 15, 2032, the first point at which the Convertible Note are puttable by the holders, as described above, using the effective interest method. For the three and six months ended June 30, 2026, the Company recognized $0.5 million to interest expense on the condensed consolidated statements of operations. The remaining $1.2 million of issuance cost that was allocated to the conversion option was immediately expensed upon issuance to interest expense on the condensed consolidated statements of operations. The Company recorded $1.9 million of interest expense during the three months ended June 30, 2026, relating to the coupon interest on the convertible notes due semi-annually. As of June 30, 2026, no Convertible Notes were convertible pursuant to their terms. The estimated fair value of the Convertible Notes was $117.0 million as of June 30, 2026. As of June 30, 2026, the if-converted value of the Convertible Notes did not exceed the principal value of those notes. Debt In September 2016, in connection with the U.S. government's foreign national investor program, commonly known as the EB-5 Program, the Company entered into a financing arrangement (the "EB-5 Loan Agreement") which provided for cumulative borrowings of up to $10.0 million from EB5 Life Sciences, L.P. ("EB-5 Life Sciences") as the lender. Pursuant to the EB-5 Loan Agreement, borrowings were made in $0.5 million increments with a fixed interest rate of 4% per annum (the "Original Offering"). The borrowings pursuant to the Original Offering are secured by substantially all of the Company's assets, with the exception of any patents, patent applications, pending patents, patent licenses, patent sublicenses, trademarks, and other intellectual property rights held by the Company. Under the terms and conditions of the Original Offering, the Company borrowed $1.0 million during 2016, $0.5 million during 2020, $0.5 million in September 2022, and an additional $0.5 million in May 2023. Issuance costs were recognized as a reduction to the loan balance and are amortized to interest expense over the term of each borrowing. Pursuant to the Original Offering, each outstanding borrowing, as well as accrued unpaid interest, becomes due upon the seventh anniversary of its disbursement date, subject to certain extension provisions. Once repaid, amounts cannot be re-drawn. The March 2022 EB-5 Reform and Integrity Act of 2022 (the "RIA") enacted changes to the EB-5 Program, including but not limited to: raising the minimum investment amount for a targeted employment area (the "TEA") from its previous level of $0.5 million to its new level of $0.8 million, as well as modifying the process for the creation of TEAs. Under the previous regime, the state in which the TEA would be located could send a letter in support of efforts to designate a TEA. Under the current regime, only U.S. Citizenship and Immigration Services can designate TEAs. In connection with the aforementioned changes to the EB-5 Program, the Original Offering was amended in May 2023 (the "Amended Offering"). Pursuant to the terms and conditions of the Amended Offering, EB-5 Life Sciences now provides for cumulative borrowings of up to $20.0 million. Future borrowings can be made in increments of $0.8 million with a fixed interest rate of 4.0% per annum. Each future borrowing pursuant to the Amended Offering, as well as accrued unpaid interest, will become due upon the seventh anniversary of its disbursement date. The Company has not made any borrowings pursuant to the Amended Offering as of June 30, 2026. The Company repaid principal of $1 million during the six months ended June 30, 2025. The carrying values of the borrowings pursuant to the Original Offering as of June 30, 2026 and December 31, 2025 are summarized below (in thousands):
| June 30, 2026 |  | December 31, 2025
Principal outstanding | $ | 1,500 |  |  | $ | 1,500 |
Plus: accrued interest | 309 |  |  | 259 |
Less: unamortized debt issuance costs | (60) |  |  | (68) |
Carrying value, net | 1,749 |  |  | 1,691 |
Less: current portion of long term debt | (20) |  |  | — |
Long term debt, net of current portion | $ | 1,729 |  |  | $ | 1,691 |
In November 2024, the Company entered into a Loan and Security Agreement with Avenue Capital Management II, L.P., as administrative agent and collateral agent (the “Agent”, together with Avenue I and Avenue II, “Avenue”), Avenue Venture Opportunities Fund II, L.P., as a lender (“Avenue 2”), and Avenue Venture Opportunities Fund, L.P., as a lender (“Avenue 1”, and together with Avenue 2, the “Lenders”) for net proceeds of $29.2 million. The Loan and Security Agreement had a maturity date of November 1, 2028, of which the first 24 months were interest only, and bore interest at a variable rate per annum equal to the greater of (i) the prime rate as reported in The Wall Street Journal plus 4.25% or (ii) 12.25%. Additionally, the Lenders had the right to convert an aggregate amount of up to $6.0 million of the outstanding principal amount into shares of common stock at a conversion price per share equal to 80% of the trading price on the date of conversion, which would be at Lenders' option. In the event the Company elects to prepay the term loans in full, Lenders would have 10 days to elect to exercise their conversion right prior to such prepayment. All conversion rights terminated upon payoff. Notwithstanding the foregoing, the aggregate amount of common stock that could have been issued pursuant to the “Conversion Right” and the “Equity Grant” could not exceed a number of shares equal to 19.9% of the Company’s outstanding common stock. The agreement was collateralized by all of the Company’s assets in which the Agent was granted a senior secured lien. The Company also granted the Lenders a negative pledge on the Company’s intellectual property. In connection with the Loan and Security Agreement, the Company entered into a Subscription Agreement with the Lenders, pursuant to which the Company issued 1,056,338 shares of common stock to the Lenders with an issue date of November 6, 2024. On May 7, 2026, the Company used approximately $32.7 million of the net proceeds from its offering of Convertible Notes (See Note 9) to fully repay the Company's obligations under the Loan and Security Agreement, including payment of the related prepayment fee and expenses, and terminated the Loan and Security Agreement and all related loan documents. The Company recognized a loss on extinguishment of debt of $2.4 million during the three and six months ended June 30, 2026, in the condensed consolidated statements of operations. The carrying values of the borrowings pursuant to the Loan and Security Agreement as of June 30, 2026 and December 31, 2024 are summarized below (in thousands):
| June 30, 2026 |  | December 31, 2025
Principal outstanding | $ | — |  |  | 30,000 |
Less: unamortized debt issuance costs | — |  |  | (2,899) |
Carrying value, net | $ | — |  |  | $ | 27,101 |
Less: current portion of long term debt | $ | — |  |  | $ | (1,250) |
Long term debt, net of current portion | — |  |  | 25,851 |
For the six months ended June 30, 2026 and June 30, 2025, the Company recognized interest expense of approximately $2.2 million and $2.5 million respectively, including amortization of debt issuance cost of $0.6 million and $0.6 million, respectively. For the three months ended June 30, 2026 and June 30, 2025 the Company recognized interest expense of approximately $0.9 million and $1.3 million, respectively including amortization of debt issuance cost of $0.3 million and $0.3 million, respectively.

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