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Loans and Convertible Notes Payable
 9 Months Ended
Sep. 30, 2021
Debt Disclosure [Abstract]  
Loans and Convertible Notes Payable

 

(8)

Loans and Convertible Notes Payable

 

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

Gross

 

 

Discount

 

 

Net

 

 

Gross

 

 

Discount

 

 

Net

 

Loan - Avenue [1]

 

$

12,638

 

 

$

(1,804

)

 

$

10,834

 

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible Note Payable - Rosalind

 

$

2,000

 

 

$

—

 

 

$

2,000

 

 

$

2,000

 

 

$

—

 

 

$

2,000

 

Convertible Loan Payable - Avenue

 

 

3,000

 

 

 

(398

)

 

 

2,602

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

$

5,000

 

 

$

(398

)

 

$

4,602

 

 

$

2,000

 

 

$

—

 

 

$

2,000

 

 

[1] The gross amount includes the 4.25% final payment of $637.5.

 

 

 

Remaining maturities of the Company's loan and convertible note payables are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

Convertible

Notes

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Year ended December 31, 2021

 

$

-

 

 

$

-

 

 

$

-

 

Year ended December 31, 2022

 

 

571

 

 

 

143

 

 

 

714

 

Year ended December 31, 2023

 

 

6,857

 

 

 

1,714

 

 

 

8,571

 

Year ended December 31, 2024

 

 

5,210

 

 

 

3,143

 

 

 

8,353

 

Total

 

$

12,638

 

 

$

5,000

 

 

$

17,638

 

The Avenue Warrant was valued at issuance at $1,309 using the Black-Scholes option pricing method using the following assumptions:

 

 

August 6,

 

 

 

2021

 

Contractual term (years)

 

5.07

 

Expected volatility

 

187.0%

 

Risk-free interest rate

 

0.77%

 

Expected dividends

 

0.00%

 

Term Loan from Avenue Venture Opportunities Fund, L.P.

On August 6, 2021, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”) for a term loan in an aggregate principal amount of up to $20,000 (the “Loan”). The Loan bears interest at an annual rate equal to the greater of (a) the sum of 7.70% plus the prime rate as reported in The Wall Street Journal and (b) 10.95%. The Loan is secured by all of the Company’s assets globally, including intellectual property. The Loan maturity date is August 1, 2024.

The initial tranche of the Loan is $15,000, including $4,000 which has been funded into a restricted account and will be released upon achievement of (a)(x) positive FOCUS trial efficacy per the trial’s predefined Statistical Analysis Plan (SAP) (specifically the Overall Response Rate exceeds the prespecified threshold for success defined in the SAP by a statistically significant amount); and (y) based on data contained within the FOCUS trial database and appropriate for use with the U.S. Food and Drug Administration, safety and tolerability among FOCUS trial participants is within the range of currently approved and commonly used cytotoxic chemotherapeutic agents; and (b) raising subsequent net equity proceeds of at least $20,000. The Company may request an additional $5,000 of gross proceeds between October 1, 2022 and December 31, 2022, with funding, subject to the approval of Avenue’s Investment Committee.

In connection with the Loan, the Company issued to Avenue a warrant (the “Avenue Warrant”) to purchase 127,755 shares of common stock at an exercise price per share equal to $0.01. The Avenue Warrant is exercisable until August 31, 2026.

Up to $3,000 of the principal amount of the loan outstanding may be converted, at the option of the Lender, into shares of the Company’s common stock at a conversion price of $11.98 per share.

The Company will make monthly interest-only payments during the first fifteen months of the term of the Loan, which could be increased to up to twenty-four months upon the achievement of specified performance milestones. Following the interest-only period, the Company will make equal monthly payments of principal plus interest until the maturity date, when all remaining principal outstanding and accrued interest must be paid. If the Company prepays the Loan, it will be required to pay (a) a prepayment fee of 3% if the Loan is prepaid during the interest-only period; and (b) a prepayment fee of 1% if the Loan is prepaid after the interest-only period. The Company must make an incremental final payment equal to 4.25% of the aggregate funding.

The Company paid an aggregate commitment fee of $150 at closing. Upon funding a second tranche of the Loan, the Lender will earn a 1.0% fee on the $5,000 of incremental committed capital, for a total commitment fee of $200.

The Loan Agreement requires the Company to make and maintain representations and warranties and other agreements that are customary in loan agreements of this type. The Loan Agreement also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments.

The Company determined that the embedded conversion option associated with the Loan was not required to be bifurcated.  The Company determined that the Avenue Warrant met the criteria to be equity-classified. The $637 value of the final payment was treated as original issue discount.  The $1,171 relative fair value of the Avenue Warrant was credited to Additional Paid in Capital while it was debited as debt discount.  Of the $563 of cash issuance costs, $519 was allocated to the Loan and was recorded as debit discount, while $44 was allocated to the Avenue Warrant and was debited to Additional Paid in Capital.  Of the $2,327 of aggregate debt discount, $1,909 was allocated to the non-convertible portion of the Loan, while $418 was allocated to the convertible portion of the Loan.  Aggregate debt discount amortization of $127 was recorded during the three months ended September 30, 2021, including $107 related to the non-convertible portion of the Loan and $19 related to the convertible portion of the Loan.  The Company also determined that the convertible portion of the loan did not include a beneficial conversion feature, because the effective conversion price exceeded the commitment date market price of the Company’s common stock.

 

Extension and Amendment of Convertible Note Payable – Rosalind

 

As previously reported, on August 6, 2021, the Company executed an agreement to amend an aggregate of $2,000 outstanding

secured convertible notes payable to Rosalind Opportunities Fund I L.P. and Rosalind Master Fund L.P., respectively, which (a)

reduces the conversion price of the convertible notes to $1,198 per share of the Company’s Series E Convertible Preferred

Stock; and (b) extends the maturity date of the convertible notes to October 30, 2024. In addition, in order to induce the

Company’s lender Avenue to provide the Loan described above, the holders of the convertible notes agreed to subordinate (a)

all of the Company’s indebtedness and obligations to the holders; and (b) all of the holders’ security interest, to the Loan and

Avenue’s security interest in the Company’s property.

 

 

 

Conversion

price

 

 

Current interest

rate

 

 

Principal

 

Convertible notes payable

 

 

 

 

 

 

 

 

 

 

 

 

July 2019 Notes - Rosalind  (maturity date - October 30, 2024)1

 

$

1,198

 

 

8.00%

 

 

$

2,000

 

August 2021 Note - Avenue (maturity date - August 1, 2024)

 

$

12

 

 

10.95%

 

 

$

3,000

 

 

1 The notes are convertible into shares of the Company’s Series E Convertible Preferred Stock.