XML 59 R11.htm IDEA: XBRL DOCUMENT
v3.19.3

Borrowings - (Notes) | 9 Months Ended
--- | ---
Sep. 30, 2019
Debt Disclosure [Abstract] |
Borrowings | Borrowings 2017 Term Loan In September 2017, the Company executed a term loan agreement (the 2017 Term Loan) with Innovatus Life Sciences Lending Fund I, LP (Innovatus) and borrowed $20.0 million, $17.8 million of which was immediately used to repay the Company's existing loan with Capital Royalty Partners II L.P. and its affiliates. On December 7, 2018, the Company borrowed an additional $5.0 million under the 2017 Term Loan. At September 30, 2019, no additional amounts remain available to borrow under the 2017 Term Loan. The interest rate on all borrowings under the 2017 Term Loan is 11.0%, of which 2.5% is paid in-kind in the form of additional term loans, or PIK Loans, until September of 2019, after which interest accrues at an annual rate of 11.0%. The Company has estimated the effective interest rate of this loan to be approximately 14%. Accrued interest is due and payable monthly, unless the Company elects to pay PIK interest. The outstanding principal and accrued interest on the 2017 Term Loan will be repaid in twenty-four equal monthly installments commencing in October 2020. Upon repayment of the final installment under the 2017 Term Loan, the Company is required to pay an additional fee of $1.0 million. This obligation is being accreted into interest expense over the term of 2017 Term Loan using the effective interest method. For the three months ended September 30, 2019 and 2018, the Company issued PIK Loans totaling $0.2 million and $0.1 million, respectively. For the nine months ended September 30, 2019 and 2018, the Company issued PIK Loans totaling $0.5 million and $0.4 million, respectively. If the 2017 Term Loan is prepaid after September 7, 2019, but before September 7, 2020, the 2017 Term Loan requires a prepayment premium of 3% of the aggregate outstanding principal. The prepayment premium decreases by 1% during each subsequent twelve-month period after September 7, 2020. The 2017 Term Loan is collateralized by a first priority security interest on substantially all of the Company's assets, including intellectual property. The affirmative covenants of the 2017 Term Loan require that the Company timely file taxes, maintain good standing and government compliance, maintain liability and other insurance, provide prompt notification of significant corporate events, and furnish audited financial statements within 150 days of fiscal year end without qualification as to the scope of the audit or as to going concern and without any other similar qualification. The affirmative covenants require that the Company achieve a specified level of revenue, and either (i) gross margins, or (ii) gross profits (collectively referred to as the Interest Only Milestones), as measured quarterly on a rolling twelve month basis, and commencing with the quarter ending December 31, 2017 (1) the interest rate on the 2017 Term Loan will increase by 8% and (2) repayment will commence on the date it is determined the Interest Only Milestones have not been met and over the following eighteen months in equal monthly installments. The consequences of failing to achieve the Interest Only Milestones will be waived if, within sixty days of failing to achieve the Interest Only Milestones, the Company issues additional equity securities or subordinated debt with net proceeds of at least $9.5 million. In addition, the 2017 Term Loan requires that the Company maintain certain levels of minimum liquidity. If the Company has achieved the Interest Only Milestones, the Company is required to maintain an unrestricted cash balance of $2.0 million. If the Interest Only Milestones are not met, the Company must maintain unrestricted cash balances totaling at least the trailing four months cash used to fund operating activities. The negative covenants provide, among other things, that without the prior consent of Innovatus subject to certain exceptions, the Company may not dispose of certain assets, engage in certain business combinations or acquisitions, incur additional indebtedness or encumber any of the Company's property, pay dividends on the Company's capital stock or make prohibited investments. The 2017 Term Loan agreement provides that an event of default will occur if, among other triggers, (i) the Company defaults in the payment of any amount payable under the agreement when due, (ii) there occurs any circumstance(s) that could reasonably be expected to result in a material adverse effect on the Company's business, operations or condition, or on the Company's ability to perform its obligations under the agreement, (iii) the Company becomes insolvent, (iv) the Company undergoes a change in control or (v) the Company breaches any negative covenants or certain affirmative covenants in the agreement or, subject to a cure period, otherwise neglects to perform or observe any material item in the agreement. At September 30, 2019, the Company was in compliance with all covenants of the 2017 Term Loan. Upon an event of default in any of the 2017 Term Loan covenants, the repayment of the 2017 Term Loan may be accelerated and the applicable interest rate will be increased by 4.0% until the default is cured. Although repayment of the 2017 Term Loan can be accelerated under certain circumstances, the Company believes acceleration of this loan is not probable as of the date of these condensed financial statements. Accordingly, the Company has reflected the amounts of the 2017 Term Loan due beyond twelve months of the balance sheet date as non-current. In connection with the 2017 Term Loan, the Company paid issuance costs of $0.4 million to Innovatus and an additional $0.1 million to third parties. These fees were recorded as discounts to the carrying value of the 2017 Term Loan. The Company also issued Innovatus warrants (i) on the closing date of the 2017 Term Loan, to purchase 15,384,615 shares of Series F redeemable convertible preferred stock at an exercise price of $0.078 per share and (ii) on December 7, 2018, to purchase 3,846,154 shares of Series F redeemable convertible preferred stock at an exercise price of $0.078 per share (Note 5). These warrants are immediately exercisable and will expire if unexercised seven years after their issuance. The fair value of the warrants on each of their dates of issuance, determined using BSM option pricing model, was recorded as a discount to long-term debt and an offsetting amount recognized as a liability. The resulting debt discount is being amortized to interest expense using the effective interest method over the term of the 2017 Term Loan. In connection with the completion of the IPO in September 2019, the Series F redeemable convertible preferred stock warrants automatically converted into warrants exercisable for an aggregate of 104,722 shares of common stock. Future Minimum Payments on the Outstanding Borrowings Future minimum aggregate payments, including interest, for outstanding borrowings under the 2017 Term Loan are as follows (in thousands):
|  | September 30, 2019
2019 (remaining) |  | $ | 725 |
2020 |  | 6,125 |
2021 |  | 14,937 |
2022 |  | 11,250 |
Total |  | 33,037 |
Less: |  |
Unamortized debt discount and issuance costs |  | (484) |
Interest |  | (6,876) |
Total borrowings, net of discounts and debt issuance costs |  | $ | 25,677 |

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration