Long-Term Debt

3 Months Ended

Mar. 31, 2024

LONG-TERM DEBT

Long-term debt consisted of the following:


(in thousands)	March 31, 2024		December 31, 2023
Principal amount of long-term debt	$	55,000	$	55,000
Debt discount, net of accretion	(825)		(917)
Cumulative accretion of end of term payments	649		487
Long-term debt	$	54,824	$	54,570

Hercules Loan Agreement

The Company entered into a Loan and Security Agreement, as most recently amended, with Hercules Capital, Inc., the (“Hercules Loan Agreement”). The Hercules Loan Agreement provides for an aggregate term loan facility of up to $115.0 million, under which the Company has borrowed an aggregate of $55.0 million of term loans, representing the maximum borrowings allowable as of March 31, 2024. The term loan facility allows for $60.0 million of additional borrowings:

(i) an additional tranche of up to $20.0 million, which became available on April 26, 2024 upon receipt of U.S. approval of XOLREMDI (mavorixafor) in individuals with WHIM syndrome. This tranche is available until September 30, 2024 in the case of the first drawing, and until December 15, 2024 in the case of a second drawing;

(ii) an additional tranche of $7.5 million, which will be available following achievement of a certain clinical development-related milestone through the earlier of (a) 45 days following achievement of such milestone and (b) December 15, 2024; and

(iii) an additional tranche of up to $32.5 million, which will be available subject to approval by Hercules in its sole discretion.

Borrowings under the Hercules Loan Agreement accrue interest at a variable rate equal to the greater of (i) 10.15% or (ii) The Wall Street Journal prime rate plus 3.15%. In an event of default and until such event is no longer continuing, the interest rate applicable to borrowings would be increased by 4.0%. Borrowings are repayable in monthly interest-only payments through July 1, 2027, which is the maturity date of the loans. At the Company’s option, the Company may prepay all, but not less than all, of the outstanding borrowings, subject to a prepayment premium of 2% during the 12 month period ending January 5, 2025 and 1% thereafter. In addition, the Hercules Loan Agreement provides for payment of end-of-term fees of $2.1 million plus 3.5% of the aggregate principal amount of future loans drawn, if any, payable upon the earlier of maturity or the repayment in full of all obligations under the Hercules Loan Agreement. Borrowings under the Hercules Loan Agreement are collateralized by substantially all of the Company’s personal property and other assets except for its intellectual property (but including rights to payment and proceeds from the sale, licensing or disposition of the intellectual property).

Under the Hercules Loan Agreement, the Company has agreed to affirmative and negative covenants. Prior to January 31, 2025, the Company must maintain cash in an account or accounts in which Hercules has a first priority security interest (“Qualified Cash”) in an aggregate amount equal to at least $20.0 million.

•On and after January 31, 2025, such amount must equal at least 20% of the aggregate principal amount of loans outstanding under the Hercules Loan Agreement.

•From and after January 31, 2025, the Company must maintain trailing six month net product revenue of at least 55% of its forecast as approved by the Company’s Board of Directors (the “Performance Covenant”). However, the Performance Covenant will be waived during any period in which:

(i) the Company maintains Qualified Cash in an aggregate amount equal to at least 75% of loans outstanding under the Amended Loan Agreement or

(ii) both (a) the Company maintains a Market Capitalization (as defined in the Hercules Loan Agreement) of at least $450.0 million and (b) the Company maintains Qualified Cash, as defined in the Hercules Loan Agreement, in an aggregate amount equal to at least 45% of loans outstanding.

The Hercules Loan Agreement also restricts the Company’s ability to incur additional indebtedness, pay dividends, encumber its intellectual property, or engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses, with certain exceptions.

The Company recognized interest expense under the Hercules Loan Agreement as follows:


(in thousands)	Three Months Ended March 31,
	2024		2023
Total interest expense	$	1,874	$	884
Non-cash interest expense	$	254	$	225

The annual effective interest rate of the Hercules Loan Agreement as of March 31, 2024 is 13.6%. There were no principal payments due or paid under the Hercules Loan Agreement during the three months ended March 31, 2024.

As of March 31, 2024, future principal and accrued end-of-term payments due under the Hercules Loan Agreement were as follows (in thousands):


Year Ending December 31,	Total
2024	$	—
2025	24,720
2026	30,929

Long-term debt	$	55,649