DEBT

6 Months Ended

Jun. 30, 2024

DEBT

DEBT

14.     DEBT

The following table presents the composition of debt as of June 30, 2024 and December 31, 2023 (in thousands):

	June 30,		December 31,
	2024		2023
Outstanding principal	$	60,000	$	60,000
Accrued final payment fees		2,970		1,856
Less debt discounts		(3,212)		(2,573)
Total debt, net		59,758		59,283
Less current portion		(13,612)		—
Long-term debt, net	$	46,146	$	59,283

For the three months ended June 30, 2024, the Company recognized interest expense of $2.0 million, of which $1.7 million was cash and $0.3 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees. For the three months ended June 30, 2023, the Company recognized interest expense of $1.1 million, of which $1.0 million was cash and $0.1 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees.

For the six months ended June 30, 2024, the Company recognized interest expense of $3.8 million, of which $3.3 million was cash and $0.5 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees. For the six months ended June 30, 2023, the Company recognized interest expense of $2.4 million, of which $2.1 million was cash and $0.3 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees.

SLR Credit Facility

On March 2, 2020 the Company entered into a Loan and Security Agreement with Solar Capital Ltd as collateral agent and other lenders as defined in the agreement (such agreement, as amended, the “SLR Facility”).

On March 7, 2024, the Company entered into a sixth amendment (the “SLR Sixth Amendment”) to the SLR Facility. Under the SLR Sixth Amendment, SLR: (a) waived the specified events with respect to the Company’s non-compliance with the required revenue under the net product revenue covenant; and (b) amended the financial covenants and increased the amount of the liquidity covenant and temporarily decreased the net product revenue covenant to reflect current projections.

On September 29, 2023, the Company entered into a fifth amendment (the “SLR Fifth Amendment”) to the SLR Facility. The SLR Fifth Amendment allowed the Company to draw on the $22.5 million Term C Loan portion of the SLR Facility and revised the required testing levels of the net product revenue and minimum liquidity covenants for certain testing periods. On October 3, 2023, the Company borrowed $22.5 million under the Term C Loan portion of the SLR Facility, resulting in total borrowing of $60 million.

On March 29, 2023, the Company entered into a fourth amendment (the “SLR Fourth Amendment”) to the Loan and Security Agreement dated March 2, 2020 with SLR Investment Corp. (formerly known as Solar Capital Ltd.). The SLR Fourth Amendment increased the borrowings by $2.5 million, extended the interest only period from March 2023 to March 2026, and extended the maturity date from February 2025 to March 2028. In addition, the SLR Fourth Amendment changed the basis of the interest expense from LIBOR to SOFR.

The SLR Facility accrued interest from the date of borrowing through the date of repayment at a floating per annum rate of interest, which reset monthly and was equal to the greater of 5.65% plus (a) 3.95% or (b) daily simple SOFR for a term of one month. Only interest was required to be paid on the SLR Facility until March 1, 2026. Prior to the effectiveness of the SLR Fourth Amendment, the interest only period with respect to the Term A Loan expired on March 1, 2023. Commencing April 1, 2026, the Company was required to make monthly payments of principal and interest on the SLR Facility.

In addition to the principal and interest payments due under the SLR Facility, the Company was required to pay a final payment fee to SLR upon the earlier of prepayment, acceleration or the maturity date of the SLR Facility equal to 4.95% of the principal amount of the term loans actually funded. If the Company prepaid the SLR Facility prior to their respective scheduled maturities, the Company will also be required to pay prepayment fees to SLR equal to 3% of the principal amount of such term loan then-prepaid if prepaid on or before the first anniversary of the Term C Funding Date, 2% of the principal amount of such term loan then-prepaid if prepaid after the first anniversary and on or before the second anniversary of the Term C Funding Date, or 1% of the principal amount of such term loan then-prepaid if prepaid after the second anniversary of the Term C Funding Date.

The Company was also required to pay SLR an exit fee upon the occurrence of (a) any liquidation, dissolution or winding up of the Company, (b) any transaction that results in a person obtaining control over the Company, (c) the Company achieving $100 million in trailing twelve-month net product revenue or (d) the Company achieving $125 million in trailing twelve-month net product revenue. The exit fee for liquidation, dissolution, winding up or change of control of the Company is equal to 2% of the principal amount of the term loans actually funded. The exit fee for achieving either $100 million or $125 million in trailing twelve-month net product revenue is equal to 1% of the principal amount of the term loans actually funded or, if both net product revenue milestones are achieved, 2% of the principal amount of the term loans actually funded. The exit fee was capped at 2% of the principal amount of the term loans actually funded.

On January 31, 2024 and February 29, 2024, the Company was not in compliance with its minimum net product revenue covenant under the SLR Facility. The Company was granted a waiver from SLR in the SLR Sixth Amendment for the covenant violations. The amount of borrowings affected by this noncompliance was $60 million.

As of June 30, 2024, the Company was not in compliance with its minimum net product revenue covenant under the SLR Facility. The amount of borrowing affected by this noncompliance was $60 million.

Subsequently, on July 25, 2024, the Company entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings IV, LP, (“Perceptive”) as collateral agent and other lenders defined in the agreement, see “Note 21. Subsequent Events” for further discussion on the Perceptive Credit Agreement.

The Company projects to be in compliance with the covenants under the Perceptive Credit Agreement going forward.