Subsequent Event

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

Subsequent Event

15. Subsequent Event

In January 2020, the Company entered into an Amended and Restated Loan and Security Agreement (the Amended Loan Agreement) with Hercules, which provides the Company with an additional term loan in an aggregate principal amount of up to $100.0 million (the Restated Credit Facility) in three tranches, subject to certain terms and conditions.

The first tranche of up to $40.0 million is available to the Company through December 15, 2020, of which $20.0 million would be available upon submission of the avacopan New Drug Application (NDA) for the treatment of ANCA vasculitis. Under the first tranche, $5.0 million will be advanced to the Company on or before March 15, 2020. The second tranche of up to an additional $30.0 million is available to the Company through December 15, 2021 upon NDA approval of avacopan for the treatment of ANCA vasculitis. The third tranche of up to an additional $30.0 million is available through December 15, 2022, subject to certain conditions.

For advances under the Restated Credit Facility, the Company will make interest only payments through September 1, 2022 and will then repay the principal balance and interest of the advances in equal monthly installments through February 1, 2024. Upon satisfaction of certain conditions, the interest only payment period and the principal balance repayment period may be extended.

The initial interest rate equals to the greater of either (i) 8.50% plus the prime rate as reported in The Wall Street Journal minus 5.25%, and (ii) 8.50%, which may be reduced upon the Company achieving certain cumulative net avacopan revenue levels.

The Company may prepay advances under the Restated Credit Facility, in whole or in part, at any time subject to a prepayment charge up to 2.0% of prepayment amounts. In addition, the Company will pay an end of term charge of 7.15% of the aggregate amount of the advances. The Restated Credit Facility is secured by substantially all of the Company’s assets, excluding intellectual property.

In connection with the Amended Loan Agreement, the Company also entered into a Right to Invest Agreement with Hercules, pursuant to which Hercules shall have the right to participate, in an amount up to $3.0 million, in any subsequent equity financing broadly marketed to multiple investors in an amount greater than $30.0 million.

The Amended Loan Agreement also includes customary affirmative and negative covenants and events of default, the occurrence and continuance of which provide Hercules with the right to demand immediate repayment of all principal and unpaid interest under Amended Loan Agreement, and to exercise remedies against the Company and the collateral securing the Amended Loan Agreement.