INDEBTEDNESS

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

INDEBTEDNESS

INDEBTEDNESS

Entry into BlackRock Loan Facility

On January 29, 2024, or the Closing Date, the Company entered into the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with Kreos Capital VII (UK) Limited, or Kreos, which are funds and accounts managed by BlackRock Inc., collectively, BlackRock, and provides for a senior secured term loan facility in the aggregate principal amount

of up to $55.0 million, or the Term Loan Facility. The Term Loan Facility is available in three tranches (i) Tranche A — $37.0 million was funded on the Closing Date and used to repay the Pharmakon Term Loans; (ii) Tranche B — $8.0 million was funded on April 19, 2024, or the Tranche B Closing Date, and (iii) Tranche C — $10.0 million is available in a single draw through December 31, 2024, collectively the Term Loans. Tranche C is available subject to receipt of a certain amount of cumulative gross cash proceeds after the Closing Date in the form of equity or equity linked securities in one or more series of transactions.

On the Closing Date, the Company drew $34.5 million on Tranche A, after deducting debt issuance costs, fees and expenses. On the Tranche B Closing Date, the Company drew $7.5 million, after deducting debt issuance costs, fees and expenses.

The BlackRock Term Loan Facility had an initial maturity date of March 31, 2025, which was automatically extended to January 29, 2028, after the Company received FDA approval for Vafseo, or the BlackRock Maturity Date. The Company is required to make interest-only payments until December 31, 2026, or the BlackRock Interest Only Period, after which the Company will begin paying equal monthly principal on the first calendar day of each month. In the event of certain prespecified events, the repayment schedule will be accelerated.

The Term Loan Facility will accrue interest at a floating annual rate equal to the sum of (i) term Secured Overnight Financing Rate, or SOFR, for a tenor of one month (subject to a floor of 4.25% per annum) plus (ii) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest rate). As of March 31, 2024, the Company's interest rate was 12.08%. The Company recognized interest expense related to the BlackRock Credit Agreement of $1.0 million during the three months ended March 31, 2024.

During the continuance of any payment event of default under the BlackRock Credit Agreement, the interest rate on such overdue sum will automatically increase by an additional 3.0% per annum, and may be subject to an additional late fee of 2.0% of such overdue sum. The Term Loan Facility also includes transaction fees ranging from 1.00% to 1.25% of the draw down amount as well exit fees of 0.75% of the amount funded to the relevant tranche.

If the Company prepays the outstanding loan prior to maturity, it will be required to pay a prepayment fee ranging from 1.0% to 4.0% of the amount prepaid. If prepayment is made during the first year, the Company also is required to pay the amount of otherwise due interest payments for the twelve-month period following prepayment.

As of March 31, 2024, future principal payments under the BlackRock Credit Agreement are as follows (in thousands):

	Principal Payments
2024	$	—
2025	—
2026	—
2027	34,010
2028	1,299
Total before unamortized discount and issuance costs	35,309
Less: unamortized discount and issuance costs	(5,164)
Total term loans	$	30,145

The BlackRock Term Loan Facility is secured by substantially all of the existing and after-acquired assets of the Company, including intellectual property. The BlackRock Credit Agreement requires the Company to (i) maintain a minimum aggregate cash balance of $15.0 million in one or more controlled accounts or (ii) trailing twelve-month revenue of $150.0 million, both of which are measured monthly. The BlackRock Credit Agreement contains various affirmative and negative covenants that limit the Company's ability to enter into certain transactions.

Warrant

On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder, received a warrant to purchase 3,076,923 shares of the Company’s common stock, at an exercise price per share of $1.30, or the Initial Warrant, and upon borrowing of Tranche C, the Company will become obligated to issue to the Warrant Holder additional warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $1.30. Each warrant shall be exercisable for eight years from the date of issuance.

The Initial Warrant is liability classified under ASC 815, Derivatives and Hedging, as it could potentially require net cash settlement outside of the Company’s control. The Initial Warrant is measured at fair value each period with changes in fair value presented within the unaudited condensed consolidated statements of operations. The fair value of the warrant liability

was $5.0 million as of March 31, 2024. See Note 3, Fair Value of Financial Instruments, for information on the fair value determination.

Other Agreements Accounted for as Debt

The Company has a liability related to the sale of future royalties which is accounted for as a debt arrangement. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for further information.

The Company has a refund liability with CSL Vifor which is also accounted for as a debt arrangement. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for further information.

Pharmakon Term Loans (Extinguished January 29, 2024)

On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement, or Pharmakon Loan Agreement, with BioPharma Credit PLC as collateral agent and a lender, or Collateral Agent, and BioPharma Credit Investments V (Master) LP as a lender, and a Guaranty and Security Agreement with the Collateral Agent. BioPharma Credit PLC subsequently transferred its interest in the loans, solely in its capacity as a lender, to its affiliate, BPCR Limited Partnership. The Collateral Agent and the lenders are collectively referred to as Pharmakon. The Pharmakon Loan Agreement, as amended, consisted of a secured term loan facility in an aggregate amount of up to $100.0 million, or Pharmakon Term Loans, which was made available under two tranches: (i) Pharmakon Tranche A - $80.0 million and (ii) Pharmakon Tranche B - $20.0 million. On November 25, 2019, the Company drew $77.3 million on Pharmakon Tranche A, net of fees and expenses of $2.7 million. On December 10, 2020, the Company drew $20.0 million on Pharmakon Tranche B, net of immaterial lender expenses and issuance costs.

On the Closing Date, using the proceeds from the BlackRock Credit Agreement, the Company paid the then outstanding principal balance on the Pharmakon Term Loans of $35.0 million, plus the outstanding interest and a prepayment fee of $0.2 million. During the three months ended March 31, 2024, the Company recorded a debt extinguishment loss of $0.5 million.

The Pharmakon Term Loans, as amended, bore interest through maturity at a variable rate based on the three month SOFR plus a SOFR adjustment of 0.30% plus 7.50%. The SOFR interest rate was capped at 3.35% through October 31, 2023, the date of the Fourth Amendment to the Pharmakon Loan Agreement, or Fourth Amendment. Interest expense related to the Pharmakon Loan Agreement was immaterial for the three months ended March 31, 2024. The Company recognized $1.8 million of interest expense during the three months ended March 31, 2023.

See Note 7, Indebtedness, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for further details.