Convertible Notes

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Convertible Notes

6. Convertible Notes

In 2018 and 2019, the Company issued convertible promissory notes in the aggregate principal amount of $3.0 million and $4.5 million, respectively (the 2018 Notes and 2019 Notes, respectively). The 2018 Notes and the 2019 Notes accrued interest at 8% and 10% per annum, respectively, and automatically converted into preferred equity in the next qualified financing of at least $10 million at 85% and 80%, respectively, of the per share price paid by the investors in such financing.

Concurrently with the execution of the Lilly Agreement in April 2019, the Company issued a convertible promissory note to Lilly (the Lilly Note) and received cash proceeds of $15.0 million. The Lilly Note accrued simple interest of 8.0% per annum and, if not converted, would have matured in October 2020. All unpaid principal and interest were due at maturity.

The 2018 Notes, 2019 Notes and the Lilly Note (collectively, the Notes) represented share settled debt that were accounted for at amortized cost by accreting the Notes to their redemption value over the life of the debt using the effective interest method.  In connection with the Series C financing in November 2019, all outstanding principal and interest accrued under the Notes converted into 6,893,036 shares of Series C convertible preferred stock.