Notes Payable

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

. Notes payable

In May 2019, the Company entered into a senior term facilities agreement, which was amended in April 2020 (the “Original Credit Facility”) with MidCap Financial (Ireland) Limited (“MidCap Financial”), as agent, and additional lenders from time to time (together with MidCap Financial, the “Lenders”), to borrow up to $75.0 million in term loans.

In May 2021, the Company amended and restated the Original Credit Facility (the “Amended Credit Facility”). Under the Amended Credit Facility, the Lenders agreed to make term loans available to the Company in the aggregate amount of $100.0 million, including increasing the principal on the initial term loan to $33.0 million, from $25.0 million. In January 2023, the Company amended and restated the credit facility to change the reference rate from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR"). As of September 30, 2023, the Company has borrowed $33.0 million under the Amended Credit Facility.

In March 2023, the Company notified MidCap Financial of its voluntary cancellation of each Lender's remaining commitments under the Amended Credit Facility. As a result of this notice, the Company can no longer draw on the remaining $67.0 million that was available on the Amended Credit Facility. Additionally, MidCap agreed to waive certain restrictive covenants of the Amended Credit Facility, specifically related to restrictions on the Company's ability to dispose of intellectual property related to deprioritized products.

The Company's borrowings under the Amended Credit Facility bear interest at an annual rate equal to 5.95% plus SOFR plus a 0.10% annual increase to the annual rate. The Company was required to make interest only payments on the term loan for 18 months following the date of the Amended Credit Facility. The term loan under the Amended Credit Facility began amortizing on the 18-month anniversary of the Amended Credit Facility (December 2022), with the Company commencing equal monthly payments of principal plus interest to the Lenders to be made in consecutive monthly installments until the loan maturity date in May 2026. In addition, a final payment of 3.5% is due on the loan maturity date. The Company is accruing the final payment amount of $1.2 million associated with the Amended Credit Facility, to outstanding debt by charges to interest expense using the effective-interest method from the date of issuance through the loan maturity date.

The Amended Credit Facility includes affirmative and negative covenants. The affirmative covenants include, among others, covenants requiring the Company to maintain their legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, maintain property, pay taxes, satisfy certain requirements regarding accounts and comply with laws and regulations. The negative covenants include, among others, restrictions on the Company transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, amending material agreements and organizational documents, selling assets, changing the nature of the business and undergoing a change in control, subject to certain exceptions.

Notes payable consist of the following (in thousands):

	September 30,			December 31,
	2023			2022
Notes payable, net of issuance costs	$	24,961		$	31,970
Less: current portion		(9,429	)		(9,429	)
Notes payable, net of current portion		15,532			22,541
Accretion related to final payment		630			450
Notes payable, long term	$	16,162		$	22,991

As of September 30, 2023, the estimated future principal payments due are as follows (in thousands):

	Aggregate Minimum Payments
2023 (remaining three months)	$	2,357
2024		9,429
2025		9,429
2026		5,084
Total		26,299
Less current portion		(9,429	)
Less unamortized portion of final payment		(525	)
Less unamortized debt issuance costs		(183	)
Notes payable, long term	$	16,162

During the three months ended September 30, 2023 and 2022, the Company recognized $0.8 million and $0.8 million of interest expense related to the term loan, respectively. During the nine months ended September 30, 2023 and 2022, the Company recognized $2.7 million and $2.1 million of interest expense related to the term loan, respectively. The effective annual interest rate as of September 30, 2023, was approximately 12.62%.