Convertible Notes

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Convertible Notes

Convertible Notes

In June 2020, the Company issued $15.0 million aggregate principal non-interest bearing convertible promissory notes due June 29, 2021 (the “2020 Convertible Notes”) to Perceptive. The 2020 Convertible Notes become convertible into the Company’s ordinary shares at a conversion price of $1.47, at the option of the holder, upon the occurrence of the next preferred equity financing.

The fair value of the Company’s ordinary shares as of the issuance date was $1.71 per share compared to the conversion rate of $1.47 per share and therefore the 2020 Convertible Notes contain a beneficial conversion feature (“BCF”). The Company measured the BCF at $2.4 million as the intrinsic value of the conversion option at the commitment date, representing the difference between the conversion price and the Company’s share price on the commitment date. The BCF was recorded in additional paid-in capital as a discount to the carrying value of the 2020 Convertible Notes and amortized to interest expense using the effective interest method.

In October 2020, as part of the Series A preferred issuance, the 2020 Convertible Notes were subsequently converted into 10,211,527 ordinary shares, in accordance with their terms and at their conversion price of $1.47 per share, and following such conversion, the 2020 Convertible Notes were cancelled.

The Company accounted for the conversion of the 2020 Convertible Notes as interest expense of $1.6 million within interest expense in the consolidated statement of operations and comprehensive loss as of the year ended December 31, 2020. The interest expense upon conversion was calculated as the difference between (i) the 2020 Convertible Note principal amount of $15.0 million and (ii) the carrying value of the 2020 Convertible Notes, including the principal balance of the 2020 Convertible Notes of $13.4 million.

The Company recognized interest expense of $2.5 million related to the BCF during the year ended December 31, 2020, in connection with the 2020 Convertible Notes.