Loans and Convertible Notes Payable

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Loans and Convertible Notes Payable

(11) Loans and Convertible Notes Payable

	December 31, 2022									December 31, 2021
	Gross			Discount			Net			Gross			Discount			Net
Loan - Avenue [1]	$	11,923		$	(1,008	)	$	10,916		$	12,638		$	(1,645	)	$	10,993
Loan - Avenue [1] - Less Current Portion		(8,570	)		724			(7,846	)		(714	)		93			(621	)
Total - Loans Payable, Non-Current	$	3,353		$	(284	)	$	3,070		$	11,924		$	(1,552	)	$	10,372
Convertible Note Payable - Rosalind		2,000			—			2,000			2,000			—			2,000
Convertible Portion of Loan Payable - Avenue		3,000			(228	)		2,772			3,000			(361	)		2,639
Total - Convertible Notes Payable - Non-Current	$	5,000		$	(228	)	$	4,772		$	5,000		$	(361	)	$	4,639

[1]  The gross amount includes the 4.25% final payment of $637.5.

Remaining maturities of the Company’s loan and convertible note payables are as follows:

			Convertible
	Loans		Notes		Total
Year ended December 31, 2023	$	8,570	$	—	$	8,570
Year ended December 31, 2024		3,353		5,000		8,353
Total	$	11,923	$	5,000	$	16,923

Term Loan from Avenue Venture Opportunities Fund, L.P.

On August 6, 2021, the Company entered into a Loan and Security Agreement (the “Avenue Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (the “Lender,” or “Avenue”) for a term loan in an aggregate principal amount of up to $20.0 million (the “Avenue Loan”). The Avenue Loan bears interest at an annual rate equal to the greater of (a) the sum of 7.70% plus the prime rate as reported in The Wall Street Journal and (b) 10.95%. The interest rate at December 31, 2022 was 15.2%. The Avenue Loan is secured by all of the Company’s assets globally, including intellectual property. The Avenue Loan matures on August 1, 2024.

The initial tranche of the Avenue Loan is $15.0 million, including $4.0 million which has been funded into a restricted account and will be released upon achievement of (a)(x) positive FOCUS trial efficacy per the trial’s predefined Statistical Analysis Plan (SAP) (specifically the Overall Response Rate exceeds the prespecified threshold for success defined in the SAP by a statistically significant amount); and (y) based on data contained within the FOCUS trial database and appropriate for use with the U.S. Food and Drug Administration, safety and tolerability among FOCUS trial participants is within the range of currently approved and commonly used cytotoxic chemotherapeutic agents; and (b) raising subsequent net equity proceeds of at least $20.0 million. The Company may request an additional $5.0 million of gross proceeds between October 1, 2022 and December 31, 2022, with funding, subject to the approval of Avenue’s Investment Committee. Since the Company did not achieve a net equity raise of $20.0 million of gross proceeds, the Company did not request an additional $5.0 million of funding during the period from October 1, 2022 through December 31, 2022.

Up to $3.0 million of the principal amount of the Avenue Loan outstanding may be converted, at the option of Avenue, into shares of the Company’s common stock at a conversion price of $11.98 per share.

In connection with the Avenue Loan, the Company issued to Avenue a warrant (the “Avenue Warrant”) to purchase 127,755 shares of common stock at an exercise price per share equal to $0.01. The Avenue Warrant is exercisable until August 31, 2026.

The Company will make monthly interest-only payments during the first fifteen months of the term of the Avenue Loan, which could be increased to up to twenty-four months upon the achievement of specified performance milestones. Following the interest-only period, the Company will make equal monthly payments of principal plus interest until the maturity date, when all remaining principal outstanding and accrued interest must be paid. The interest only period ended in November 2022, and the Company began making principal payments on December 1, 2022. If the Company prepays the Avenue Loan, it will be required to pay (a) a prepayment fee of 3% if the Avenue Loan is prepaid during the interest-only period; and (b) a prepayment fee of 1% if the Avenue Loan is prepaid after the interest-only period. The Company must make an incremental final payment equal to 4.25% of the aggregate funding. On March 15, 2023, the Company returned to Avenue the $4.0 million held in the restricted cash to paydown a portion of the outstanding loan balance and reduce the monthly principal payments.

The Company paid an aggregate commitment fee of $150 at closing. Upon funding a second tranche of the Avenue Loan, the Lender will earn a 1.0% fee on the $5.0 million of incremental committed capital, for a total commitment fee of $200.

The Avenue Loan Agreement requires the Company to make and maintain representations and warranties and other agreements that are customary in loan agreements of this type. The Avenue Loan Agreement also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments.

The Company determined that the embedded conversion option associated with the Avenue Loan was not required to be bifurcated. The Company determined that the Avenue Warrant met the criteria to be equity-classified. The $637 value of the final payment was treated as original issue discount. The $1,171 relative fair value of the Avenue Warrant was credited to Additional Paid in Capital while it was debited as debt discount. Of the $563 of cash issuance costs, $519 was allocated to the Avenue Loan and was recorded as debit discount, while $44 was allocated to the Avenue Warrant and was debited to Additional Paid in Capital. Of the $2,327 of aggregate debt discount, $1,909 was allocated to the non-convertible portion of the Avenue Loan, while $418 was allocated to the convertible portion of the Avenue Loan. Aggregate debt discount amortization of $0.8 million was recorded during the year ended December 31, 2022. The Company also determined that the convertible portion of the Avenue Loan did not include a beneficial conversion feature, because the effective conversion price exceeded the commitment date market price of the Company’s common stock. Interest expense was $1.9 million for the year ended December 31, 2022.

The Avenue Warrant was valued at issuance at $1.3 million using the Black-Scholes option pricing method using the following assumptions:

	August 6, 2021
Contractual term (years)		5.07
Expected volatility		187.0	%
Risk-free interest rate		0.77	%
Expected dividends		0.00	%

Convertible Notes Payable

The Company has $2.0 million of principal outstanding related to Senior Secured Promissory Notes (the “Rosalind Notes”) which bear interest at 8% per annum. Pursuant to their original terms, the Rosalind Notes were convertible into Series E Preferred Stock at a price of $1,500 per share and were to mature on July 16, 2021.

On August 6, 2021, the Company executed an agreement to amend the Rosalind Notes to (a) reduce the conversion price to $1,198 per share of the Company’s Series E Convertible Preferred Stock; and (b) extend the maturity date to October 30, 2024.

In addition, in order to induce the Avenue Venture Opportunities Fund, L.P. to provide the Avenue Loan described above, the holders of the Rosalind Notes agreed to subordinate (a) all of the Company’s indebtedness and obligations to the holders; and (b) all of the holders’ security interest, to the Avenue Loan and Avenue’s security interest in the Company’s property.

Up to $3.0 million of the principal amount of the Avenue Loan outstanding may be converted, at the option of the Lender, into shares of the Company’s common stock at a conversion price of $11.98 per share.

Interest expense with respect to the Rosalind Notes was $160 for both years ended December 31, 2022 and 2021