INDEBTEDNESS

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

INDEBTEDNESS

13. INDEBTEDNESS

2024 Convertible Notes

On November 14, 2017, the Company issued $570.0 million senior notes due on November 15, 2024. The 2024 Notes were issued at face value and bear interest at the rate of 1.50% per annum, payable semi-annually in cash on each May 15 and November 15, commencing on May 15, 2018. The 2024 Notes contain customary covenants and events of default, occurrence of which permits the certain holders to accelerate all outstanding obligations, including principal and interest. The Company incurred $10.6 million of offering costs, which represents the total debt discount on the 2024 Notes at issuance. The debt discount is amortized under the effective interest method and recorded as additional interest expense over the life of the 2024 Notes.

Upon conversion, the Company may pay cash, shares of its common stock or a combination of cash and stock, as determined by the Company in its discretion. The 2024 Notes may be convertible into 7,763,552 shares of the Company’s common stock under certain circumstances prior to maturity at a conversion rate of 13.621 shares per $1,000 principal amount of the 2024 Notes, which represents a conversion price of $73.42 per share, subject to adjustment under certain conditions.

To minimize the impact of potential dilution upon conversion of the 2024 Notes, the Company separately entered into capped call transactions with certain counterparties. The capped calls have a strike price of $73.42 and a cap price of $104.88 and are exercisable when and if the 2024 Notes are converted. If, upon conversion of the 2024 Notes, the price of the Company’s common stock is between the strike price and the cap price of the capped calls, the counterparties will deliver shares of the Company’s common stock and/or cash with an aggregate value equal to the difference between the price of the Company’s common stock at the conversion date and the strike price, multiplied by the number of shares of the Company’s common stock related to the capped calls being exercised. The Company paid $50.9 million for these capped calls transactions, which was recorded as additional paid-in capital.

Upon adoption of ASU 2020-06, the 2024 Notes are accounted for as a single liability measured at its amortized cost. The cumulative effect of the accounting change as of January 1, 2021 increased the carrying amount of the convertible notes by $96.8 million, reduced the accumulated deficit by $60.2 million and reduced additional paid-in capital by $157.0 million. Upon adoption of ASU 2020-06, the effective interest rate on the liability component of the 2024 Notes for the year ended December 31, 2021 was 1.9%. The effective interest rate on the liability component of the 2024 Notes for each of the years ended December 31, 2020 and 2019 was 6.9%. Interest expense of the 2024 Notes was reduced by $22.4 million for the year ended December 31, 2021 as a result of adoption of this guidance. For the years ended December 31, 2021, 2020 and 2019, the interest expense related to the 2024 Notes was $10.7 million, $31.4 million and $29.9 million, respectively.

December 2019 Term Loan

On December 13, 2019, the Company entered into a loan agreement (the “Credit Agreement”) which provides a term loan (“December 2019 Term Loan”) of $500.0 million with Biopharma Credit PLC and Biopharma Credit Investments V (Master) LP (collectively, the “Lenders”). The December 2019 Term Loan has two tranches: A and B, each of which had an initial loan amount of $250.0 million. On September 24, 2020, the Company entered into a first amendment to Credit Agreement (the “Amendment”),which increased the aggregate principal amount of tranche B of the December 2019 Term Loan from $250.0 million to $300.0 million and revised certain fees. Tranche A and B of the December 2019 Term Loan were drawn down on December 20, 2019 and November 2, 2020 and will mature on December 20, 2023 and December 31, 2024, respectively, when the principal amount of the loan will become

due. Borrowings under the Credit Agreement bear interest at a rate per annum equal to 8.5%, which shall be payable quarterly in arrears. The Company may voluntarily prepay, in whole or in part, the outstanding balance under the December 2019 Term Loan at any time after the tranche A closed but may be obligated to make additional financial considerations to the Lenders.

Upon draw-down of tranche A and B, the Company received net proceeds of $244.9 million and $291.1 million, net of debt discounts of $9.4 million and $14.9 million relating to fees payable to the Lenders, respectively. Of the fees payable to the Lenders related to tranche A and B, $5.0 million and $6.0 million are expected to be paid on December 20, 2023 and December 31, 2024, respectively. The debt discounts are being treated as a reduction to the carrying value of tranche A and B of the December 2019 Term Loan and amortized as interest expense over the term of the loan based on an effective interest method. Debt issuance costs associated with the draw-down of tranche A and B were $0.7 million and less than $0.1 million, respectively.

As of December 31, 2021, the Company recorded approximately $1,096.9 million as long-term debt on the consolidated balance sheets. For the years ended December 31, 2021, 2020 and 2019, the Company recorded $63.5 million, $59.9 million and $30.7 million of interest expense, respectively.

The following table summarizes the Company’s debt facilities for the periods indicated:

	As of December 31,
	2021			2020
	(in thousands)
Principal amount of the 2024 Notes	$	569,993		$	569,993
Unamortized discount - equity component		—			(98,721	)
Unamortized discount - debt issuance costs		(6,320	)		(6,510	)
Net carrying value of 2024 Notes		563,673			464,762
Principal amount of the 2019 Term Loan		550,000			550,000
Unamortized discounts		(16,797	)		(22,269	)
Net carrying value of 2019 Term Loan		533,203			527,731
Total carrying value of debt facilities	$	1,096,876		$	992,493
Fair value of 2024 Notes	$	846,138		$	1,394,249
Fair value of 2019 Term Loan		576,085			550,000
Total fair value of debt facilities	$	1,422,223		$	1,944,249

The fair value of the 2024 Notes is based on open market trades and is classified as Level 1 in the fair value hierarchy. The fair value of the December 2019 Term Loan is classified as Level 2 in the fair value hierarchy and is determined using a discounted cash flow analysis with market interest rates adjusted for credit risk as a significant input.

The following table summarizes the total gross payments due under the Company’s debt arrangements:

	As of December 31, 2021
	(in thousands)
2022	$	—
2023		250,000
2024		869,993
2025		—
2026		—
Thereafter		—
Total payments	$	1,119,993

The aggregate annual maturities of long-term debt and interest during the years ending December 31, 2022, 2023 and 2024 are $55.9 million, $305.3 million and $903.4 million, respectively.