|3 Months Ended|
Mar. 31, 2019
|Debt Disclosure [Abstract]|
Horizon and Molteni Loan
In July 2017, we entered into a venture loan and security agreement, which was subsequently amended in February 2018, (“Horizon Loan Agreement”) with Horizon Technology Finance Corporation (“Horizon”).
Repayment of the loans is on an interest-only basis through December 31, 2019, followed by monthly payments of principal and accrued interest for the balance of the 46-month term. The loans bear interest at a floating coupon rate of one-month LIBOR (floor of 1.10%) plus 8.40%. A final payment equal to 5.0% of each loan tranche will be due on the scheduled maturity date for such loan. In addition, if we repay all or a portion of the loan prior to the applicable maturity date, we will pay Horizon a prepayment penalty fee, based on a percentage of the then outstanding principal balance, equal to 4% if the prepayment occurs during the interest-only payment period, 3% if the prepayment occurs during the 12 months following such period, and 2% thereafter.
In connection with the Horizon Loan Agreement, we issued warrants to purchase an aggregate of 366,668 shares of our common stock with an exercise price per share of $1.50 associated with the Horizon Loan Agreement to Horizon.
In March 2018, we entered into an Amended and Restated Venture Loan and Security Agreement (the “Restated Loan Agreement”) with Horizon and Molteni pursuant to which Horizon assigned approximately $2.4 million of the $4.0 million outstanding principal balance of the loan to Molteni and Molteni was appointed as the collateral agent and assumed majority and administrative control of the loan. Under the Restated Loan Agreement, Molteni has the right to convert its portion of the debt into shares of our common stock at a conversion price of $7.20 per share and is required to effect this conversion of debt to equity if we complete an equity financing resulting in gross proceeds of at least $10.0 million at a price per share of common stock in excess of $7.20 and repay the $1.6 million balance of Horizon’s loan amount. In connection with the Restated Loan Agreement, we issued warrants to purchase an aggregate of 6,667 shares of our common stock with an exercise price per share of $7.20 associated with the Restated Loan Agreement to Horizon. As of March 31, 2019, loan from Molteni was convertible into 333,333 shares of our common stock under the Restated Loan Agreement.
As of March 31, 2019, the outstanding loan under the Restated Loan Agreement was approximately $3.9 million, net of debt discount of $0.1 million, of which approximately $0.7 million was recorded within current portion of long-term debt and the remainder within long-term debt in our condensed balance sheet.
In consideration of Molteni’s entry into the Restated Loan Agreement and the Purchase Agreement, on March 21, 2018, we entered into a rights agreement (the “Rights Agreement”) with Molteni pursuant to which we agreed to (i) issue Molteni seven-year warrants to purchase 90,000 shares of our common stock at an exercise price of $7.20 per share (the “Molteni Warrants”), (ii) provide Molteni customary demand and piggy-back registration rights with respect to the shares of common stock issuable upon conversion of its loan and exercise of the Molteni Warrants, (iii)designate one member of our board of directors following conversion of the loan in full
and (iv) provide board observer rights to Molteni if it has not designated a board nominee as well as certain information rights.
Molteni Convertible Loan
In connection with the Amendment to the Molteni Purchase Agreement (see Note 4), the Molteni Convertible Loan will convert automatically into shares of our common stock upon the issuance of marketing approval for Probuphine by the EMA at a conversion price per share equal to the lower of (i) the closing price on the loan funding date ($3.42 per share) or (ii) the closing price on the conversion date. In the event the EMA has not granted marketing approval by December 31, 2019, the Molteni Convertible Loan will become due and payable, together with accrued interest at the rate of one-month LIBOR (to the extent in excess of 1.10%) plus 9.50% per annum. Based on the closing stock price of our common stock at March 31, 2019, the Molteni Convertible Loan, including the unpaid accrued interest, was convertible into 374,456 shares of our common stock as of March 31, 2019.
As of March 31, 2019, the outstanding Molteni Convertible Loan was approximately $0.5 million, net of debt discount of approximately $0.1 million, which was recorded within current portion of long-term debt in our condensed balance sheet.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef