Debt | Debt 2020 2019 (In thousands) Principal Unaccreted Debt (Discount) Premium Fair Value Adjustment Net Principal Unaccreted Debt (Discount) Premium Fair Value Adjustment Net Convertible notes payable Senior convertible notes $ 30,020 $ — $ 23,367 $ 53,387 $ 66,000 $ — $ (15,376) $ 50,624 30,020 — 23,367 53,387 66,000 — (15,376) 50,624 Related party convertible notes payable Foris convertible note 50,041 — 73,123 123,164 — — — — Total 2014 Rule 144A convertible note — — — — 10,178 — — 10,178 50,041 — 73,123 123,164 10,178 — — 10,178 Loans payable and credit facilities Schottenfeld notes 12,500 (240) — 12,260 20,350 (1,315) — 19,035 Ginkgo note 12,000 — — 12,000 12,000 (3,139) — 8,861 Nikko notes 2,802 (759) — 2,043 14,318 (901) — 13,417 Other loans payable 1,227 — — 1,227 1,828 — — 1,828 28,529 (999) — 27,530 48,496 (5,355) — 43,141 Related party loans payable DSM notes 33,000 (2,443) — 30,557 33,000 (4,621) — 28,379 Naxyris note 23,914 (493) — 23,421 24,437 (822) — 23,615 Foris notes 5,000 — — 5,000 115,351 (9,516) — 105,835 61,914 (2,936) — 58,978 172,788 (14,959) — 157,829 Total debt $ 170,504 $ (3,935) $ 96,490 263,059 $ 297,462 $ (20,314) $ (15,376) 261,772 Less: current portion (77,437) (63,805) Long-term debt, net of current portion $ 185,622 $ 197,967 Future minimum payments under the debt agreements as of December 31, 2020 are as follows: Years ending December 31 Convertible Notes Loans Payable and Credit Facilities Related Party Convertible Notes Related Party Loans Payable and Credit Facilities Total 2021 $ 33,897 $ 4,249 $ — $ 31,823 $ 69,969 2022 — 14,769 59,578 40,940 115,287 2023 — 12,899 — — 12,899 2024 — 398 — — 398 2025 — 396 — — 396 Thereafter — 1,472 — — 1,472 Total future minimum payments 33,897 34,183 59,578 72,763 200,421 Less: amount representing interest (1) (3,877) (5,654) (9,537) (10,849) (29,917) Less: future conversion of accrued interest to principal — — — — — Present value of minimum debt payments 30,020 28,529 50,041 61,914 170,504 Less: current portion of debt principal (30,020) (1,495) — (25,000) (56,515) Noncurrent portion of debt principal $ — $ 27,034 $ 50,041 $ 36,914 $ 113,989 ______________ (1) Excluding net debt discount of $3.9 million that will be amortized to interest expense over the term of the debt. Exchange of Senior Convertible Notes On January 14, 2020, the Company completed the exchange of the Company’s $66 million Senior Convertible Notes (or the Prior Notes), pursuant to separate exchange agreements (the Exchange Agreements) with certain private investors (the Holders), for (i) new senior convertible notes in an aggregate principal amount of $51 million (the New Notes or Senior Convertible Notes), (ii) an aggregate of 2,742,160 shares of common stock (the Exchange Shares), (iii) rights (the Rights) to acquire up to an aggregate of 2,484,321 shares of common stock (the Rights Shares), (iv) warrants (the Warrants) to purchase up to an aggregate of 3,000,000 shares of common stock (the Warrant Shares) at an exercise price of $3.25 per share, with an exercise term of two years from issuance, (v) accrued and unpaid interest on the Senior Convertible Notes (payable on or prior to January 31, 2020) and (vi) cash fees in an aggregate amount of $1.0 million (payable on or prior to January 31, 2020). The Exchange Shares and Warrants were issued on January 14, 2020. The unpaid interest and cash fees were paid in accordance with the Exchange Agreements. The Rights were exercised by the Holder and common stock shares issued by the Company according to the terms of the Senior Convertible Notes on February 24, 2020. The New Notes have substantially similar terms as the Prior Notes, except under the New Notes (i) the requirement to redeem an aggregate principal amount of $10 million on December 31, 2019 was eliminated, (ii) the Company would be required to redeem the New Notes in an aggregate amount of $10 million following the receipt by the Company of at least $80 million of aggregate net cash proceeds from one or more financing transactions, and at a price of 107% of the amount being redeemed, (iii) the financing activity requirement was reduced such that the Company would be required to raise aggregate net cash proceeds of $50 million from one or more financing transactions by January 31, 2020, (iv) the Company would have until January 31, 2020 to comply with certain covenants related to the repayment, conversion or exchange into equity or amendment of certain outstanding indebtedness of the Company, and (v) the deadline for the Company to seek stockholder approval for the Holders to exceed a 19.99% stock exchange ownership limitation (the Stockholder Approval) would be extended from January 31, 2020 to March 15, 2020. Due to multiple changes in key provisions of the Prior Notes, the Company analyzed the before and after cash flows between the (i) fair value of the New Notes and (ii) reacquisition price of the Prior Notes resulting from the (A) decreased principal from $66 million to $51 million, (B) fair value of the Exchange Shares, (C) fair value of the Rights, (D) fair value of the Warrants and (E) cash fees to be paid prior to January 31, 2020 to determine whether these changes resulted in a modification or extinguishment of the Prior Notes. Based on the before and after cash flows of each note, the change was significantly different. Consequently, the Exchange Agreements were accounted for as a debt extinguishment of the Prior Notes and a new debt issuance of the New Notes. The Company recorded a $5.3 million loss upon extinguishment of debt in the three months ended March 31, 2020, which was comprised of the $4.1 million fair value of the Warrants (considered a non-cash fee paid to the lender), the $1.0 million cash fee and $0.2 million excess fair value of the Exchange Shares and the Rights Shares over the contractual value. See Note 6, “Stockholders’ Deficit” for further information on the accounting treatment of the Exchange Shares and the Rights Shares upon issuance of the New Notes. Also, see Note 3, “Fair Value Measurement” for more information regarding the valuation methodology used to determine the fair value of the Warrants. The Company elected to account for the New Notes at fair value, as of the January 14, 2020 issuance date. Management believes that the fair value option better reflects the underlying economics of the Senior Convertible Notes, which contain multiple embedded derivatives. Under the fair value election, changes in fair value will be reported in the consolidated statements of operations as "Gain (loss) from change in fair value of debt" in each reporting period subsequent to the issuance of the New Notes. For the three months ended March 31, 2020, the Company recorded a loss of $1.1 million, which is shown as Fair Value Adjustment in the table at the beginning of this Note 4. See Note 3, "Fair Value Measurement" for information about the assumptions that the Company used to measure the fair value of the Senior Convertible Notes. On February 18, 2020, the Company and the Holders entered into separate waiver and forbearance agreements, (the W&F Agreements), pursuant to which the Holders agreed to, for 60 days following the date of the W&F Agreement, except in case of early termination of the W&F Agreement or, solely with respect to the Stockholder Approval if the other defaults described below have been cured on or prior to the date that is 60 days following the date of the W&F Agreement, until May 31, 2020 (the W&F Period), and in each case subject to certain conditions to effectiveness contained in the W&F Agreement, (i) forbear from exercising certain of their rights and remedies with respect to certain defaults by the Company, including, but not limited to, the Company's failure, on or before January 31, 2020, (A) to receive aggregated net cash proceeds of not less than $50 million from one or more financing transactions, (B) to repay in full or convert into equity the $20.4 million of indebtedness outstanding under the Schottenfeld Credit Agreements (discussed under the Schottenfeld Forbearance Agreement below) or amend all such indebtedness outstanding to fit within the definition of permitted indebtedness of the New Notes, and certain other events of default, and (ii) waive any event of default for (A) violations of the minimum liquidity covenant since December 31, 2019 and (B) failure to obtain the Stockholder Approval prior to March 15, 2020. In addition, pursuant to the W&F Agreements, the Company and the Holders agreed that (i) the New Note amortization payment due on March 1, 2020 would be in the aggregate amount of $10.0 million (the Amortization Payment), split proportionally among the Holders, and that the Company would elect to pay such amortization payment in shares of Common Stock in accordance with the terms of the New Notes, provided however, that: (A) the Amortization Stock Payment Price (as defined in the New Notes) would be $3.00, (B) the Amortization Share Payment Period (as defined in the New Notes) with respect to the Amortization Payment would end on April 30, 2020 rather than March 31, 2020; and (C) in the event that Holder did not elect to receive the full Amortization Share Amount (as defined in the New Notes) during such Amortization Share Payment Period, then the Amortization Payment would be automatically reduced by the portion of such Amortization Payment not received by the Holder, (ii) there would be no amortization payment due on April 1, 2020, and (iii) the amortization payment due on May 1, 2020 would be in the aggregate amount of $8.9 million split proportionally among the Holders. The W&F Agreements were accounted for as a debt modification, as the before and after cash flows were not significantly different. Amendment to Senior Convertible Notes On May 1, 2020, the Company and the holders of the Senior Convertible Notes entered into separate amendments to the New Notes and the W&F Agreements (Note Amendment), pursuant to which the Company and the Holders agreed: (i) to amend the maturity date of the New Notes from September 30, 2022 to June 1, 2021 (Maturity Date); (ii) to remove from the New Notes all equity triggering provisions that allowed the Holders to convert the notes at a reduced conversion price in certain circumstances other than events of default; (iii) that the Company would no longer be required to redeem the New Notes in an aggregate amount of $10 million following the receipt by the Company of at least $80 million of aggregate net cash proceeds from one or more financing transactions; (iv) that interest payments would be due quarterly (as opposed to monthly), starting on August 1, 2020; (v) that an aggregate amortization payment of approximately $16.4 million (split proportionally among the Holders) would be due on or before the earlier of May 31, 2020 and the date on which the Company receives at least $50 million of aggregate net proceeds in an offering of securities (Amended May Amortization), an amortization payment of $5 million (to the largest Holder) would be due on December 1, 2020 unless the Company receives at least $50 million of aggregate net cash proceeds from one or more financing transactions after May 1, 2020, and no other amortization payment would be due prior to the Maturity Date; (vi) to reduce the conversion price of the New Notes from $5.00 to $3.50; (vii) to reduce the redemption price with respect to optional redemptions by the Company prior to October 1, 2020 to 100%, prior to December 31, 2020 to 105% and to 110% thereafter (as opposed to 115%), of the amount being redeemed; and (viii) that an aggregate of 2,836,364 shares of Common Stock held by the Holders would not be considered as Pre-Delivery Shares (issued in connection with the November 15, 2019 Senior Convertible Notes Due 2022 and as defined in the New Notes) and would be subject to certain selling restrictions until June 15, 2020, and that an aggregate of 1,363,636 Pre-Delivery Shares held by certain Holders would be promptly returned to the Company. These Pre-Delivery Shares were returned to the Company on May 5, 2020 and May 6, 2020. The Company paid $16.4 million on June 1, 2020 to satisfy the required amortization payment and is no longer required to make the $5.0 million amortization payment on December 1, 2020. On June 4, 2020, the Company released an additional 700,000 Pre-Delivery Shares to the largest Holder in connection with the Second Amendment to New Notes and the W&F Agreements. The Company recorded $10.5 million of additional interest expense, representing the fair value of the 3,536,364 Pre-Delivery Shares released to the Holders. Further, in connection with the Note Amendment, the Company and the Holders entered into certain warrant amendment agreements pursuant to which (i) the exercise price of the warrants issued on January 14, 2020 in connection with the Exchange of the Senior Convertible Notes was reduced to $2.87 per share, from $3.25, with respect to an aggregate of 2,000,000 warrant shares; (ii) the exercise price of a warrant to purchase 960,225 shares of the Company’s Common Stock issued to one of the Holders on May 10, 2019 was reduced to $2.87 per share, from $5.02, and the exercise term of such warrant was extended to January 31, 2022, from May 10, 2021; and (iii) the exercise term of a right to purchase 431,378 shares of the Company’s Common Stock issued to one of the Holders on January 31, 2020 was extended to January 31, 2022, from January 31, 2021. See Note 6, “Stockholders’ Deficit” for more information regarding the accounting treatment of these warrant modifications. The Company has elected to account for the Senior Convertible Notes at fair value, as of the issuance date. Management believes that the fair value option better reflects the underlying economics of the Senior Convertible Notes, which contain multiple embedded derivatives. Under the fair value election, changes in fair value will be reported in the consolidated statements of operations as "Gain (loss) from change in fair value of debt" in each reporting period subsequent to the issuance of the Senior Convertible Notes. For the year ended December 31, 2020, the Company recorded a loss of $38.7 million, which is shown as Fair Value Adjustment in the table at the beginning of this Note 4. See Note 3, "Fair Value Measurement" for information about the assumptions that the Company used to measure the fair value of the Senior Convertible Notes. 2014 Rule 144A Note Exchange and Extensions – Total, Related Party On March 11, 2020, the Company and Total entered into a Senior Convertible Note Maturity Extension Agreement (the Extension Agreement) due to the Company’s failure to pay the $10.2 million principal amount due under the December 20, 2019 reissued 2014 Rule 144A Convertible Notes that matured on January 31, 2020. The Extension Agreement resulted in the reissuance and extension of the December 20, 2019 promissory note to March 31, 2020. Under the terms of the extension agreement, the Company paid Total $1.5 million to satisfy all accrued but unpaid interest and to reduce the principal balance of the reissued note by $1.1 million. The reissued note: (i) had a maturity date of March 31, 2020, (ii) had a $9.1 million principal amount due, (iii) accrued interest at a rate of 12.0% per annum, and (iv) had terms substantially identical to the December 20, 2019 promissory note. The Extension Agreement was accounted for as a debt modification, as the before and after cash flows were not significantly different. On April 6, 2020, the Company and Total entered into a Senior Convertible Note Maturity Extension Agreement to extend the maturity date of the 2014 Rule 144A Convertible Note to April 30, 2020 and reduce the conversion price of the 2014 Rule 144A Convertible Note to $2.87 per share. Effective April 30, 2020, the Company and Total entered into a subsequent Senior Convertible Note Maturity Extension Agreement to extend the maturity date of the 2014 Rule 144A Convertible Note to the earlier of the day the Company receives cash proceeds from any private placement of its equity and/or equity-linked securities, and May 31, 2020. The 2014 Rule 144A Convertible Note was reissued as a result of such extensions with terms substantially identical to the previously issued promissory notes. On June 2, 2020, Total elected to convert all the outstanding principal and interest due under the 2014 Rule 144A Convertible Note totaling $9.3 million into 3,246,489 shares of common stock. Upon conversion, the $9.3 million debt principal and interest balance and the $6.5 million derivative liability balance related to the fair value of the conversion option was derecognized into additional paid in capital. See Note 3, “Fair Value Measurement” for more information regarding the accounting treatment of the embedded conversion option and subsequent conversion price reduction. Foris Debt Transactions—Related Party The Company has loans payable to Foris Ventures, LLC (Foris) with a total principal balance of $55.0 million at December 31, 2020. Foris is an entity affiliated with director John Doerr of Kleiner Perkins Caufield & Byers, a current stockholder, and an owner of greater than five percent of the Company’s outstanding common stock. The notes payable to Foris are comprised of the following (amounts in thousands): Description Date Issued Original Loan Amount Balance at December 31, 2020 Interest Rate per Annum Maturity Date Foris Convertible Note June 1, 2020 $ 50,041 $ 50,041 6% July 1, 2022 Foris $5M Note April 29, 2020 5,000 5,000 12% December 31, 2022 $ 55,041 $ 55,041 Debt Equitization – Foris, Related Party At December 31, 2019, the Company had two loans payable to Foris with a total principal balance of $110.0 million, excluding capitalized interest of $5.3 million. The first loan (Foris $19 million Note) was a $19 million unsecured borrowing that accrued interest at 12% per annum and matures on January 1, 2023. The second loan (Foris LSA) is a $91.0 million secured borrowing that accrues interest at 12.5% per annum and matured on March 1, 2023. The Foris LSA required quarterly principal payments and monthly interest payments. See Amendment No. 1 to Amended and Restated LSA — Foris, Related Party below for more information on the maturity date and payment terms of the Foris LSA. On January 31, 2020, the Company completed a series of equity transactions with Foris that resulted in the Company (i) reducing its aggregate debt principal with Foris by $60.0 million and accrued interest and fees due to Foris by $9.9 million (including $5.4 million of capitalized interest), (ii) issuing an aggregate of 19,287,780 shares of common stock as a result of the exercise of outstanding warrants at a weighted average exercise price of approximately $2.84 per share for an aggregate of $54.8 million, (iii) issuing an aggregate of 5,279,171 shares of common stock at $2.87 per share for an aggregate of $15.1 million in a private placement, and (iv) issuing rights (the Rights) to purchase an aggregate of 8,778,230 shares of common stock, at an exercise price of $2.87 per share, for an exercise term of 12 months. The exercise price of the outstanding warrants and the purchase price of the private placement common stock was paid through the cancellation of principal and accrued interest and fees totaling $69.9 million. See Note 6, “Stockholders’ Deficit” for information on the accounting treatment of the various equity related instruments. As a result of the transaction described above, on January 31, 2020, the principal balance of the Foris $19 million Note and accrued but unpaid interest was fully settled through the exercise price of certain of outstanding warrants. Upon settlement of the Foris $19 million Note, the Company recorded a $5.7 million loss upon extinguishment debt, which was comprised of $6.1 million of unaccreted discount, less the $0.4 million fair value of the extinguished bifurcated derivative liability. In addition, this series of equity transactions directly impacted the cash flows of the Foris LSA and, as a result, the Company analyzed the before and after cash flows resulting from the significant decrease in principal, the warrant exercise price modifications and the issuance rights to purchase additional shares of common stock at $2.87, to determine whether these changes result in a modification or extinguishment of the Foris LSA. Based on the before and after cash flows, the change was significantly different. Consequently, the accelerated paydown of the Foris LSA loan balance through the exercise price of the remaining outstanding warrants and the purchase price of the private placement common stock was accounted for as a debt extinguishment and a new debt issuance. The Company recorded a $10.4 million loss upon extinguishment of debt, which was comprised of $8.9 million fair value of the Rights and $3.1 million of unaccreted discount, less the $1.6 million fair value of the extinguished bifurcated derivative liability. See Note 6, “Stockholders’ Deficit” for further information on the valuation methodology and related accounting treatment of the Rights. In recording the new debt issuance, the Company capitalized $0.7 million for the initial fair value of the embedded mandatory redemption feature as a debt discount to be amortized to interest expense under the effective interest method over the term of the remaining term of the new debt issuance. Amendment No. 1 to Foris LSA (Foris Convertible Note) — Related Party On June 1, 2020, the Company and Foris entered into Amendment No. 1 to the Foris LSA (LSA Amendment), pursuant to which: (i) the interest rate applicable to the then outstanding secured indebtedness (Secured Indebtedness) was amended from and after June 1, 2020 to a per annum rate of interest equal to 6.00% (previously 12.5%), (ii) the Company shall not be required to make any interest payments outstanding as of May 31, 2020 or accruing thereafter prior to July 1, 2022 (previously due monthly), (iii) the quarterly principal amortization payments were eliminated and all outstanding principal under the LSA Amendment became due on July 1, 2022, and (iv) Foris shall have the option, in its sole discretion, to convert all or portion of the Secured Indebtedness, including accrued interest, into shares of common stock at a $3.00 conversion price (Conversion Option), subject to the Company’s stockholder approval to issue shares of common stock upon exercise of the Conversion Option in accordance with applicable rules and regulations of the Nasdaq Stock Market, including Nasdaq Listing Standard Rule 5635(d); for which stockholder approval was obtained on August 14, 2020. The Company analyzed the before and after cash flows resulting from the LSA Amendment to determine whether these changes result in a modification or extinguishment of the Foris LSA. Based on the before and after cash flows, the change was significant. Consequently, the LSA Amendment was accounted for as a debt extinguishment and a new debt issuance. The Company elected to account for the new debt issuance under the fair value option and recorded a $22.0 million loss upon extinguishment of the Foris LSA, representing the difference between the carrying value of the Foris LSA prior to the modification and the $72.1 million reacquisition price of the Foris LSA (which is the fair value of the LSA Amendment with the conversion option). Management believes the fair value option best reflects the underlying economics of the LSA Amendment, which contains embedded derivatives, a conversion option requiring bifurcation and a beneficial conversion feature. Under the fair value election, changes in fair value will be reported in the consolidated statements of operations as "Gain (loss) from change in fair value of debt" in each reporting period subsequent to the issuance of the LSA Amendment (Foris Convertible Note). The Company also recorded gains of $23.1 million and $13.6 million for the three and nine months ended September 30, 2020 related to the change in fair value of the LSA Amendment (Foris Convertible Note) after the June 1, 2020 issuance date, which is shown as Fair Value Adjustment in the table at the beginning of this Note 4. See Note 3, "Fair Value Measurement" for information about the assumptions that the Company used to measure the fair value of the LSA Amendment (Foris Convertible Note). Foris $5 Million Note – Related Party On April 29, 2020, the Company borrowed $5.0 million from Foris, an entity affiliated with director John Doerr and which beneficially owns greater than 5% of the Company’s outstanding common stock. The note is unsecured and accrues interest at 12% per annum. Principal and interest will be payable at maturity, on December 31, 2022. Naxyris LSA – Related Party On August 14, 2019, the Company, certain of the Company’s subsidiaries (the Subsidiary Guarantors) and, as lender, Naxyris, an existing stockholder of the Company and an investment vehicle owned by Naxos Capital Partners SCA Sicar, which is affiliated with NAXOS S.A.R.L. (Switzerland), for which director Carole Piwnica serves as director, entered into a Loan and Security Agreement (the Naxyris Loan Agreement) to make available to the Company a secured term loan facility in an aggregate principal amount of up to $10.4 million (the August 2019 Naxyris Loan), which the Company borrowed in full on August 14, 2019. In connection with the funding of the August 2019 Naxyris Loan, the Company paid Naxyris an upfront fee of $0.4 million. Loans under the August 2019 Naxyris Loan have a maturity date of July 1, 2022 and accrue interest at a rate per annum equal to the greater of (i) 12% or (ii) the rate of interest payable with respect to any indebtedness of the Company plus 25 basis points, which interest will be payable monthly in arrears, provided that all interest accruing from and after August 14, 2019 through December 1, 2019 shall be due and payable on December 15, 2019. The obligations of the Company under the Naxyris Loan Agreement are (i) guaranteed by the Subsidiary Guarantors and (ii) secured by a perfected security interest in substantially all of the assets of the Company and the Subsidiary Guarantors (the Collateral), junior in payment priority to Foris subject to certain limitations and exceptions, as well as the terms of the Intercreditor Agreement. Mandatory prepayments of the outstanding amounts under the August 2019 Naxyris Loan will be required upon the occurrence of certain events, including asset sales, a change in control, and the incurrence of additional indebtedness, subject to certain exceptions and reinvestment rights. Outstanding amounts under the August 2019 Naxyris Loan must also be prepaid to the extent that the borrowing base exceeds the outstanding principal amount of the loans under the August 2019 Naxyris Loan. In addition, the Company may at its option prepay the outstanding principal amount of the loans under the August 2019 Naxyris Loan in full before the maturity date. Any prepayment of the loans under the August 2019 Naxyris Loan prior to the maturity date, whether pursuant to a mandatory or optional prepayment, is subject to a prepayment charge equal to one year’s interest at the then-current interest rate for the August 2019 Naxyris Loan. Upon any repayment of the loans under the August 2019 Naxyris Loan, whether on the maturity date or earlier pursuant to an optional or mandatory prepayment, the Company will pay Naxyris an end of term fee based on a percentage of the aggregate amount borrowed. In addition, (i) the Company will be required to pay a fee equal to 6% of any amount the Company fails to pay within three business days of its due date and (ii) any interest that is not paid when due will be added to principal and will accrue compound interest at the applicable rate. The August 2019 Naxyris Loan contains customary affirmative and negative covenants and financial covenants, including covenants related to minimum revenue, minimum liquidity and minimum asset coverage requirements. The August 2019 Naxyris Loan also contained a mandatory redemption feature that was not clearly and closely related to the debt host instrument, and thus, required bifurcation and separate accounting as a derivative liability. The embedded feature had an initial fair value of $0.3 million and was recorded as a derivative liability and a debt discount to be amortized to interest expense under the effective interest method over the term of the August 2019 Naxyris Loan. See Note 3, “Fair Value Measurement” for information regarding the fair value measurement and subsequent accounting for the embedded mandatory redemption feature. In connection with the entry into the August 2019 Naxyris Loan, on August 14, 2019 the Company issued to Naxyris a warrant (the Naxyris LSA Warrant) to purchase up to 2.0 million shares of common stock at an exercise price of $2.87 per share, with an exercise term of two years from issuance. See Note 6, “Stockholders’ Deficit” for information regarding the fair value measurement and issuance of this warrant. The warrant had a $4.0 million fair value and a $3.0 million relative fair value after allocating the August 2019 Naxyris Loan proceeds to the $0.3 million fair value of the embedded mandatory redemption feature contained in the August 2019 Naxyris Loan, and allocating on a residual basis, to the relative fair values of the August 2019 Naxyris Loan and the Naxyris LSA Warrant. The $3.0 million relative fair value of the Naxyris LSA Warrant was recorded as an increase to additional paid in capital and as a debt discount to be amortized to interest expense under the effective interest method over the term of the August 2019 Naxyris Loan. In addition to the $3.0 million relative fair value of the Naxyris LSA Warrant and the $0.3 million fair value of the embedded mandatory redemption feature, the August 2019 Naxyris Loan contained $0.4 million original issue discount, $0.5 million mandatory end of term fee and $0.3 million of issuances costs, all totaling $4.5 million. All such amounts were recorded as a debt discount to be amortized to interest expense over the term of the August 2019 Naxyris Loan. Naxyris LSA Amendment – Related Party On October 28, 2019, the Company, the Subsidiary Guarantors and Naxyris amended and restated the Naxyris Loan Agreement (the A&R Naxyris LSA), pursuant to which the maximum loan commitment of Naxyris under the Naxyris Loan Agreement was increased by $10.4 million. On October 29, 2019, the Company borrowed an additional $10.4 million (the October 2019 Naxyris Loan) from Naxyris under the A&R Naxyris LSA, which is subject to the terms and provisions of the A&R Naxyris LSA, including the lien on substantially all of the assets of the Company and the Subsidiary Guarantors. Also, under the terms of A&R Naxyris LSA, the Company owes a 5% end of term fee on the October 2019 Naxyris Loan amount and a $2.0 million term loan fee, both of which are due at July 1, 2022 maturity or upon full repayment of the amounts borrowed under the A&R Naxyris LSA. Also, the Company paid Naxyris an upfront fee of $0.4 million at the funding date of the October 2019 Naxyris Loan. After giving effect to the October 2019 Naxyris Loan amount, there is $24.4 million aggregate principal amount of loans outstanding under the A&R Naxyris LSA. Also, in connection with the entry into the A&R Naxyris LSA, on October 28, 2019 the Company issued to Naxyris a warrant to purchase up to 2.0 million shares of common stock, at an exercise price of $3.87 per share, with an exercise term of two years from issuance (the October 2019 Naxyris Warrant). The warrant had a $3.6 million fair value and a $2.8 million relative fair value after allocating the October 2019 Naxyris Loan proceeds to the $0.5 million fair value of the embedded mandatory redemption feature contained in the October 2019 Naxyris Loan, and allocating on a residual basis, to the relative fair values of the October 2019 Naxyris Loan and the October 2019 Naxyris Warrant. The $2.8 million relative fair value of the October 2019 Naxyris Warrant was recorded as an increase to additional paid in capital and as a loss on debt extinguishment (as discussed below). Due to changes in key terms of the Naxyris Loan Agreement through the addition of the October 2019 Naxyris Loan, the Company analyzed the before and after cash flows under the August 2019 Naxyris Loan and October 2019 Naxyris Loan in order to determine if these changes result in a modification or extinguishment of the original Naxyris Loan Agreem |