| Subsequent Events | 9. Subsequent Events
2010 Stock Incentive Plan
In October 2017, the Company granted an aggregate of 738,392
options to purchase shares of common stock to employees with an
exercise price of $10.03.
Term Loan Facility and Promissory Note
On October 20, 2017, the Company entered into a loan and
security agreement with Silicon Valley Bank (“SVB”) to
provide for a $20.0 million term loan facility (the “term
loan facility”). Borrowings under the term loan facility bear
interest at a floating rate per annum equal to the WSJ prime rate
plus 1.50%; provided, however, that in an event of default, as
defined in the loan and security agreement, the interest rate
applicable to borrowings under such agreement will be increased by
5.0%. Under the agreement, the Company is required to make monthly
interest-only payments through November 1, 2019 and is
required to make 24 equal monthly payments of principal, plus
accrued interest, from November 1, 2019 through
October 1, 2021, when all unpaid principal and interest
becomes due and payable.
The Company may voluntarily prepay all, but not less than all, of
the outstanding principal at any time prior to the maturity date,
subject to a prepayment fee, which ranges from 0% to 2% of the
outstanding principal. A final payment of $1.6 million is due upon
the earlier to occur of the maturity of the loan, the acceleration
or prepayment of all outstanding principal or the termination of
the term loan facility.
Borrowings under the term loan facility are secured by a first
priority lien on all of the Company’s assets, excluding
intellectual property owned by the Company. The Company has agreed
to a negative pledge on its intellectual property and to grant a
security interest on its interest in its licenses from Penn if Penn
consents to such security interest. The term loan facility contains
customary events of default and affirmative and negative covenants,
including restrictions on the Company’s ability to pay
dividends and incur additional debt, but does not contain any
financial covenants.
In connection with the Company’s entry into the term loan
facility, the Company issued to SVB a warrant to purchase
14,064 shares of the Company’s common stock with an
exercise price per share of $5.484. The warrant has a ten-year term
and includes a put option pursuant to which, in the event of an
acquisition, change in control or dissolution or winding up of the
Company, an initial public offering or the expiration of the
warrant, SVB may require the Company to repurchase the warrant for
a total aggregate purchase price of $250,000.
On October 19, 2017, the Company issued and sold an unsecured
promissory note in the principal amount of $7.0 million to Golda
Darty Partners S.A. (“GDP”), an affiliate of one of the
Company’s stockholders. The promissory note bears interest at
a rate per annum of 8.0%, and is due and payable quarterly in
arrears on the 19th day of each April, July, October and January
beginning on January 19, 2018. The promissory note has a
maturity date of October 19, 2022. The promissory note is
contractually subordinated to the term loan facility with SVB.
In connection with the issuance and sale of the above promissory
note, the Company issued to GDP a warrant to purchase 93,764 shares
of the Company’s common stock at a price per share of $5.484,
which was exercised in whole in October 2017. The Company recorded
the fair value of the warrant in the aggregate amount of $430,160
as a discount to the promissory note. This amount is being accreted
as additional interest expense over the term of the promissory
note.
Reverse Stock Split
On October 27, 2017, the Company effectuated a l-for-2.133
reverse stock split of its outstanding common stock, which was
approved by the Company’s board of directors on
October 27, 2017. The reverse stock split resulted in an
adjustment to the preferred stock conversion prices of the
convertible preferred stock to reflect a proportional decrease in
the number of shares of common stock to be issued upon conversion
and in an adjustment to the number of shares of common stock
underlying options to purchase common stock and warrants, as well
as the related exercise prices.
2017 Stock Incentive Plan
In October 2017, the Company’s stockholders approved the 2017
Stock Incentive Plan (the “2017 Plan”), which became
effective on November 8, 2017. The 2017 Plan provides for the
grant of incentive stock options, non-statutory stock options,
stock appreciation rights, awards of restricted stock, restricted
stock units and other stock-based awards. The number of shares of
common stock reserved for issuance under the 2017 plan is the sum
of (i) 1,359,587 shares of Common Stock, plus (ii) an
additional number of shares of common stock equal to the sum of
(a) the number of shares of common stock reserved for issuance
under the 2010 equity incentive plan that remained available for
future issuance immediately prior to the effectiveness of the 2017
Plan, which was 299,567 shares, and (b) the number of shares
of common stock subject to outstanding awards under the 2010 equity
incentive plan upon effectiveness of the 2017 plan that expire,
terminate or are otherwise surrendered, cancelled, forfeited or
repurchased by us at their original issuance price pursuant to a
contractual repurchase right plus (iii) an annual increase, to
be added the first day of each fiscal year, beginning with the
fiscal year ending December 31, 2018 and continuing until, and
including, the fiscal year ending December 31, 2027, equal to
the lowest of 4,219,409 shares of common stock, 4.0% of the
number of shares of common stock outstanding on the first day of
the fiscal year and an amount determined by the board of directors.
The Company granted options to purchase an aggregate of 537,737
shares of common stock under the 2017 Plan in November 2017.
2017 Employee Stock Purchase Plan
In October 2017, the Company’s stockholders approved the 2017
Employee Stock Purchase Plan (the “2017 ESPP”), which
became effective on November 8, 2017. Under the 2017 ESPP the
Company may issue up to an aggregate of (i) 468,823 shares of
Common Stock, plus (ii) an annual increase to be added on the
first day of each fiscal year, beginning with the fiscal year
ending December 31, 2018 and continuing for each fiscal year
until, and including, the fiscal year ending December 31,
2027, equal to the least of (a) 937,646 shares of Common
Stock, (b) 1% of the outstanding shares on such date and
(c) an amount determined by the board of directors. No shares
have been issued from the 2017 ESPP.
Initial Public Offering
On November 13, 2017, the Company closed its IPO in which it
issued and sold 10,714,000 shares of its common stock at a price
per share of $14.00. The Company received net proceeds of $137.2
million after deducting underwriting discounts and commissions of
$10.5 million and offering costs of $2.3 million. Deferred issuance
costs of $783,695 have been incurred and are recognized as other
current assets in the September 30, 2017 condensed consolidated
balance sheet, of which $570,218 had been paid, as of
September 30, 2017. In addition, on December 13, 2017,
the Company issued and sold an additional 981,107 shares of its
common stock at the initial public offering price of $14.00 per
share pursuant to the underwriters’ partial exercise of their
option to purchase additional shares of common stock, which
resulted in net proceeds of approximately $12.8 million, after
underwriting discounts and commissions of $1.0 million.
Automatic Conversion of Preferred Stock
On November 13, 2017, upon the closing of the Company’s
IPO, all outstanding shares of the Company’s convertible
preferred stock converted into 30,070,034 shares of the
Company’s common stock.
Refundable Research and Development Credit
In November 2017, the Company received a refund of $1,291,300 from
the Australian tax office related to the 2016 Australian research
and development credit. |
