rdus-20220331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 001-35726

Radius Health, Inc.

(Exact name of registrant as specified in its charter)


Delaware						80-0145732
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

22 Boston Wharf Road, 7th Floor

Boston, Massachusetts 02210

(Address of Principal Executive Offices and Zip Code)

(617) 551-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	RDUS	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of the registrant’s Common Stock, $0.0001 par value per share, outstanding as of May 2, 2022: 47,570,107 shares

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RADIUS HEALTH, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2022

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PART I FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets as of Mar ch 31, 2 022 and December 31, 202 1	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 3 1 , 202 2 and 2021	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31 , 202 2 and 20 21	6
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31 , 202 2 and 202 1	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29

PART II OTHER INFORMATION		30

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	31

SIGNATURES		32

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PART I— FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Radius Health, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share and per share amounts)


	March 31, 2022		December 31, 2021
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	71,615	$	111,533
Restricted cash	567		567

Accounts receivable, net	30,280		23,355
Inventory	13,296		11,373
Prepaid expenses	16,273		10,050
Other current assets	13,738		16,201
Total current assets	145,769		173,079

Property and equipment, net	763		647
Intangible assets	4,787		4,986
Right of use assets - operating leases	981		835
Other assets	1,848		1,995
Total assets	$	154,148	$	181,542

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	15,791	$	17,625
Accrued expenses and other current liabilities	64,164		76,549

Operating lease liability, current	508		613
Total current liabilities	80,463		94,787
Convertible notes payable	190,686		190,479
Term loan	148,473		148,265
Operating lease liability, long term	473		315
Total liabilities	420,095		433,846

Stockholders’ equity (deficit):
Common stock, 0.0001 par value; 200,000,000 shares authorized, 47,564,764 shares and 47,359,573 shares issued and outstanding at March 31, 2022 and December 31, 2021	5		5
Additional paid-in-capital	1,120,299		1,115,672
Accumulated other comprehensive income	6		—
Accumulated deficit	(1,386,257)		(1,367,981)
Total stockholders’ equity (deficit)	$	(265,947)	(252,304)
Total liabilities and stockholders’ equity (deficit)	$	154,148	$	181,542

See accompanying notes to unaudited condensed consolidated financial statements.

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Radius Health, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited, in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2022		2021
REVENUES:
Product revenue, net	$	42,958	$	45,261
License revenue	200		11,000
Total revenue	$	43,158	$	56,261
OPERATING EXPENSES:
Cost of sales - product	4,060		3,925
Cost of sales - intangible amortization	200		200
Research and development, net of amounts reimbursable (a)	22,697		31,440
Selling, general and administrative	30,048		34,097

Loss from operations	(13,847)		(13,401)
OTHER INCOME (EXPENSE):
Other income (expense)	379		(1)
Interest expense	(4,822)		(4,364)
Interest income	14		57
Gain on extinguishment of debt	—		1,960
NET LOSS	$	(18,276)	$	(15,749)
OTHER COMPREHENSIVE LOSS:
Foreign currency gain	6		—
Unrealized loss from available-for-sale debt securities	—		(21)
COMPREHENSIVE LOSS	$	(18,270)	$	(15,770)
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS - BASIC AND DILUTED (Note 7)	$	(18,276)	$	(15,749)
LOSS PER SHARE:
Basic and diluted	$	(0.39)	$	(0.34)

WEIGHTED AVERAGE SHARES:
Basic and diluted	47,441,821		46,981,016

(a) Amounts reimbursable were $9.1 million and $14.3 million for the three months ended March 31, 2022 and 2021, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

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Radius Health, Inc.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited, in thousands, except share and per share amounts)


	Stockholders’ Equity (Deficit)
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Amount		Amount		Amount		Amount
Balance at December 31, 2020	46,779,479	$	5	$	1,222,137	$	21	$	(1,345,822)	$	(123,659)
Adjustment due to adoption of ASU 2020-06				(134,450)				48,017		(86,433)
Net loss								(15,749)		(15,749)
Unrealized loss from available-for-sale securities						(21)				(21)
Vesting of restricted shares	202,018									—
Exercise of options	193,300			3,764						3,764


Issuance of common stock upon purchase by employee stock purchase plan	66,301			678						678

Share-based compensation expense				5,410						5,410
Balance at March 31, 2021	47,241,098	$	5	$	1,097,539	$	—	$	(1,313,554)	$	(216,010)

Balance at December 31, 2021	47,359,573	$	5	$	1,115,672	$	—	$	(1,367,981)	$	(252,304)

Net loss								(18,276)		(18,276)

Foreign currency gain						6				6
Vesting of restricted shares	139,056									—

Share-based compensation expense related to share-based awards for employee stock purchase plan				113						113
Issuance of common stock upon purchase by employee stock purchase plan	66,135			482						482

Share-based compensation expense				4,032						4,032
Balance at March 31, 2022	47,564,764	$	5	$	1,120,299	$	6	$	(1,386,257)	$	(265,947)

See accompanying notes to unaudited condensed consolidated financial statements.

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Radius Health, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Three Months Ended March 31,
	2022		2021
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss	$	(18,276)	$	(15,749)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	387		251
Amortization of premium/discount on marketable securities, net	—		19
Amortization of debt discount and debt issuance costs	415		358


Share-based compensation	4,145		5,410

Gain on extinguishment of debt	—		(1,960)

Changes in operating assets and liabilities:
Inventory	(1,923)		(256)
Accounts receivable, net	(6,925)		(5,995)
Prepaid expenses	(6,223)		(1,012)
Other current assets	2,463		(7,465)
Operating lease right of use assets	150		358

Accounts payable	(1,828)		(2,143)
Deferred revenue	—		(1,000)
Accrued expenses and other current liabilities	(12,385)		10,693
Lease liability, operating leases	(243)		(622)

Net cash used in operating activities	(40,243)		(19,113)
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of property and equipment	(157)		—


Sales and maturities of marketable securities	—		23,240
Net cash provided by investing activities	(157)		23,240
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from exercise of stock options	—		3,764
Proceeds from issuance of term loan, net of issuance costs	—		122,687


Repurchase of convertible notes	—		(108,568)
Proceeds from issuance of shares under employee stock purchase plan	482		678
Net cash provided by financing activities	482		18,561
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(39,918)		22,688
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	112,100		92,003
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	72,182	$	114,691
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	5,797	$	4,936

Cash paid for amounts included in the measurement of operating lease liabilities	$	253
Right of use assets obtained in exchange for operating lease liability	$	488

See accompanying notes to unaudited condensed consolidated financial statements.

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Radius Health, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

Radius Health, Inc. (“Radius,” the “Company,” “us,” “our” or “we”) is a global biopharmaceutical company focused on addressing unmet medical needs in the areas of bone health, neuroscience, and oncology. In April 2017, the Company’s first commercial product, TYMLOS (abaloparatide) injection, was approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture, multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy. We are also developing certain assets we acquired related to formulations of cannabidiol related to the oral administration of a solution of CBD for therapeutic use in humans or animals (“RAD011”), for which the Company intends to seek FDA approval for a Phase 2/3 trial for treatment of hyperphagia behavior and weight loss in patients with Prader Willi syndrome (“PWS”). In October 2021, together with our licensee, Berlin-Chemie AG, a company of the Menarini Group (“Berlin-Chemie”), we announced the receipt of positive top-line results from the EMERALD Phase 3 study of our investigational product candidate elacestrant, a selective estrogen receptor degrader (“SERD”). Berlin-Chemie holds an exclusive, worldwide license to develop and commercialize products containing elacestrant.

The Company is subject to risks common to companies in its industry including, but not limited to, the dependence on revenues from a single commercialized product, competition, uncertainty about clinical trial outcomes and regulatory approvals, uncertainties relating to pharmaceutical pricing reimbursement, uncertain protection of proprietary technology and potential product liability. As of March 31, 2022, the Company had an accumulated deficit of $1,386.3 million, and total cash and cash equivalents of $71.6 million.

Based upon its cash and cash equivalents balance and the $25.0 million secured revolving credit facility available to the Company under its Revolving Credit Agreement with MidCap Financial Trust as discussed in Note 6, “Term Loan and Credit Facility” as of March 31, 2022, the Company believes that, prior to the consideration of revenue from the potential future sales of any of its investigational products that may receive regulatory approval or proceeds from partnering and/or collaboration activities, it has sufficient capital to fund its commercial operations, development plans, and other operational activities for at least one year from the date of this filing. The Company expects to finance its ongoing and future operations with its product revenue, existing cash and cash equivalents, or through strategic financing opportunities that could include, but are not limited to collaboration agreements or the incurrence of debt. However, there is no guarantee that any strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements and the related disclosures of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included.

When preparing financial statements in conformity with U.S. GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. Subsequent events have been evaluated up to the date of issuance of these financial statements. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes, which are contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022.

Significant Accounting Policies—The significant accounting policies identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 that require the Company to make estimates and assumptions include: revenue recognition, inventory obsolescence, long-lived assets and intangible assets, accounting for share-based compensation, contingencies, tax valuation reserves, fair value measures, and accrued expenses. There were no changes to significant accounting policies during the three months ended March 31, 2022.

3. Fair Value Measurements

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The Company determines the fair value of its financial instruments based upon the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:

•Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no material transfers between any levels during the three months ended March 31, 2022 or 2021.

The following table summarizes the financial instruments measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 (in thousands):


	As of March 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash	$	21,363	$	—	$	—	$	21,363
Money market funds (1)	50,252		—		—		50,252
Total	$	71,615	$	—	$	—	$	71,615


	As of December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents:
Cash	$	41,285	$	—	$	—	$	41,285
Money market funds (1)	70,248		—		—		70,248
Total	$	111,533	$	—	$	—	$	111,533

(1) Fair value is based upon quoted market prices.

The Company’s Convertible Notes are classified within Level 2 in the fair value hierarchy. The fair values of the Convertible Notes are based on data from readily available pricing sources which utilize market observable inputs and other characteristics for similar types of instruments. The fair value of the Convertible Notes, which differs from their carrying value, is influenced by interest rates, the Company’s stock price and stock price volatility. The estimated fair value of the Convertible Notes as of March 31, 2022 was approximately $187.3 million.

The Company’s Term Loan falls into the Level 2 category within the fair value level hierarchy and the fair value was determined using quoted prices for similar liabilities in active markets, as well as inputs that are observable for the liability (other than quoted prices), such as interest rates that are observable at commonly quoted intervals. The estimated fair value of the Term Facility as of March 31, 2022 was approximately $145.8 million.

As of March 31, 2022, the carrying amounts of the cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and operating lease liabilities approximated their estimated fair values.

4. Inventory

Inventory consisted of the following as of March 31, 2022 and December 31, 2021 (in thousands):

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	March 31, 2022		December 31, 2021
Raw materials	$	9,035	$	7,159
Work in process	693		1,335
Finished goods	3,568		2,879
Total inventories	$	13,296	$	11,373

Finished goods manufactured by the Company have a 36-month shelf life from date of manufacture.

5. Convertible Notes Payable

August 14, 2017, in a registered underwritten public offering, the Company issued $300.0 million aggregate principal amount of 3% Convertible Senior Notes due September 1, 2024 (the “Convertible Notes”). In addition, on September 12, 2017, the Company issued an additional $5.0 million principal amount of Convertible Notes pursuant to the exercise of an over-allotment option granted to the underwriters in the offering. In connection with the issuance of the Convertible Notes, the Company incurred approximately $9.4 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees.

The Convertible Notes are senior unsecured obligations of the Company and bear interest at a rate of 3.00% per annum, payable semi-annually in arrears on March 1 and September 1. Upon conversion, the Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election. The Convertible Notes may be redeemed at the Company’s option, in whole or in part, if the conditions described below are satisfied. The redemption of the Convertible Notes may also be subject to certain restrictions included in Note 6, “Term Loan and Credit Facility.” The Convertible Notes will mature on September 1, 2024, unless earlier converted, redeemed or repurchased in accordance with their terms. Subject to satisfaction of certain conditions and during the periods described below, the Convertible Notes may be converted at an initial conversion rate of 20.4891 shares of common stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $48.81 per share of common stock).

Holders of the Convertible Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding June 1, 2024 only under the following circumstances:

(1)if the last reported sale price of the Company’s common stock for at least 20 trading days (whether consecutive or not) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2)during the five-business day period after any five-consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(3)if the Company calls the Convertible Notes for redemption, until the close of business on the business day immediately preceding the redemption date; or

(4)upon the occurrence of specified corporate events.

As of March 31, 2022, none of the above circumstances had occurred and, as such, the Convertible Notes were not convertible.

The Company may redeem for cash all or part of the Convertible Notes if the last reported sale price of the Company’s common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30-consecutive trading day period ending within five trading days prior to the date on which the Company provides notice of the redemption. The redemption price will be the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, calling any Convertible Note for redemption will constitute a make-whole fundamental change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note, if it is converted in connection with the redemption, will be increased in certain circumstances.

In March 2021, the Company entered into separate, privately negotiated transactions with certain holders of the Convertible Notes to repurchase $112.2 million face amount of the Convertible Notes for a cash purchase of $108.6 million. As the Company only extinguished a portion of the debt, the difference between the reacquisition price and the net carrying amount of the extinguished portion resulted in a gain on extinguishment of $2.0 million. Third party costs associated with the

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extinguishment of $0.3 million were included in selling, general and administrative expense for the three months ended March 31, 2021.

The outstanding balances of the Convertible Notes as of March 31, 2022 consisted of the following (in thousands):


	2024 Convertible Notes
Liability
Principal	$	192,753
Less: debt discount and issuance costs, net	(2,067)
Net carrying amount	$	190,686

The debt issuance costs on the Convertible Notes will be amortized over the remaining period.

The Company determined the expected life of the Convertible Notes was equal to their seven-year term. The effective interest rate on the Convertible Notes is 3.43%.

As of March 31, 2022, the “if-converted value” did not exceed the remaining principal amount of the Convertible Notes.

The following table sets forth total interest expense recognized related to the Convertible Notes during the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31,
	2022		2021
Contractual interest expense	$	1,446	$	2,157
Amortization of debt discount	196		293
Amortization of debt issuance costs	11		16
Total interest expense	$	1,653	$	2,466

Future minimum payments on the Company’s Convertible Notes as of March 31, 2022 are as follows (in thousands):


Years ended December 31,	Future Minimum Payments

2022	2,891
2023	5,783
2024	198,535
Total minimum payments	$	207,209
Less: interest	(14,456)
Less: unamortized discount	(2,067)
Less: current portion	—
Convertible notes payable	$	190,686

6. Term Loan and Credit Facility

On March 3, 2021, the Company and two of its wholly-owned subsidiaries, Radius Pharmaceuticals, Inc. and Radius Health Ventures, Inc. (collectively with the Company, the “Borrowers”), entered into an (i) Amended and Restated Credit and Security Agreement (Term Loan) (the “Term Credit Agreement”), with MidCap Financial Trust, in its capacity as administrative agent, and the financial institutions or other entities from time to time parties thereto as lenders (the “Term Lenders”) and (ii) Amended and Restated Credit and Security Agreement (Revolving Loan) (the “Revolving Credit Agreement,” together with the Term Credit Agreement, the “Credit Agreements”), with MidCap Funding IV Trust, in its capacity as administrative agent, and the financial institutions or other entities from time to time parties thereto as lenders.

The Term Credit Agreement provides for a secured term loan facility (the “Term Facility”) in an aggregate principal amount of $150.0 million (the “Initial Term Loan”), an increase of $125.0 million from the arrangement entered into in January 2020.

The Revolving Credit Agreement provides for a secured revolving credit facility (the “Revolving Facility”, together with the Term Facility, the “Facilities”) under which the Borrowers may borrow up to $25.0 million, the availability of which is determined based on a borrowing base as follows: (i) up to 85% of the net collectable value of the Borrowers’ domestic

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accounts receivable due from eligible direct and third-party payors, plus (ii) up to 40% of the Borrowers’ domestic eligible inventory, minus certain reserves; provided that the availability from eligible inventory may not exceed 20% of the borrowing base at any time. As of March 31, 2022 and up to the date of issuance of these condensed consolidated financial statements, the Company was eligible to borrow $25.0 million of the Revolving Facility.

The Facilities have a maturity date of June 1, 2024. The obligations under the Credit Agreements are guaranteed by the Borrowers and are guaranteed by certain future subsidiaries of the Borrowers, subject to certain exceptions. The obligations under the Facilities are secured by substantially all of the assets of the Borrowers, and are secured by substantially all assets of the future subsidiaries of the Borrowers that become borrowers or guarantors under the Facilities, subject to certain exceptions.

Borrowings under the Term Facility bear interest through maturity at a variable rate based upon the LIBOR rate plus 5.75%, subject to a LIBOR floor of 2.00%. Borrowings under the Revolving Facility bear interest through maturity at a variable rate based upon the LIBOR rate plus 3.50%, subject to a LIBOR floor of 2.00%. The Borrowers are required to pay a monthly commitment fee on the unused commitments under the Revolving Facility of 0.50% per annum.

The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of the Borrowers and their wholly-owned subsidiaries. The security interest granted over these assets could limit the Company’s ability to obtain additional debt financing. In addition, the Credit Agreements contain affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit or restrict the Company’s ability, subject to negotiated exceptions, to incur additional indebtedness and additional liens on its assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of its businesses. In addition, the Company is required to maintain an amount of unrestricted cash of at least $50.0 million and to achieve net revenue for each preceding twelve month period of at least certain specified amounts. Failure to comply with the covenants in the Credit Agreements, including the minimum cash and minimum net revenue covenants, could result in the acceleration of its obligations under the Credit Agreements.

On March 11, 2021, the Company received proceeds of $122.6 million under the Term Facility, net of fees and expenses of $2.4 million. With the issuance of a new term loan, the Company performed an assessment comparing the discounted cash flows of the original debt and the new debt as of the modification date, and concluded that the change is considered a modification. As of the modification date, the Company established a new effective interest rate based on the carrying value of the debt and the revised cash flows. Fees paid to the lender of $2.4 million were capitalized as debt discount and will be amortized to interest expense using the effective interest method over the term of the loan. Third party costs associated with the modification of $2.8 million were included in selling, general and administrative expense for the three months ended March 31, 2021. The outstanding balance of the Term Loan as of March 31, 2022 was (in thousands):


	Term loan

Principal	$	150,000
Less: debt issuance costs, net	(1,527)
Net carrying amount	$	148,473

The following table sets forth total interest expense recognized related to the Term Facility during the three months ended March 31, 2022 and 2021 (in thousands):


	Three Months Ended March 31
	2022		2021
Contractual interest expense	$	2,961	$	1,037
Amortization of debt discount	208		49
Total interest expense

SEC Form 10-Q filed by Radius Health Inc.