Amendment of Loan and Security Agreement

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Amendment of Loan and Security Agreement

On June 17, 2016, the Company entered into a second amendment to modify the loan and security agreement with Oxford Finance LLC and Silicon Valley Bank dated as of December 30, 2014. Significant terms of the modification included:


•	providing the Company with additional term loans in net aggregate principal amount of $3,333,334;


•	amending the original repayment schedule of the term loans such that the Company is required to make interest-only payments until February 1, 2018, then equal monthly payments of principal plus interest will be made through the maturity date of the term loans on July 1, 2020;


•	amending the interest rate such that the term loans bear interest at an annual rate equal to either (i) 7.00% or (ii) the sum of (a) the “prime rate” rate reported in the Wall Street Journal on the date occurring on the last business day of the month that immediately precedes the month in which the interest will accrue, plus (b) 3.25%, whichever is greater;


•	removing the revolving line of credit previously available under the original loan and security agreement;


•	removing an affirmative covenant requiring the Company to maintain a liquidity ratio of 1.25 to 1 through the Company’s receipt of positive data from placebo-controlled trials in the United States and European Union of ZX008; and

•

amending a covenant to now permit the Company to maintain collateral account balances exceeding the greater of (i) $50,000,000, or (ii) 50% of the Company’s total collateral account balances (other than specifically excluded accounts), with financial institutions other than the lenders; provided that, if the Company’s total collateral account balances are below $50,000,000, all such balances will be maintained with the lenders.

In connection with second amendment, the Company paid (i) a final payment of $1,000,000 with respect to the existing term loans, previously due on the earlier to occur of the maturity date of the original loan and security agreement or early repayment of the term loans; (ii) an amendment fee of $25,000 with respect to a previous loan amendment; and (iii) revolving line commitment fees of $64,000 due relative to the termination of the revolving line of credit. Furthermore, the Company agreed to make a final payment of $1,350,000 on the earlier of the maturity date of the amended loan and security agreement or early repayment of the term loans, and to pay a termination fee of $200,000 on the earlier to occur of a change in control or the early termination of the loan and security agreement.