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Debt Obligations
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Debt Obligations
Debt Obligations
Early Extinguishment of Term Loan
In December 2014, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB”) (collectively, the “Lenders”), under which the Company borrowed a $20.0 million term loan (the “Term Loan”). In addition, the Loan Agreement provided for a revolving credit facility of up to $4.0 million.
In connection with the Loan Agreement, the Lenders were issued warrants to purchase 63,559 shares of the Company’s common stock at an exercise price per share of $9.44. The warrants have a term of 10 years from the issuance date. The fair value of the warrants at issuance was estimated to be $0.6 million using the Black-Scholes valuation model and was recorded as debt discount to the term loan with a corresponding increase to additional paid in capital in the consolidated balance sheet.
The term loan bore interest at an annual rate equal to the greater of (i) 8.75% or (ii) the sum of the prime rate plus 5.25%. Payments under the term loan were interest-only until January 1, 2016, followed by equal monthly payments of principal and interest through the scheduled maturity date of December 1, 2018.
In April 2015, in connection with the sale of the Zohydro ER business, the Company and the Lenders entered into an amendment to the Loan Agreement, which terminated all encumbrances on the Company’s personal property related to its Zohydro ER business.
In June 2016, the Company entered into a second amendment to the Loan Agreement, which modified the loan repayment terms to be interest-only from July 1, 2016 to February 1, 2018, followed by equal monthly payments of principal and interest through the new maturity date of July 1, 2020. Under the terms of the second amendment, the interest rate applicable to the term loan bore interest at an annual rate equal to the greater of (i) 7.00% or (ii) the sum of the prime rate plus 3.25%. In addition, the second amendment terminated the revolving credit facility previously available under the Loan Agreement. In connection with the second amendment, the Company paid (i) an end of term fee of $1.0 million due under the Loan Agreement as a result of this refinancing and (ii) the end of term fee of $0.1 million with respect to the termination of the revolving credit facility. The second amendment also included an end of term fee of $1.4 million payable on July 1, 2020, or upon early repayment of the term loan. An early repayment would be subject to a prepayment fee.
In December 2017, the Company used a portion of the proceeds from the Company’s October 2017 common stock offering (see Note 10) and repaid in full the entire $20.0 million of outstanding principal under the Loan Agreement, plus accrued interest. The Company recognized a $1.5 million loss on early extinguishment of debt consisting of a non-cash charge to write off the remaining unamortized debt issuance costs and debt discount associated with the warrant issued at loan origination. The Company also paid $1.9 million in additional fees for prepayment and termination of the Loan Agreement.
Extinguishment of Working Capital Advance Note Payable
In connection with entering into the Supply Agreement for Sumavel DosePro with Endo in May 2014, Endo provided the Company with an interest-free working capital advance of $7.0 million in the form of a note payable to support the Company’s Sumavel DosePro operations. The note payable matures in the event the Supply Agreement is terminated. The note payable was initially recorded on the consolidated balance sheet net of a $4.7 million debt discount related to imputed interest. The debt discount was being amortized as interest expense using the effective interest method over the Endo Supply Agreement’s initial term of 8 years.
In September 2017, the Company and Endo terminated the supply agreement and the note payable became due and payable in accordance with its terms. Pursuant to the termination agreement, the $7.0 million promissory note was extinguished to settle amounts owed to the Company for accounts receivable and purchased raw materials (see Note 6). In connection with the extinguishment, the Company recognized a non-cash charge upon debt extinguishment of $3.4 million to write off the remaining unamortized debt discount related to imputed interest.