Term Loan

In August 2014, the Company received a $7.5 million secured term loan from a finance company. The loan was secured by a lien on the Company’s assets, excluding intellectual property, which is subject to a negative pledge. The loan contained certain additional nonfinancial covenants. In connection with the loan agreement, the Company’s cash and investment accounts were subject to account control agreements with the finance company that give the finance company the right to assume control of the accounts in the event of a loan default. Loan defaults are defined in the loan agreement and include, among others, the finance company’s determination that there is a material adverse change in the Company’s operations, notwithstanding adverse results of clinical trials. Interest on the loan was at a rate of the greater of 7.95%, or 7.95% plus the prime rate as reported in The Wall Street Journal minus 3.25%. On August 1, 2017, the term loan matured and the Company made a final payment of $494,231 which included a termination fee of $187,500.

Debt consisted of the following as of December 31, 2017 and 2016:



	December 31,		December 31,
	2017		2016
Term loan	$	—	$	2,374,031
Less: debt discount	—		(20,364		)
Term Loan, net of debt discount	—		2,353,667
Less: current portion, net of debt discount	—		(2,353,667		)
Long term debt, net of current portion and debt discount	$	—	$	—

Interest expense, which includes amortization of a discount and the accrual of a termination fee, was approximately $95,000 and $489,000 for the years ended December 31, 2017 and 2016, respectively, and is included in interest income (expense), net on the accompanying statements of operations.

Upon issuance of the term loan, the Company paid lender fees of $110,000 and was required to pay a one‑time fee at maturity of $187,500. The lender fees were recorded as a discount to the carrying amounts of the current and long term portions of the term loan. Amortization of the debt discount was $23,000 and $106,000 during the years ended December 31, 2017 and 2016, respectively. Accretion of the one‑time fee was $12,000 and $56,000 during the years ended December 31, 2017 and 2016, respectively. The amortization of the debt discount and the accretion of the one-time fee are reflected as a components of interest expense within the accompanying statements of operations.