8.	Term Loan:

On December 18, 2017, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”), pursuant to which the Bank agreed to extend term loans to the Company with an aggregate principal amount of up to $15,000, in three tranches (the “Term Loans”). The Company borrowed an initial tranche of $7,000, with the remaining $8,000 available to be drawn in two separate tranches, at the Company’s option, subject to the achievement of certain clinical and financial milestones.

The Loan Agreement accrues interest at a floating per annum rate of 0.5% above the prime rate, and is payable monthly commencing in January 2018. The initial tranche is interest only until September 30, 2018, followed by 30 months of equal principal and interest payments, maturing on March 31, 2021. If the second tranche is advanced, then both the first and second tranches will be interest only until March 31, 2019, followed by 24 months of equal principal and interest payments, maturing on March 31, 2021. The third tranche, if advanced, will be interest only until September 30, 2019, followed by 24 months of equal principal and interest payments, maturing on September 30, 2021. In addition, the Company is required to pay a final payment fee of 6.5% of the principal amount extended on the date of repayment of the Term Loans, which is being accreted and amortized into interest expense using the effective interest rate method over the term of the loan.

The Company may prepay all, but not less than all, of the loaned amount subject to a prepayment fee of 3.0% of the outstanding principal if prepaid prior to the first anniversary of the effective date of the Loan Agreement, 2.0% if prepaid on or after the first anniversary, but prior to the second anniversary, or 1.0%, if prepaid on or after the second anniversary but prior to the applicable maturity date. As security for its obligations under the Loan Agreement, the Company granted the Bank a first priority security interest on substantially all of the Company’s assets except its intellectual property and subject to certain other exceptions.

The Loan Agreement contains customary representations and warranties, events of default (including an event of default upon the occurrence of a material impairment on the Bank’s security interest over the collateral, and a material adverse change of the Company) and affirmative and negative covenants, including, among others, covenants that limit or restrict the Company’s ability to incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, engage in any new line of business, pay dividends or make distributions, or repurchase stock, in each case subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, a default interest rate will apply that is 5.0% above the otherwise applicable interest rate.

In connection with the Loan Agreement, the Company issued a warrant to the Bank to purchase 50,411 of the Company’s common shares at a price per share of $2.43. The Bank will receive additional common shares exercisable pursuant to the warrant in connection with the second and third tranches, if and when advanced by the Bank. In no event will the number of common shares issuable pursuant to the exercise of the warrant exceed 108,023 in the aggregate. The warrant is immediately exercisable, has a 10-year term, contains a cashless exercise provision, and is classified in equity. The relative fair value of the warrant was $100.

The initial tranche proceeds of $7,000 were allocated based on the relative fair values of the debt instrument and the warrant instrument. The fair value of the warrant and the closing costs were recorded as debt discounts and are being amortized using the effective interest rate method over the term of the loan. The Company determined the effective interest rate on the initial tranche of the loan to be 9.25%. Amortization of the debt discount was $11 for the year ended December 31, 2017.

Interest expense was $24 for the year ended December 31, 2017.

The outstanding loan and unamortized debt discount balances are as follows:

	December 31,
	2017
Term loan	$	7,000
Less: unamortized discount on loan		(203	)
Less: current portion		(700	)
Accrued portion of final payment fee		7
Loan payable, long-term	$	6,104

Scheduled principal payments on outstanding debt, excluding the final payment fee of $455, as of December 31, 2017, are as follows:

2018	$	700
2019		2,800
2020		2,800
2021		700
Total	$	7,000