5. Notes Payable

In April 2014, we borrowed $2.0 million pursuant to a Loan and Security Agreement (LSA) we entered into with a financial institution. Pursuant to the terms of the LSA, we made monthly interest-only payments for outstanding borrowings at an interest rate equal to the greater of (a) prime plus 2.25% or (b) 5.5% until the LSA was amended in December 2014.

In December 2014, we entered into a First Amendment to Loan and Security Agreement, and in February 2015 and October 2015 we entered into a Second and Third Amendment to Loan and Security Agreement (collectively, “the Amended LSA”) with the same financial institution. The Amended LSA increased the total term loan availability from $2.0 million to $12.0 million, available in four tranches (in thousands):


		Term Loan		Term Loan
Tranche		Available		Borrowed	Borrowed Date
A	$	2,000	$	2,000	April 2014
B		5,000		5,000	December 2014
C		2,500		—	*
D		2,500		—	*
	$	12,000	$	7,000

*Our ability to borrow under the remaining tranches of $2.5 million each is conditioned upon meeting certain clinical trial milestones, which must be met by March 31, 2016 and December 31, 2015 for Tranches C and D, respectively. The availability end date for Tranches C and D is March 31, 2016.

In connection with the Amended LSA, we borrowed $5.0 million available to us under Tranche B in December 2014. Pursuant to the terms of the Amended LSA, we are required to make monthly interest-only payments for all outstanding borrowings at an interest rate equal to the greater of (a) prime rate plus 3.25% or (b) 6.5% until March 2016. Commencing in April 2016 and continuing through March 2018, we are required to make monthly payments of 1/24th of our principal borrowings plus interest. If we achieve certain clinical trial milestones by March 3, 2016, both the interest-only period and principal maturity date will be extended by three months.

As of September 30, 2015, of our outstanding term loan balance of $7.0 million, $2.6 million will be due within the next twelve months, and is classified as the current portion of long-term debt on our balance sheet. Interest expense related to the term loans was $116 thousand and $346 thousand for the three and nine months ended September 30, 2015, respectively. As of September 30, 2015, we had accrued interest of $38 thousand. There are no financial covenants associated with these term loans. As of September 30, 2015, we were in compliance with all non-financial covenants.

Vendor Debt

In August 2015, the Company entered into a short-term loan agreement with a third-party vendor to finance insurance premiums. The aggregate amount financed under this agreement was $584 thousand. As of September 30, 2015, there was a balance of $502 thousand, which will be repaid in monthly installments through September 2016.