DEBT

Oxford Loan

On December 21, 2017 (the “Oxford Closing Date”), the Company entered into a loan and security agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC, as the collateral agent and a lender, pursuant to which the Company borrowed $35.0 million in a single term loan (the “Oxford Loan”) on the Oxford Closing Date. On the Oxford Closing Date, the Company used approximately $32.9 million of the proceeds from the Oxford Loan to repay its indebtedness to a previous lender.

The Company’s obligations under the Oxford Loan Agreement are secured by a first priority security interest in substantially all of the Company’s current and future assets, other than its intellectual property. The Company has also agreed not to encumber its intellectual property assets, except as permitted by the Oxford Loan Agreement. The Oxford Loan matures on December 1, 2022 (the “Oxford Maturity Date”) and will be interest-only through January 31, 2020, followed by 35 equal monthly payments of principal and unpaid accrued interest. The Oxford Loan bears interest at a floating per annum rate equal to (i) 7.25% plus (ii) the greater of (a) the 30-day U.S. Dollar LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue and (b) 1.25%. The interest rate on amounts borrowed under the Oxford Loan Agreement was 11.44% at December 31, 2019.

The Company will be required to make a final payment of 8.70% of the principal amount of the Oxford Loan borrowed (the “Oxford Final Payment Fee”), payable on the earlier of (i) the Oxford Maturity Date, (ii) the acceleration of the Oxford Loan, or (iii) the prepayment of the Oxford Loan. The Company may prepay all, but not less than all, of the borrowed amounts, provided that the Company will be obligated to pay a prepayment fee equal to (i) 3.00% of the outstanding principal balance if prepaid on or before the first anniversary of the Closing Date, (ii) 2.00% of the outstanding principal balance, if prepaid after the first anniversary and before the second anniversary of the Closing Date, and (iii) 1.00% of the outstanding principal balance prepaid thereafter and prior to the Maturity Date (each, a “Prepayment Fee”). While any amounts are outstanding under the Oxford Loan Agreement, the Company is subject to a number of affirmative and restrictive covenants, including covenants regarding delivery of financial statements, payment of taxes, maintenance of insurance, dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The Company is also restricted from paying dividends or making other distributions or payments of its capital stock, subject to limited exceptions. Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Oxford Loan Agreement, the breach of certain of its other covenants under the Oxford Loan Agreement, or the occurrence of a material adverse change, the collateral agent will have the right, among other remedies, to declare all principal and interest immediately due and payable, and the lender will have the right to receive the Oxford Final Payment Fee and, if the payment of principal and interest is due prior to the Oxford Maturity Date, a Prepayment Fee.

On December 24, 2019, the Company entered into a First Amendment to Loan and Security Agreement (the “Amendment”) with Oxford Finance LLC, in connection with the proposed sale of certain assets of the Company. Pursuant to the Amendment, the Loan Agreement was amended to, among other things: (i) provide for the Collateral Agent’s and the Lenders’ consent to (a) the Company’s entry into an asset purchase agreement relating to the proposed sale of certain of the Company’s assets and (b) the Company’s consummation of such asset sale, provided such sale occurs on or prior to March 31, 2020; (ii) if such asset sale occurs on or prior to March 31, 2020, extend the interest-only period by up to 18 months; (iii) if the proposed asset sale closes on or prior to March 31, 2020, provide for a partial repayment to the Lenders of an amount that equals the vast majority of the proceeds the Company expects to receive at the closing of the asset sale, a portion of which will be applied as partial payment of the Oxford Final Payment Fee; and (v) if the proposed asset sale occurs on or prior to March 31, 2020, grant the Lenders and the Collateral Agent a security interest in the Company’s intellectual property as of the closing of the asset sale, in each case as set forth in the Amendment. In the event the proposed asset sale does not close on or prior to March 31, 2020, the Amendment provides that the Company, the Collateral Agent and the Lenders shall renegotiate the foregoing terms.

The Company paid expenses related to the Oxford Loan Agreement of $0.1 million, which, along with the final facility charge of $3.0 million, have been recorded as deferred issuance costs, which offset long-term debt on the Company's consolidated balance sheet. The deferred issuance costs are being amortized over the term of the loan as interest expense using the effective interest method. During the years ended December 31, 2019 and 2018, interest expense of amortized deferred issuance costs included $0.9 million and $0.9 million, respectively.

The future gross payments due under the Company's debt arrangements are as follows:



(in thousands)	Payments
Year 2020	$	11,000
Year 2021	12,000
Year 2022	15,045
Total debt	$	38,045
Less deferred issuance costs	(1,328		)
Less current portion	(11,000		)
Total long-term debt	$	25,717

Management believes that the carrying value of the debt facility approximates its fair value, as the Company's debt facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics. The fair value of the Company's debt facility is determined under Level 2 in the fair value hierarchy.