Note 8 - Secured Promissory Note Payable to Oxford Finance	6 Months Ended
Jun. 30, 2019
Notes to Financial Statements
Secured Promissory Note Payable [Text Block]	NOTE 8 . Secured Promissory Note Payable to Oxford Finance On December 22, 2016, the Company entered into a loan and security agreement (the “Loan Agreement”) with Oxford Finance, under which the Company borrowed $5.0 million. The $5.0 million loan, which bears interest at 30 -day U.S. LIBOR plus 6.17%, is evidenced by a secured promissory note and is repayable over four years, with interest only payable over the first 12 months and the balance fully amortized over the subsequent 36 months. Upon repayment, an additional final payment equal to $325,000 is due, which is being accreted as interest expense over the term of the loan using the effective-interest method. The loan is secured by substantially all the Company’s assets, except for intellectual property. In connection with the Loan Agreement, the Company issued a warrant to Oxford Finance to purchase 7,563 shares of its Series C convertible preferred stock at an exercise price of $33.11 per share (the “Warrant”), expiring in December 2026. The fair value of the Warrant at the date of issuance was $134,000, which was recorded as debt discount and is being amortized as interest expense over the term of the loan using the effective-interest method. The annual effective interest rate of the note, including the accretion of the final payment and the amortization of the debt discount, is approximately 10.5%. The Company recorded interest expense related to the Loan Agreement of $96,000 and $138,000 during the three months ended June 30, 2019 and 2018 , respectively, of which $64,000 and $94,000 was paid, respectively, and recorded interest expense of $202,000 and $279,000 during the six months ended June 30, 2019 and 2018 , respectively, of which $136,000 and $189,000 was paid, respectively. The Warrant provided that if the share price at the next equity financing was less than the Warrant exercise price, then the Warrant would be for the new class of shares, the exercise price would be the new class share price, and the number of shares would be calculated by dividing $250,000 by the new class share price. Due to this antidilution protection, the Company determined that the Warrant needed to be recorded as a liability, and therefore estimated the fair value of the Warrant upon issuance and at each balance sheet date, with any changes in the fair value being recorded within the loss on revaluation of financial instruments line in the statements of operations and comprehensive loss. Due to the antidilution protection, following the Merger, the Warrant was amended to allow the holder to purchase 10,914 shares of common stock at an exercise price of $22.99 per share. Since the amended Warrant contains no non-standard antidilution protections or similar features, the fair value of $70,000 on February 13, 2018, was transferred to equity.

NOTE

Secured Promissory Note Payable to Oxford Finance

December

22,

2016,

the Company entered into a loan and security agreement (the “Loan Agreement”) with Oxford Finance, under which the Company borrowed

$5.0

million. The

$5.0

million loan, which bears interest at

-day U.S. LIBOR plus

6.17%,

is evidenced by a secured promissory note and is repayable over

four

years, with interest only payable over the

first

months and the balance fully amortized over the subsequent

months. Upon repayment, an additional final payment equal to

$325,000

is due, which is being accreted as interest expense over the term of the loan using the effective-interest method. The loan is secured by substantially all the Company’s assets, except for intellectual property.

In connection with the Loan Agreement, the Company issued a warrant to Oxford Finance to purchase

7,563

shares of its Series C convertible preferred stock at an exercise price of

$33.11

per share (the “Warrant”), expiring in

December 2026.

The fair value of the Warrant at the date of issuance was

$134,000,

which was recorded as debt discount and is being amortized as interest expense over the term of the loan using the effective-interest method. The annual effective interest rate of the note, including the accretion of the final payment and the amortization of the debt discount, is approximately

10.5%.

The Company recorded interest expense related to the Loan Agreement of

$96,000

and

$138,000

during the

three

months ended

June 30,

2019

and

2018

, respectively, of which

$64,000

and

$94,000

was paid, respectively, and recorded interest expense of

$202,000

and

$279,000

during the

six

months ended

June 30,

2019

and

2018

, respectively, of which

$136,000

and

$189,000

was paid, respectively.

The Warrant provided that if the share price at the next equity financing was less than the Warrant exercise price, then the Warrant would be for the new class of shares, the exercise price would be the new class share price, and the number of shares would be calculated by dividing

$250,000

by the new class share price. Due to this antidilution protection, the Company determined that the Warrant needed to be recorded as a liability, and therefore estimated the fair value of the Warrant upon issuance and at each balance sheet date, with any changes in the fair value being recorded within the loss on revaluation of financial instruments line in the statements of operations and comprehensive loss.

Due to the antidilution protection, following the Merger, the Warrant was amended to allow the holder to purchase

10,914

shares of common stock at an exercise price of

$22.99

per share. Since the amended Warrant contains

non-standard antidilution protections or similar features, the fair value of

$70,000

February 13, 2018,

was transferred to equity.