7. Long-term Debt

Silicon Valley Bank

In November 2017, we entered into a Loan and Security Agreement with Silicon Valley Bank, or SVB, for a senior secured term loan of up to $18.0 million. The first $16.0 million of the term loan was funded in November 2017. We had an option to borrow an additional $2.0 million, which option expired unexercised on July 31, 2018. The loan proceeds were used to repay in full all outstanding indebtedness under the Loan and Security Agreement with Hercules Technology Growth Capital, Inc., or Hercules, as discussed below and to fund our general business requirements. We were required to maintain unrestricted and unencumbered cash in an amount equal to at least $16.0 million under the terms of Loan and Security Agreement, and as such, $16.0 million of our cash was legally restricted as of December 31, 2017 and held as a compensating balance against the term loan. The restriction was removed in January 2018. See Note 1. Description of Business and Summary of Significant Accounting Policies for further details regarding restricted cash.

The term loan is repayable over 36 months after an initial interest-only period of 12 months after closing. The interest rate on the term loan floats at a rate per annum equal to the greater of 2.5 percent above the prime rate and 6.75 percent. We may elect to prepay some or all of the loan balance at any time subject to a prepayment fee. A fee in the amount of 9 percent of the total principal amount funded to us is payable to SVB on the date on which the term loan is paid or becomes due and payable in full. Such back-end fee in the amount of $1.4 million was included in Other liabilities in the consolidated balance sheets as of December 31, 2018 and 2017. The loan obligations are secured by a first priority security interest on substantially all of our personal property except our intellectual property and subject to certain other exceptions.

In addition, we issued warrants to SVB and Life Science Loans II, LLC, pursuant to a participation arrangement among SVB, Loan Manager II, LLC and Life Science Loans II, LLC, to purchase up to 190,140 shares of our common stock. Warrants have an initial exercise price of $2.84 per share of our common stock and will expire on November 28, 2027.

In connection with the Loan and Security Agreement, we recorded debt discount and debt issuance costs of $1.9 million and $0.1 million, respectively, of which $1.4 million and $0.1 million , respectively, was unamortized as of December 31, 2018. The outstanding principal balance on the term loan was $15.6 million as of December 31, 2018.

As of December 31, 2018, the scheduled principal and interest payments (based on the interest rate of 8.0 percent as of December 31, 2018) as well as the back-end fee described above are as follows:



	Principal			Interest		Back-end fee		Total
2019	$	5,333		$	1,061	$	—	$	6,394
2020	5,333			633		—		5,966
2021	4,889			198		1,440		6,527
Thereafter	—			—		—		—
Total scheduled payments	$	15,555		$	1,892	$	1,440	$	18,887
Less: debt discount and issuance costs	$	(1,476	)
Less: current portion of long-term debt	$	(4,812	)
Long-term debt	$	9,267

Hercules

In November 2017, we repaid Hercules the then-outstanding loan principal balance of $14.3 million in full, using the proceeds from the Loan and Security Agreement with SVB as discussed above. Accordingly, among other things, (1) all obligations under the loan agreement with Hercules and all related documents have been paid, satisfied, released and discharged in full, (2) all unfunded commitments to make credit extensions or financial accommodations to us or any other person under the loan agreement with Hercules have been automatically and irrevocably terminated, and (3) our obligations under the loan agreement with Hercules and all related documents have been automatically and irrevocably terminated (other than with respect to customary provisions and agreements that are expressly specified to survive the termination). Upon full repayment of the principal in November 2017, we wrote-off the then-unamortized debt discount balance of $0.1 million to a loss on debt extinguishment, which was recorded in Other non-operating expense for the year ended December 31, 2017.