LONG-TERM OBLIGATIONS

9 Months Ended

Sep. 30, 2015

Notes Payable - HealthCare Royalty Partners

In August 2015, the Company repaid in full all indebtedness outstanding under a loan agreement with an affiliate of HC Royalty (the Loan) which included $84.1 million in principal. In connection with the Loan, which bore interest at a rate of 12% per annum, the Company had entered into a security agreement granting HC Royalty a security interest in the intellectual property related to the LFRP, and the revenues generated by the Company through the licenses of the intellectual property related to the LFRP. This security agreement terminated at the time of the Loan repayment.

For financial reporting purposes, the Company’s $84.1 million principal repayment was recorded as an $82.2 million debt extinguishment and a $1.9 million extinguishment loss associated with discounts from the debt issuance that had not been accreted to principal prior to repayment. Previously, these charges were accreted to the principal balance over the expected term of the Loan, which was scheduled to mature in August 2018.

Activity under the Loan, adjusted for discounts associated with the debt issuance, including warrants and fees, is presented for financial reporting purposes, as follows:



	September 30, 2015			December 31, 2014
	(in thousands)
Beginning balance	$	82,165		$	81,516
Accretion of discount	727			198
Loan activity:
Interest expense	8,078			10,588
Payments applied to principal	(84,472		)	—
Payments applied to interest	(6,498		)	(8,978		)
Accrued interest payable	—			(1,159		)
Ending balance	$	—		$	82,165

Facility Lease

The Company’s principal offices and corporate headquarters are located in Burlington, Massachusetts. As of September 30, 2015, the leased premises consist of approximately 45,000 rentable square feet of office and laboratory facilities. The ten year term of the lease extends to 2022 and the Company has rights to extend the term for an additional five years at fair market value, subject to specified terms and conditions. The aggregate minimum lease commitment over the term of the lease is approximately $15.0 million. The Company has provided the landlord a Letter of Credit of $1.1 million to secure its obligations under the lease for which the Company has restricted cash recorded in the accompanying condensed balance sheet. Under the terms of the lease agreement, the landlord has provided the Company with a tenant improvement allowance of $2.6 million, including a loan totaling $671,000, which was used towards the cost of leasehold improvements. As of September 30, 2015 and December 31, 2014, the outstanding balance of the loan was $484,000 and $527,000. The Company has capitalized approximately $4.6 million in leasehold improvements associated with the Burlington facility. Costs reimbursed under the tenant improvement allowance have been recorded as deferred rent and are being amortized as a reduction to rent expense over the lease term.

Subsequent to September 30, 2015, the Company amended its lease to add approximately 20,000 rentable square feet of office space on terms that are equivalent to the original lease.