Note 6 – Deerfield Loan

Long-term debt consists solely of amounts due under the $30 million loan Deerfield Loan with Deerfield for the periods presented:

(in thousands)	March 31, 2015			December 31, 2014

Note payable	$	30,000		$	30,000
Unamortized discount		(9,143	)		(9,698	)

Long-term debt, net of discount	$	20,857		$	20,302

The principal amount of the loan is payable in three $10 million annual installments beginning in February 2017, provided that the amounts payable in February 2017 and 2018 may be deferred if certain financial milestones are achieved. See, Note 9, “Deerfield Loan,” in the Notes to Consolidated Financial Statements in our 2014 Form 10-K. Accordingly, if the milestones are achieved in each year, payment of the principal amount could be deferred until the sixth anniversary date of the loan, on February 13, 2019.

The following amounts comprise the Deerfield Loan interest expense for the periods presented:

(in thousands)	Three months ended March 31,
	2015		2014

Cash interest expense	$	647	$	647
Non-cash amortization of debt discount		554		439
Amortization of debt costs		5		5

Total interest expense	$	1,206	$	1,091

Cash interest expense represents interest at an annual rate of 8.75% on the outstanding principal amount for the period, paid in cash on a quarterly basis. Non-cash amortization of debt discount represents the amortization of transaction fees and the fair value of the warrants issued in connection with the Deerfield Loan. The amortization of debt costs represents legal costs incurred in connection with the Deerfield Loan.

In connection with the Deerfield Loan, we issued the Deerfield Warrants to purchase 7.0 million shares of our common stock at an exercise price of $2.81 per share that expire on February 13, 2019. The Deerfield Warrants are derivatives that qualify for an exemption from liability accounting provided in ASC 815 and are classified as equity. See, Note 9, “Deerfield Loan,” in the Notes to Consolidated Financial Statements in our 2014 Form 10-K.