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Debt
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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| Debt | 7. Debt On June 29, 2012, the Company and its domestic subsidiaries, as co-borrowers, entered into loan and security agreement (the "Loan and Security Agreement") with Hercules Technology Growth Capital, Inc ("HTGC") for borrowings of up to $20 million under a term loan. The Loan and Security Agreement bears interest at a rate per annum equal to the greater of (i) 9.25% or (ii) 9.25% plus the sum of the prevailing prime rate minus 4.50%. The first $10 million of the Loan and Security Agreement was funded at closing, with net proceeds to the Company of $9.7 million received, net of $0.3 million issuance costs. The Company also incurred an end of term charge of $0.2 million on the initial $10 million advance. As of September 30, 2012 debt issuance and deferred financing costs, net of accumulated amortization are $0.2 million and $0.1 million, respectively. The Company had no debt issued or deferred financing costs as of December 31, 2011. The issuance costs of $0.2 million are being amortized to interest expense using the effective interest rate over the term of the agreement. The end of term charge of $0.2 million is being accrued to interest expense and debt using the effective interest rate over the term of the agreement. The Loan and Security Agreement is repayable in installments over forty-two months including an initial interest-only period of twelve months after closing. The interest only period is extendable to December 31, 2013, contingent upon completion of certain ARIKACE-related development milestones. The remaining $10 million of the Loan and Security Agreement is available at the Company's option throughout the availability period, which ends on December 31, 2012. In connection with this Loan and Security Agreement, the Company granted the lender a first position lien on all of the Company's assets, excluding intellectual property. Pursuant to the Loan and Security Agreement, the Company issued a warrant to HTGC to purchase 329,932 shares of the Company's common stock at an exercise price of $2.94 per share. The warrant is exercisable for five years from the date of issuance. The fair value of the warrants at the date of issuance was $0.8 million, which amount has been recorded as a discount to debt and is being amortized ratably over the term of the Loan and Security Agreement. The following table presents the components of the Company's debt balances as of September 30, 2012. The Company had no debt as of December 31, 2011.
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