DEBT

The amortized carrying amount of our debt consists of the following (in thousands):



	March 31, 2017		December 31, 2016
Secured Convertible Notes due 2018 (“Deerfield Notes”)	$	113,349	$	109,122
Term loan payable	—		80,000
Total debt	$	113,349	$	189,122

See “Note 7 - Debt” to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 27, 2017 for additional information on the terms of our debt, including a description of the material features of the Deerfield Notes.

Deerfield Notes

As of March 31, 2017 and December 31, 2016, the outstanding principal balance on the Deerfield Notes was $113.9 million and $109.8 million, respectively, which, subject to certain limitations, is payable in cash or in stock at our discretion. The outstanding principal amount of the Deerfield Notes bears interest at the rate of 7.5% per annum to be paid in cash, quarterly in arrears, and 7.5% per annum to be paid in kind, quarterly in arrears, for a total interest rate of 15% per annum.

Under the note purchase agreement, we may at our sole discretion, prepay all of the principal amount of the Deerfield Notes at a prepayment price equal to 105% of the outstanding principal amount of the Deerfield Notes, plus all accrued and unpaid interest through the date of such prepayment, plus, if prepaid prior to July 1, 2017, all interest that would have accrued on the principal amount of the Deerfield Notes between the date of such prepayment and July 1, 2017, if the outstanding principal amount of the Deerfield Notes as of such prepayment date had remained outstanding through July 1, 2017, plus all other accrued and unpaid obligations, collectively referred to as the Prepayment Price.

The Deerfield Notes are classified as a current liability as of March 31, 2017 and December 31, 2016 because we intend to repay the Deerfield Notes on or about July 1, 2017 at the Prepayment Price. We expect that cash and cash equivalents and short-term investments held at March 31, 2017 will be used to repay the Deerfield Notes.

The following is a summary of interest expense for the Deerfield Notes (in thousands):



	Three Months Ended March 31,
	2017		2016
Stated coupon interest	$	2,068	$	1,936
Interest paid in kind	2,068		1,936
Amortization of debt discount and debt issuance costs	89		93
Total interest expense	$	4,225	$	3,965

The balance of unamortized fees and costs was $0.4 million as of both March 31, 2017 and December 31, 2016, which is recorded as a reduction of the carrying amount of the Deerfield Notes on the accompanying Condensed Consolidated Balance Sheets. We are amortizing the remaining unamortized debt discount and debt issuance costs through the July 1, 2018 maturity date using the effective interest method at an effective interest rate of 15.2%.

Although we currently intend to repay the Deerfield Notes on or about July 1, 2017, if we do not prepay the Deerfield Notes by December 31, 2017, we may be required to make an additional mandatory prepayment in January 2018 equal to 15% of certain revenues from collaborative arrangements, which we refer to as Development/Commercialization Revenue, received during the fiscal year ending December 31, 2017, subject to a maximum prepayment amount of $27.5 million. However, we will only be obligated to make any such annual mandatory prepayment if the holders of the Deerfield Notes provide notice to us of their election to receive the prepayment. The definition of “Development/Commercialization Revenue” expressly excludes any sale or distribution of drug or pharmaceutical products in the ordinary course of our business, and any proceeds from any sale of our intellectual property, subject to limited exceptions, but would include our share of the net profits from the commercialization of cobimetinib in the U.S. and the receipt of royalties from cobimetinib sales outside the U.S., if any. Pursuant to this requirement, if we do not prepay the Deerfield Notes by December 31, 2017, we may be required to make a mandatory prepayment of $8.2 million in January 2018.

Silicon Valley Bank Loan and Security Agreement

On March 29, 2017, we repaid all amounts outstanding under our term loan with Silicon Valley Bank which was initiated in June 2010 under our loan and security agreement with Silicon Valley Bank. The payment included $80.0 million in principal plus $0.1 million in accrued and unpaid interest. There was no gain or loss on the extinguishment of debt as a result of the repayment of the term loan. As of December 31, 2016, the outstanding principal balance due under the term loan was $80.0 million. Prior to our early repayment of the term loan, the principal amount outstanding under the term loan had accrued interest at 1.0% per annum, which was due and payable monthly.

In accordance with the terms of the loan and security agreement, we were required to maintain an amount equal to at least 100%, but not to exceed 107%, of the outstanding principal balance of the term loan on deposit in one or more investment accounts with Silicon Valley Bank or one of its affiliates as support for our obligations under the loan and security agreement. We were entitled to retain income earned or the amounts maintained in such accounts. The total collateral balance as of December 31, 2016 was $81.6 million and is reflected in our Condensed Consolidated Balance Sheet in Short-term investments as the amounts were not restricted as to withdrawal. As a result of our repayment of the term-loan, the compensating balance requirement was terminated as of March 29, 2017.