XML 51 R10.htm IDEA: XBRL DOCUMENT v3.3.0.814
Debt
9 Months Ended
Sep. 30, 2015
Debt Disclosure [Abstract]  
Debt

5. DEBT

2013 Convertible Notes Payable

During 2013, the Company issued convertible notes (the 2013 Notes) to a major shareholder of the Company, 5AM Ventures, for an aggregate of $1,250,000. The 2013 Notes bore interest at 8% which compounded annually. The 2013 Notes were convertible into preferred shares of the Company’s equity securities at a 15% discount to the sales price of the equity securities sold at the next financing or a series of related transactions yielding gross proceeds to the Company of at least $13,750,000 (defined as a Qualified Financing). The 2013 Notes were to mature on the earlier of a Qualified Financing, a change in control, or February 8, 2014, or such later date as provided for by the written consent of the note holders. In January 2014, the holders of the 2013 Notes executed a written consent to extend the maturity date of the 2013 Notes to July 30, 2014.

2014 Convertible Notes Payable

In January and February 2014, the Company issued convertible notes (the 2014 Notes) to 5AM Ventures and certain non-affiliated investors for $500,000 and $450,000, respectively. The 2014 Notes bore interest at 8%, which compounded annually. The 2014 Notes were convertible into preferred shares of the Company’s equity securities at a 15% discount to the sales price of the equity securities sold in a Qualified Financing. The 2014 Notes were to mature on the earlier of a Qualified Financing, a change in control, or July 30, 2014, or such later date as provided for by the written consent of the note holders

On May 30, 2014, the outstanding principal balance of both the 2013 Notes and the 2014 Notes plus all accrued interest thereon converted into 321,492 shares of Series A preferred.

Comerica Loan

In December 2014, the Company entered into a Loan and Security Agreement with Comerica Bank, or the Comerica Loan, to borrow up to $10 million. The Comerica Loan is secured by substantially all of the Company’s assets other than intellectual property (except rights to payment from the sale, licensing, or disposition of such intellectual property). The Comerica Loan may be drawn upon by the Company through December 2015. The Comerica Loan bears interest at either Comerica’s Prime Reference Rate or LIBOR plus Comerica’s LIBOR Spread Rate, as defined in the Comerica Loan. The terms allow for a 12-month interest-only period and all outstanding term loans under the credit facility will begin amortizing at the end of the interest-only period, with monthly payments of principal and interest to be made in 36 consecutive installments following the interest-only period. Any advances made on the Comerica Loan would become due in December 2018. The Company has the right to repay any borrowings on the Comerica Loan in full without prepayment penalty. The Company issued a warrant for the purchase of Series A preferred equal to 1.5% of the total borrowings under the Comerica Loan divided by the warrant purchase price of $8.5344 per share. Due to the conversion of the Series A preferred upon closing of the IPO, if advances are made on the Comerica Loan, the warrant will become exercisable for the purchase of common stock on the earlier to occur of (1) the date on which the aggregate amount of advances under the Comerica Loan equals $10 million or (2) December 29, 2015. If no advances are made on the Comerica Loan by December 29, 2015, the warrant will terminate. As of September 30, 2015, the Company has not drawn any advances on the Comerica Loan.  The Company incurred $22,000 in costs associated with the execution of the Comerica Loan.  During the three and nine months ended September 30, 2015, $6,000 and $17,000, respectively, of debt issue costs were amortized and recognized as interest expense in the condensed statement of operations.