Quarterly report pursuant to Section 13 or 15(d)

Debt

v2.4.0.6
Debt
3 Months Ended
Mar. 31, 2012
Debt [Abstract]  
Debt

7. Debt

In January 2011, in connection with the acquisition of CyDex, the Company entered into a $20 million Loan and Security Agreement (the “Oxford Loan”) with Oxford Finance Corporation (“Oxford”). Under the terms of the Oxford Loan agreement, the Company will make interest only payments for one year at a fixed rate of 8.64%, with an option to extend the interest only payments for an additional year. Subsequent to the interest only payments, the note will amortize with principal and interest payments due through the remaining term of the loan. The loan term, including interest only payments, is 42 months.

Upon final repayment of the Oxford Loan on the maturity date, by prepayment, or upon acceleration of the Oxford Loan, the Company also must make an additional final payment of $1.2 million, which is being accreted over the term of the loan. To secure the Company’s repayment obligations under the Oxford Loan, Oxford obtained a first priority security interest in all of the Company’s assets, excluding intellectual property.

On January 23, 2012, the Company and Oxford Finance LLC amended the Loan and Security Agreement (the “Amended Loan and Security Agreement”). The Amended Loan and Security Agreement increased the secured term loan credit facility from $20 million up to $30 million; the Company immediately borrowed $7.5 million of the additionally-authorized $10 million against two Secured Promissory Notes. The Company did not elect to borrow the remaining available $2.5 million. The additional $7.5 million loan bears interest at (and the additional $2.5 million loan would bear interest at) a fixed rate equal to the greater of (i) 8.81% per year and (ii) the sum of (a) 8.34% plus (b) the 3-month LIBOR rate reported in The Wall Street Journal three business days before the loan amounts are funded to the Company, which interest, along with amortized principal, is payable on a monthly basis. The Company must also make an additional final payment at maturity equal to 6% of the total amount borrowed under the Amended Loan and Security Agreement. Amortization of the entire $27.5 million due to Oxford commences on March 1, 2013 and the maturity date of the term loans is August 1, 2014. The other material terms of the Loan and Security Agreement remain unchanged.

The Company also has a cash-collateralized revolving line of credit facility with its commercial bank, Square 1 Bank, or Square 1, to borrow up to $10 million. All outstanding amounts under the credit facility bear interest at a floating rate equal to 200 basis points above the prime rate and may become immediately due and payable if the Company fails to maintain a cash balance at Square 1 equal to the amount outstanding under the credit facility. Interest is payable on a monthly basis. The maturity date of the revolving line of credit facility is March 29, 2013. As of March 31, 2012 and December 31, 2011, the Company had an outstanding balance due under the credit facility of $1.5 million and $10.0 million, respectively.