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security agreement evidencing the credit facility, we made monthly payments of interest only through January 1, 2013 and, thereafter, we make monthly payments of principal and interest over
the remaining 33 months of the loan. The credit facility bears interest at the rate of 8.85% per annum. Monthly payments are $513,765. The final payment will include an additional interest
payment of $0.3 million, which is being recognized as interest expense over the term of the loan. As a result, the effective interest rate on the loan is 9.49% per annum. We may prepay the debt
subject to certain prepayment fees. The credit facility also prohibits us from paying dividends on our equity securities.
credit facility is secured by all of our assets other than intellectual property for which we have provided a negative pledge. The credit facility contains customary affirmative and
negative covenants. As of June 30, 2014 and December 31, 2013, we were in compliance with all of the covenants under our credit facility.
principal balance of the loan was $7.7 million and $10.4 million at June 30, 2014 and December 31, 2013, respectively.
We anticipate we will incur net losses for the next several years as we complete preclinical studies and initiate clinical development
of our RORgt and LXRb programs. In addition, we plan to continue to invest in discovery efforts to explore additional
targets, including our new discovery program in immuno-oncology, build commercial capabilities and expand our corporate infrastructure. We may not be able to complete the development and initiate
commercialization of these programs if, among other things, our preclinical research and clinical trials are not successful or if the FDA does not approve our product candidates arising out of our
current preclinical program when we expect, or at all.
this offering, we will be a publicly-traded company and will incur significant legal, accounting and other expenses that we were not required to incur as a private company. In
addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC and The NASDAQ Stock Market, requires public companies to implement specified corporate governance practices that are
currently inapplicable to us as a private company. We expect these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and
believe that the net proceeds from this offering, together with receipt of anticipated milestone payments and our existing cash, cash equivalents and marketable securities, will be
sufficient to fund our operations through the first half of 2016. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner
than we currently expect. If we are required to raise additional capital, we may seek to sell additional equity or debt securities or incur indebtedness. The sale of additional equity and debt
securities may result in additional dilution to our stockholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to
those of our common stock and could contain covenants that would restrict our operations. We may also seek funding through collaborations or other similar arrangements with third parties. If we are
unable to raise sufficient additional capital we may need to substantially curtail our planned operations.
of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our
working capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:
- the number and characteristics of the product candidates we pursue;
- the scope, progress, results and costs of researching and
developing our product candidates, and conducting preclinical
and clinical trials;
- the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;
- the cost of manufacturing our product candidates and any products we successfully commercialize;