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SEC Filings

VITAE PHARMACEUTICALS, INC filed this Form S-1 on 08/12/2014
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Vitae Pharmaceuticals, Inc.

Notes to Unaudited Condensed Financial Statements (Continued)

As of June 30, 2014 and December 31, 2013 and
for the Six Months Ended June 30, 2014 and 2013

6. Investments (Continued)

        As of June 30, 2014, the Company's marketable securities had the following maturities:

  Cost Basis   Fair Value  

Less than one year

  $ 9,422,624   $ 9,422,358  

One to five years


  $ 9,422,624   $ 9,422,358  

7. Notes Payable

Term Notes

Silicon Valley Bank and Oxford Finance Corp.—2011 Credit Facility

        On December 22, 2011, the Company entered into a $15 million senior secured credit facility with Silicon Valley Bank and Oxford Finance Corp. (together, the "Lenders") and drew all funds at that time. Pursuant to the terms of the loan and security agreement evidencing the credit facility, the Company made monthly payments of interest only through January 1, 2013 and, thereafter, will 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%. The final payment will include an additional interest payment of $300,000, which is being recognized as interest expense over the term of the note. Therefore, the effective interest rate on the loan is 9.49%. The Company may prepay the debt provided it pays certain prepayment fees.

        The loan is secured by all of the Company's assets other than intellectual property for which the Company has provided a negative pledge. The Company cannot grant a license to its intellectual property without the prior consent of the Lenders except for certain predefined situations. The loan prohibits the Company from paying dividends on its equity securities.

        In connection with the credit facility, the Company issued to Silicon Valley Bank and Oxford Financial Corp. 10-year warrants to purchase an aggregate of 687,500 shares of Series D preferred stock with an exercise price of $1.20 per share. The estimated fair value of the preferred stock warrants was $680,625 determined using the Black-Scholes option pricing model and was recorded as a debt discount, with a corresponding credit to the preferred stock warrant liability. The debt discount is being accreted to interest expense over the term of the loan. The Company accreted $90,750 to interest expense for the six months ended June 30, 2014 and 2013, respectively. In addition, the Company incurred and capitalized a total of $140,000 in debt issuance costs which are being amortized on a straight-line basis as additional interest expense over the expected 45-month loan term.

        The Company also issued Series D preferred stock warrants in conjunction with a credit facility that is no longer outstanding. All Series D preferred stock warrants are recorded as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity. The preferred stock warrants are revalued at each reporting period to reflect any changes in fair value, with any gain or loss from the revaluation recorded in earnings as an adjustment to other income in the Condensed Statements of Operations. The estimated fair value of the preferred stock warrants decreased $175,750 and $219,500 for the six months ended June 30, 2014 and 2013, respectively. See Note 5 for further details.