Aradigm (ARDMQ) 10-Q 11 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 08, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q2
Trading Symbol	ARDM
Entity Registrant Name	ARADIGM CORP
Entity Central Index Key	1,013,238
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,943,542

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 31,213	$ 31,462
Restricted cash	1,800
Receivables	330	150
Prepaid and other current assets	2,332	3,634
Total current assets	35,675	35,246
Property and equipment, net	282	299
Other assets	81	81
Total assets	36,038	35,626
Current liabilities:
Accounts payable	1,151	1,789
Accrued clinical and cost of other studies	2,346	4,315
Accrued compensation	1,021	1,159
Deferred rent		37
Facility lease exit obligation	4	104
Other accrued liabilities	696	112
Total current liabilities	5,218	7,516
Deferred revenue - related party, non-current	5,000	5,000
Convertible debt - related party, net of discount	10,292
Total liabilities	20,510	12,516
Commitments and contingencies
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none outstanding
Common stock, no par value; authorized shares: 35,045,765 at June 30, 2016 and 25,045,765 at December 31, 2015; issued and outstanding shares: 14,943,542 at June 30, 2016; 14,761,351 at December 31, 2015	437,824	428,591
Accumulated deficit	(422,296)	(405,481)
Total shareholders' equity	15,528	23,110
Total liabilities and shareholders' equity	$ 36,038	$ 35,626

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value
Common stock, shares authorized	35,045,765	25,045,765
Common stock, shares issued	14,943,542	14,761,351
Common stock, shares outstanding	14,943,542	14,761,351

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue:
Contract revenue - related party	$ 0	$ 9,927	$ 0	$ 18,666
Grant revenue	14	25	20	54
Total revenue	14	9,952	20	18,720
Operating expenses:
Research and development	6,235	9,754	12,686	18,115
General and administrative	1,385	1,339	3,029	2,881
Restructuring and asset impairment	1	3	2	7
Total operating expenses	7,621	11,096	15,717	21,003
Loss from operations	(7,607)	(1,144)	(15,697)	(2,283)
Interest income	26	7	36	15
Interest expense	(577)		(577)
Other expense	(571)	(8)	(577)	(40)
Net loss and comprehensive loss	(8,729)	(1,145)	(16,815)	(2,308)
Comprehensive loss	$ (8,729)	$ (1,145)	$ (16,815)	$ (2,308)
Basic and diluted net loss per common share	$ (0.59)	$ (0.08)	$ (1.14)	$ (0.16)
Shares used in computing basic and diluted net loss per common share	14,778	14,749	14,769	14,738

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net loss	$ (16,815)	$ (2,308)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization	57	149
Stock-based compensation expense	800	442
Amortization of convertible debt discount	252
Financing costs, derivative liability and warrant	936
Change in value of derivative liability	(386)
Changes in operating assets and liabilities:
Receivables	(180)	618
Prepaid and other current assets	1,302	27
Other assets		30
Accounts payable	(638)	312
Accrued compensation	(138)	18
Current deferred revenue - related party		85
Accrued liabilities	(1,649)	1,505
Deferred rent	(37)	(24)
Accrued clinical and cost of other studies, non-current		109
Facility lease exit obligation	(100)	(87)
Net cash (used in) provided by operating activities	(16,596)	876
Cash flows from investing activities:
Transfer to restricted cash	(1,800)
Capital expenditures	(40)
Net cash used in investing activities	(1,840)
Cash flows from financing activities:
Proceeds from issuance of convertible debt - related party	20,000
Proceeds from issuance of common stock	60	121
Payments for debt issuance costs	(1,873)
Net cash provided by financing activities	18,187	121
Net decrease (increase) in cash and cash equivalents	(249)	997
Cash and cash equivalents at beginning of period	31,462	47,990
Cash and cash equivalents at end of period	31,213	$ 48,987
Non-cash disclosures of financing activities:
Reclassification of derivative liability to equity	8,362
Reclassification of warrants to equity	11
Accrued financing costs	$ 264

Organization, Basis of Presenta

Organization, Basis of Presentation and Liquidity	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization, Basis of Presentation and Liquidity	1. Organization, Basis of Presentation and Liquidity Organization Aradigm Corporation (the “Company,” “we,” “our,” or “us”) is a California corporation, incorporated in 1991, focused on the development and commercialization of drugs delivered by inhalation for the treatment and prevention of severe respiratory diseases. The Company’s principal activities to date have included conducting research and development and developing collaborations. Management does not anticipate receiving revenues from the sale of any of its products during the 2016 fiscal year. The Company operates as a single operating segment. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for fair presentation. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on March 30, 2016 (the “2015 Annual Report on Form 10-K”). The results of the Company’s consolidated operations for the interim periods presented are not necessarily indicative of operating results for the full fiscal year or any future interim period. The consolidated balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, please refer to the consolidated financial statements and notes thereto included in the 2015 Annual Report on Form 10-K. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. Liquidity The Company has incurred significant operating losses and negative cash flows from operations. At June 30, 2016, the Company had an accumulated deficit of $422.3 million, working capital of $30.5 million and shareholders’ equity of $15.5 million. The Company had cash and cash equivalents of approximately $31.2 million as of June 30, 2016. Management believes that this amount, together with the proceeds from the second closing of the convertible debt transaction described in Note 7 and Note 11 below, will be sufficient to meet its obligations through at least December 31, 2016. However, the Company’s business strategy will require it to raise additional capital through equity or debt financing(s), strategic transactions or otherwise, to develop and seek regulatory approval of the Company’s investigational product candidate. In addition, the Company may decide to raise capital opportunistically.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include useful lives for property and equipment and related depreciation calculations, accruals for clinical trial expenses, assumptions for valuing options and warrants, and income taxes. Actual results could differ from these estimates. Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are classified as cash equivalents. Restricted Cash The Company classifies transfers to the restricted cash balance in the statement of cash flows based on the nature of the restriction. At June 30, 2016, the Company has $1.8 million in restricted cash held in an interest bearing escrow account for the purpose of making future interest payments on the Convertible Notes, see Note 7. The Company is required to maintain such deposits sufficient to pay all required payments of interest through May 1, 2017. Property and Equipment The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful lives of the respective assets. Machinery and equipment includes external costs incurred for validation of the equipment. The Company does not capitalize internal validation expense. Computer equipment and software includes capitalized computer software. All of the Company’s capitalized software is purchased; the Company has no internally-developed computer software. Leasehold improvements are amortized over the shorter of the term of the lease or useful life of the improvement. Impairment of Long-Lived Assets The Company reviews for impairment whenever events or changes in circumstances indicate that the carrying amount of property and equipment may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values and the loss is recognized in the consolidated statements of operations. Convertible Instruments The Company accounts for hybrid contracts that feature conversion options in accordance with generally accepted accounting principles in the United States. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible instruments (when it has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract is allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations. Warrants Issued in Connection with Financings For warrants where there is a possibility that the Company may have to settle the warrants in cash, the Company records the fair value of the issued warrants as a liability at each reporting date and records changes in the estimated fair value as a non-cash gain or loss in the condensed consolidated statements of operations. The fair values of these warrants have been determined using the Black Scholes Merton Option Pricing valuation model (the “Black-Scholes Model”). The Black-Scholes Model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. These values are subject to a significant degree of judgment on the part of the Company. Accounting for Costs Associated with Exit or Disposal Activities The Company recognizes a liability for the cost associated with an exit or disposal activity that is measured initially at its fair value in the period in which the liability is incurred. The Company accounted for the partial sublease of its headquarters building as an exit activity and recorded the sublease loss in its Condensed Consolidated Statement of Operations and Comprehensive Loss (see Note 5). Costs to terminate an operating lease or other contracts are (a) costs to terminate the contract before the end of its term or (b) costs that will continue to be incurred under the contract for its remaining term without economic benefit to the entity. In periods subsequent to initial measurement, changes to the liability are measured using the credit-adjusted risk-free rate that was used to measure the liability initially. Revenue Recognition Contract revenues consist of revenues from grants, collaboration agreements and feasibility studies. License and collaboration revenue is primarily generated through agreements with strategic partners for the development and commercialization of our product candidates. The terms of the agreement typically include non-refundable upfront fees, funding of research and development activities, payments based upon achievement of milestones and royalties on net product sales. The Company recognizes revenue under the provisions of the Securities and Exchange Commission issued Staff Accounting Bulletin 104, Topic 13, Revenue Recognition Revised and Updated (“SAB Topic 13”) and ASC 605-25, Revenue Recognition-Multiple Elements. Revenue for arrangements not having multiple deliverables, as outlined in ASC 605-25, is recognized once costs are incurred and collectability is reasonably assured. Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When the Company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. The Company estimates its performance period used for revenue recognition based on the specific terms of each agreement, and adjusts the performance periods, if appropriate, based on the applicable facts and circumstances. Significant management judgment may be required to determine the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Company adopted the provisions of Accounting Standards Update No. 2009-13, Revenue Recognition (Topic 605); Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) for new and materially modified arrangements originating on or after January 1, 2010. ASU 2009-13 provides updated guidance on how the deliverables in an arrangement should be separated, and how consideration should be allocated, and it changes the level of evidence of standalone selling price required to separate deliverables by allowing a vendor to make its best estimate of the standalone selling price of deliverables when vendor-specific objective evidence or third-party evidence of selling price is not available. The Company allocates non-contingent consideration to each stand-alone deliverable based upon the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence, or VSOE, of selling price, if it exists, or third-party evidence, or TPE, of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses best estimated selling price, or BESP, for that deliverable. Assuming the elements meet the revenue recognition guidelines, the revenue recognition methodology prescribed for each unit of accounting is summarized below: Upfront Fees Funded Research and Development and Grant Revenue Milestones Royalties Research and Development Research and development expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct and research-related overhead expenses. The Company expenses research and development costs as such costs are incurred. Stock-Based Compensation The Company accounts for share-based payment arrangements in accordance with ASC 718, Compensation-Stock Compensation Equity-Equity Based Payments to Non-Employees Income Taxes The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As part of the process of preparing the financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves the Company estimating its current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities which are included in the Company’s consolidated balance sheets. The Company estimated its current tax exposure to be zero as it expects to be able to utilize its net operating loss carryovers (NOLs) to offset the income recognized in the quarter and year to date. The Company has updated its Section 382 analysis through December 31, 2015 and noted no additional changes since the last change in 2010. The Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including the historical levels of income and losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If the Company does not consider it more likely than not that it will recover its deferred tax assets, the Company records a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. At June 30, 2016, and December 31, 2015 the Company believed that the amount of its deferred income taxes would not be ultimately recovered. Accordingly, the Company recorded a full valuation allowance for deferred tax assets. However, should there be a change in the Company’s ability to recover its deferred tax assets the Company would recognize a benefit to its tax provision in the period in which it determines that it is more likely than not that it will recover its deferred tax assets. Net Income/(Loss) Per Common Share Basic net income/(loss) per common share is computed using the weighted-average number of shares of common stock outstanding during the period less the weighted-average number of restricted shares of common stock subject to repurchase. Potentially dilutive securities were not included in the net loss per common share calculation for the three and six months ended June 30, 2016, and 2015 because the inclusion of such shares would have had an anti-dilutive effect. Comprehensive Income (Loss) Comprehensive loss refers to revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive loss but are excluded from net loss as these amounts are recorded directly as an adjustment to shareholders’ equity. Comprehensive loss for the periods presented was comprised solely of the Company’s consolidated net loss. There were no changes in equity that were excluded from the Company’s consolidated net loss for all periods presented. Recently Issued Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2016, as compared to the recent accounting pronouncements described in the Company’s 2015 Annual Report on Form 10-K that are of significance or potential significance to the Company.

Cash and Cash Equivalents

Cash and Cash Equivalents	6 Months Ended
	Jun. 30, 2016
Cash and Cash Equivalents [Abstract]
Cash and Cash Equivalents	3. Cash and Cash Equivalents At June 30, 2016 and December 31, 2015, the amortized cost of the Company’s cash and cash equivalents approximated their fair values. The Company currently invests its cash and cash equivalents in money market funds.

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurements	4. Fair Value Measurements The Company follows ASC 820, Fair Value Measurements The Company’s cash and cash equivalents at June 30, 2016 consist of cash and money market funds. Money market funds are valued using quoted market prices.

Sublease Agreement and Lease Ex

Sublease Agreement and Lease Exit Liability	6 Months Ended
	Jun. 30, 2016
Restructuring and Related Activities [Abstract]
Sublease Agreement and Lease Exit Liability	5. Sublease Agreement and Lease Exit Liability See Note 5 to the audited consolidated financial statements included in Part II, Item 8 of the 2015 Annual Report on Form 10-K for information on the sublease agreement. The lease exit liability activity for the six months ended June 30, 2016 is as follows (in thousands): Six Months Ended June 30, 2016 Balance at January 1, 2016 $ 104 Accretion expense 1 Lease payments (101 ) Balance at June 30, 2016 $ 4 As of June 30, 2016, all of the balance was recorded as a current liability.

Other Accrued Liabilities

Other Accrued Liabilities	6 Months Ended
	Jun. 30, 2016
Payables and Accruals [Abstract]
Other Accrued Liabilities	6. Other Accrued Liabilities At June 30, 2016, other accrued liabilities consisted of accrued expenses for interest of $325,000, expenses for services of $316,000 and payroll withholding liabilities of $55,000. At June 30, 2015, other accrued liabilities consisted of accrued expenses for services of $56,000 and payroll withholding liabilities of $56,000. The liability for accrued interest of $325,000 is related to the Convertible Notes as outlined in Note 7 and represents the interest on the Convertible Notes that is accrued but unpaid as of June 30, 2016.

Convertible Notes and Warrants

Convertible Notes and Warrants	6 Months Ended
	Jun. 30, 2016
Text Block [Abstract]
Convertible Notes and Warrants	7. Convertible Notes and Warrants On April 21, 2016, the Company entered into a securities purchase agreement to conduct a private offering (the “Convertible Note Financing”) consisting of $23 million aggregate principal amount of its 9% senior convertible notes convertible into shares of common stock (the “Convertible Notes”) and 263,436 warrants to purchase shares of the Company’s common stock (the “Warrants”). The Convertible Notes bear interest at a rate of 9% per year, payable semiannually in arrears on November 1 and May 1 of each year commencing on November 1, 2016. The Convertible Notes mature on May 1, 2021, unless earlier redeemed or converted. The Convertible Notes are senior unsecured and unsubordinated obligations; rank equal in right of payment to the Company’s existing and future unsecured indebtedness that is not subordinated and are effectively subordinated in right of payment to the Company’s existing and future secured indebtedness. The Convertible Notes are initially convertible into the Company’s common stock at a conversion rate of 191.9386 shares of common stock per $1,000 principal amount of Convertible Notes, representing an initial effective conversion price of $5.21 per share of common stock. The conversion rate may be subject to adjustment upon the occurrence of certain specified events as provided in the indenture governing the Convertible Notes, dated April 25, 2016 between the Company and U.S. Bank National Association, as trustee (the “Indenture”), but will not be adjusted for accrued but unpaid interest. Upon conversion of a Convertible Note, the Company will settle the conversion obligation in common stock equal to the conversion rate, together with a cash payment, if applicable. The Convertible Notes are convertible at the option of the holders at any time prior to April 29, 2021, except that, prior to shareholder approval of the issuance of the Convertible Notes, the Warrants and the underlying shares (“Shareholder Approval”), in the event that the aggregate number of shares of common stock issuable to the holders at any time would exceed 19.99% of the total number of shares of common stock outstanding on April 20, 2016 (the “Conversion Share Cap”), the number of shares issued in any such conversion would be capped at the Conversion Share Cap of 25.9476 shares per $1,000 principal amount of Convertible Notes. Shareholder approval was obtained on June 9, 2016 at which point the Conversion Share Cap was no longer applicable. Holders of the Convertible Notes who convert their Convertible Notes in connection with a make-whole fundamental change, as defined in the Indenture, may be entitled to a make-whole premium in the form of an increase to the conversion rate during a specified period following the effective date of the make-whole fundamental change. In addition, upon the occurrence of a fundamental change prior to the maturity date of the Convertible Notes, as defined in the Indenture, holders of the Convertible Notes may require the Company to purchase all or a portion of their Convertible Notes for cash at a price equal to 100% of the principal amount of the Convertible Notes to be purchased plus any accrued but unpaid interest to, but excluding, the fundamental change purchase date. On or after December 1, 2017, the Company may redeem for cash all or a portion of the Convertible Notes if the last reported sale price of the Company’s common stock is at any time equal to or greater than 200% of the conversion price then in effect for at least twenty trading days immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. The Indenture provides for customary events of default which may result in the acceleration of the maturity of the Notes, including, but not limited to, cross acceleration to certain other indebtedness of the Company and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency or reorganization all outstanding Convertible Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs or is continuing, the trustee or holders of at least 25% in aggregate principal amount of the then outstanding Convertible Notes may declare all of the Convertible Notes to be due and payable immediately. The Warrants have a five-year term and are exercisable at $5.21 per share of common stock. The exercise price is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events or upon any distributions of assets, including cash, stock or other property to the Company’s shareholders. The Warrants are exercisable commencing on the later of October 25, 2016 and the date of the public release of top line data related to the conclusion of the ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Company’s investigational product Pulmaquin ® In accounting for the Convertible Notes and Warrants, the Company bifurcated a derivative liability from the debt host and discounted the Convertible Notes for the estimated fair value of the conversion feature and the freestanding Warrants issued in connection with the Convertible Notes. The liability components were measured by estimating their fair value as of the commitment date. On June 9, 2016, the Company obtained Shareholder Approval, at which point the Conversion Share Cap was lifted. As a result, the bifurcated derivative and warrant liability met the equity classification criteria under ASC 815-40-25 and the liabilities were remeasured at fair value on June 9, 2016 and reclassified to permanent equity. The equity component will not be remeasured in subsequent periods provided that the component continues to meet the conditions necessary for equity classification. The excess of the aggregate face value of the Convertible Notes over the estimated fair value of the liability components is recognized as a debt discount which will be amortized over the term of the Convertible Notes using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense. On April 25, 2016, the initial closing of the Convertible Notes took place under which the Company raised $20 million from a total of two investors and issued 4,319 Warrants to one investor. Of the $20 million $19.9 million was financed by Grifols, a related party to the Company, see Note 8. There were 3,319,820 common shares underlying the conversion feature that was bifurcated as a derivative liability due to the Conversion Share Cap. The Company deposited $1.8 million of the net proceeds into an escrow account after the initial closing to fund, when due, the first two scheduled semi-annual interest payments on the notes. The effective interest rate of the liability component was equal to 22.9% for the three and six months ended June 30, 2016. The financing costs of $2.1 million incurred in connection with the issuance of the Convertible Notes were allocated to the derivative liability, warrant liability and Convertible Note components based on their relative fair values. At June 30, 2016, financing costs of $1.9 million were paid and financing costs of $264,000 were recorded in other accrued liabilities. Financing costs of $1.2 million allocated to the Convertible Note host are being amortized using the effective interest rate method and recognized as non-cash interest expense over the expected term of the Convertible Notes. Financing costs of $936,000 allocated to derivative and Warrant liability components were expensed as financing costs and are included in other expense in the Condensed Consolidated Statement of Operations and Comprehensive Loss. The derivative and warrant liabilities are measured at fair value using certain estimated inputs, which are classified within Level 3 of the valuation hierarchy. The following assumptions were used in the Black-Scholes Model to measure the fair value of the derivative and Warrants as of June 9, 2016 and April 21, 2016: June 9, 2016 April 21, 2016 Fair value of underlying stock – per share $ 4.48 $ 4.55 Risk-free interest rate 1.20 % 1.35 % Expected life (years) 4.9 5 Expected volatility 73.16 % 73.95 % Dividend yield 0.0 % 0.0 % The following table summarizes the activity in the derivative liability and the warrant liability for the three months ended June 30, 2016: Three Months Ended June 30, 2016 (in thousands) Fair Value Fair Value of Change in Reclassifications to Equity Fair Value 2016 Derivative liability $ — $ 8,748 $ (386 ) $ (8,362 ) $ — Warrant liability — 11 — (11 ) — Total $ — $ 8,759 $ (386 ) $ (8,373 ) $ — For the three and six months ended June 30, 2016, the Company recognized a gain of $386,000 and $500 on the derivative and warrant liabilities, respectively, related to the change in fair value from the date of commitment to the date the instruments met the equity classification criteria on June 9, 2016 at which point $8.4 million was reclassified from liabilities to equity. The gain has been recorded in other expense in the Condensed Consolidated Statement of Operations and Comprehensive Loss. As of June 30, 2016, the Convertible Notes consisted of the following: June 30, 2016 (in thousands, except Principal value $ 20,000 Unamortized debt discount (8,537 ) Unamortized debt issuance costs (1,171 ) Carrying value of the convertible notes $ 10,292 Conversion rate (shares of common stock per $1,000 principal amount of notes) 191.9386 Conversion price (per share of common stock) $ 5.21 For the three and six months ended June 30, 2016, the Company recognized interest expense associated with its Convertible Notes as follows: Three and Six months (in thousands) Cash Interest Expense Coupon interest expense $ 325 Noncash Interest Expense Amortization of debt discount 222 Amortization of transaction costs 30 $ 577 As of June 30, 2016, the unamortized debt discount will be amortized over a remaining period of approximately 4.84 years. The if converted value as of June 30, 2016 does not exceed the principal balance of the Convertible Notes. Accrued interest payable at June 30, 2016 is $325,000 and is included in other accrued liabilities.

Collaboration Agreement

Collaboration Agreement	6 Months Ended
	Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Collaboration Agreement	8. Collaboration Agreement Grifols License and Collaboration Agreement See Note 6 to the audited consolidated financial statements included in Part II, Item 8 of the 2015 Annual Report on Form 10-K for information on the Grifols Collaboration Transaction. Grifols is a related party of the Company. Pursuant to the License Agreement, the Company recognized reimbursements for services performed and costs incurred related to the development of the Pulmaquin ® Reimbursable costs incurred under the Grifols License Agreement in the quarters ended June 30, 2016 and 2015 are zero and $9.9 million, respectively. Costs incurred under the Grifols License Agreement for the six months ended June 30, 2016 and 2015 are zero and $18.7 million, respectively. Research and development expenses incurred under the Grifols License Agreement for the three and six months ended June 30, 2015, were $9.4 and $17.5 million, respectively. General and administrative expenses incurred under the Grifols License Agreement for the three and six months ended June 30, 2015, were $0.6 and $1.2 million, respectively. Development expenses are fully burdened and include direct costs reported as research and development expenses and collaboration-related general and administrative expenses.

Stock-Based Compensation and St

Stock-Based Compensation and Stock Options and Awards	6 Months Ended
	Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation and Stock Options and Awards	9. Stock-Based Compensation and Stock Options and Awards The following table shows the stock-based compensation expense included in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Costs and expenses: Research and development $ 207 $ 139 $ 374 $ 217 General and administrative 193 118 426 225 Total stock-based compensation expense $ 400 $ 257 $ 800 $ 442 There was no capitalized stock-based employee compensation cost for the three and six months ended June 30, 2016 and 2015. Since the Company did not record a tax provision during the quarters ended June 30, 2016 and 2015, there was no recognized tax benefit associated with stock-based compensation expense. In March 2016, the Company granted to the officers certain stock option bonus grants, (contingent upon shareholder approval which was received in June 2016) whose vesting is dependent upon meeting certain specified company-wide performance goals. These options were granted at-the-money, contingently vest upon achievement of performance goals, and have contractual lives of ten years. Stock Option Plans: 2005 Equity Incentive Plan (the “2005 Plan”), and 2015 Equity Incentive Plan (the “2015” Plan) On March 13, 2015 the Board adopted and, on May 14, 2015 the Company’s shareholders approved, the 2015 Plan. The 2015 Plan replaces the Company’s 2005 Plan, which expired in March 2015. The 2015 Plan is intended to promote our long-term success and increase shareholder value by attracting, motivating, and retaining non-employee directors, officers, employees, advisors, consultants and independent contractors, and allows the flexibility to grant a variety of awards to eligible individuals, thereby strengthening their commitment to the Company’s success and aligning their interests with those of the Company’s shareholders. The Company did not request that shareholders authorize any new shares of Common Stock in connection with the approval of the 2015 Plan; rather, the shares authorized for issuance under the 2005 Plan were available for issuance under the 2015 Plan. In March 2016, the Company’s Board of Directors amended, and in June 2016 the Company’s shareholders approved, the amendment to the 2015 Plan increasing the shares of common stock authorized for issuance by 2,400,000 shares. Stock Option Activity The following is a summary of activity under the 2005 Plan and the 2015 Plan for the six months ended June 30, 2016: Shares Available for Balance at January 1, 2016 252,725 Increase in authorized shares 2,400,000 Options granted (707,823 ) Options cancelled 10,616 Awards granted (166,000 ) Balance at June 30, 2016 1,789,518 Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Aggregate Outstanding at January 1, 2016 947,142 $ 11.40 Options granted 707,823 $ 4.10 Options cancelled (10,616 ) $ 73.79 Outstanding at June 30, 2016 1,644,349 $ 7.85 8.45 $ 199,720 Exercisable at June 30, 2016 464,966 $ 13.06 6.75 $ 1,708 During the six months ended June 30, 2016, zero stock options were exercised. The total amount of unrecognized compensation cost related to non-vested stock options and stock purchases, net of forfeitures, was $2.0 million as of June 30, 2016. This amount will be recognized over a weighted average period of 1.39 years. A summary of the Company’s unvested restricted stock award activities as of June 30, 2016 is presented below representing the maximum number of shares that could be earned or vested under the 2005 Plan and the 2015 Plan: Number Shares Weighted Average Grant Date Fair Balance at December 31, 2015 300 $ 57.60 Restricted shares granted 166,000 $ 3.87 Restricted share awards vested (4,687 ) $ 4.04 Balance at June 30, 2016 161,613 $ 3.97 For restricted stock awards the Company recognizes compensation expense over the vesting period for the fair value of the stock award on the measurement date. The Company retained purchase rights with respect to 162,000 shares of unvested restricted stock awards issued pursuant to stock purchase agreements at no cost per share as of June 30, 2016. As of June 30, 2016, there was approximately $515,000 of total unrecognized compensation costs, net of forfeitures, related to non-vested stock award which are expected to be recognized over a weighted average period of 2.51 years.

Net Loss and Comprehensive Loss

Net Loss and Comprehensive Loss Per Common Share	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Net Loss and Comprehensive Loss Per Common Share	10. Net Loss and Comprehensive Loss Per Common Share The Company computes basic net loss per common share using the weighted-average number of shares of common stock outstanding during the period less the weighted-average number of shares of common stock subject to repurchase. The effects of including the incremental shares associated with options, warrants and unvested restrictive are anti-dilutive, and are not included in the diluted weighted average number of shares of common stock outstanding for the six months ending June 30, 2016 and 2015. The Company excluded the following securities from the calculation of diluted net loss per common share for the six months ended June 30, 2016 and 2015, as their effect would be anti-dilutive (in thousands): Six months ended June 30, 2016 2015 Common shares underlying convertible notes 3,839 — Outstanding stock options 1,644 885 Unvested restricted stock 162 — Unvested restricted stock units 10 10

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	11. Subsequent Events On July 14, 2016, the Company completed the second closing of its Convertible Note Financing. See Note 7 for information on the first closing of the Convertible Note Financing. The second closing occurred after the Company’s resale registration statement on Form S-1 relating to the Convertible Notes and the Warrants issued in connection with the private placement was declared effective by the Securities and Exchange Commission. The Company issued $3 million of the Convertible Notes and the Warrants in the second closing. The initial conversion price of the Convertible Notes is $5.21 per share of common stock, equivalent to an initial conversion rate of 191.9386 shares of common stock per $1,000 aggregate principal amount of notes. The Warrants are exercisable at an exercise price of $5.21 per share beginning on the later of 180 days after the date of issuance or the date the Company issues a press release announcing data related to the ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Company’s investigational product Pulmaquin inhaled ciprofloxacin. The Company deposited $215,250 of the net proceeds into an escrow account to fund, when due, the first two scheduled semi-annual interest payments on the notes. The Company intends to use the remaining net proceeds to fund the current clinical development and regulatory submission for licensure of Pulmaquin and for general corporate purposes.

Summary of Significant Accoun17

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Accounting Policies [Abstract]
Use of Estimates	Use of Estimates The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates include useful lives for property and equipment and related depreciation calculations, accruals for clinical trial expenses, assumptions for valuing options and warrants, and income taxes. Actual results could differ from these estimates.
Cash and Cash Equivalents	Cash and Cash Equivalents All highly liquid investments with maturities of three months or less at the time of purchase are classified as cash equivalents.
Restricted Cash	Restricted Cash The Company classifies transfers to the restricted cash balance in the statement of cash flows based on the nature of the restriction. At June 30, 2016, the Company has $1.8 million in restricted cash held in an interest bearing escrow account for the purpose of making future interest payments on the Convertible Notes, see Note 7. The Company is required to maintain such deposits sufficient to pay all required payments of interest through May 1, 2017.
Property and Equipment	Property and Equipment The Company records property and equipment at cost and calculates depreciation using the straight-line method over the estimated useful lives of the respective assets. Machinery and equipment includes external costs incurred for validation of the equipment. The Company does not capitalize internal validation expense. Computer equipment and software includes capitalized computer software. All of the Company’s capitalized software is purchased; the Company has no internally-developed computer software. Leasehold improvements are amortized over the shorter of the term of the lease or useful life of the improvement.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets The Company reviews for impairment whenever events or changes in circumstances indicate that the carrying amount of property and equipment may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values and the loss is recognized in the consolidated statements of operations.
Convertible Instruments	Convertible Instruments The Company accounts for hybrid contracts that feature conversion options in accordance with generally accepted accounting principles in the United States. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible instruments (when it has determined that the embedded conversion options should be bifurcated from their host instruments) in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract is allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in results of operations.
Warrants Issued in Connection with Financings	Warrants Issued in Connection with Financings For warrants where there is a possibility that the Company may have to settle the warrants in cash, the Company records the fair value of the issued warrants as a liability at each reporting date and records changes in the estimated fair value as a non-cash gain or loss in the condensed consolidated statements of operations. The fair values of these warrants have been determined using the Black Scholes Merton Option Pricing valuation model (the “Black-Scholes Model”). The Black-Scholes Model provides for assumptions regarding volatility, call and put features and risk-free interest rates within the total period to maturity. These values are subject to a significant degree of judgment on the part of the Company.
Accounting for Costs Associated with Exit or Disposal Activities	Accounting for Costs Associated with Exit or Disposal Activities The Company recognizes a liability for the cost associated with an exit or disposal activity that is measured initially at its fair value in the period in which the liability is incurred. The Company accounted for the partial sublease of its headquarters building as an exit activity and recorded the sublease loss in its Condensed Consolidated Statement of Operations and Comprehensive Loss (see Note 5). Costs to terminate an operating lease or other contracts are (a) costs to terminate the contract before the end of its term or (b) costs that will continue to be incurred under the contract for its remaining term without economic benefit to the entity. In periods subsequent to initial measurement, changes to the liability are measured using the credit-adjusted risk-free rate that was used to measure the liability initially.
Revenue Recognition	Revenue Recognition Contract revenues consist of revenues from grants, collaboration agreements and feasibility studies. License and collaboration revenue is primarily generated through agreements with strategic partners for the development and commercialization of our product candidates. The terms of the agreement typically include non-refundable upfront fees, funding of research and development activities, payments based upon achievement of milestones and royalties on net product sales. The Company recognizes revenue under the provisions of the Securities and Exchange Commission issued Staff Accounting Bulletin 104, Topic 13, Revenue Recognition Revised and Updated (“SAB Topic 13”) and ASC 605-25, Revenue Recognition-Multiple Elements. Revenue for arrangements not having multiple deliverables, as outlined in ASC 605-25, is recognized once costs are incurred and collectability is reasonably assured. Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed and determinable and collection is reasonably assured. Multiple-deliverable arrangements, such as license and development agreements, are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price method and the appropriate revenue recognition principles are applied to each unit. When the Company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. The Company estimates its performance period used for revenue recognition based on the specific terms of each agreement, and adjusts the performance periods, if appropriate, based on the applicable facts and circumstances. Significant management judgment may be required to determine the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations either are completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance using the cumulative catch-up method. The Company adopted the provisions of Accounting Standards Update No. 2009-13, Revenue Recognition (Topic 605); Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) for new and materially modified arrangements originating on or after January 1, 2010. ASU 2009-13 provides updated guidance on how the deliverables in an arrangement should be separated, and how consideration should be allocated, and it changes the level of evidence of standalone selling price required to separate deliverables by allowing a vendor to make its best estimate of the standalone selling price of deliverables when vendor-specific objective evidence or third-party evidence of selling price is not available. The Company allocates non-contingent consideration to each stand-alone deliverable based upon the relative selling price of each element. When applying the relative selling price method, the Company determines the selling price for each deliverable using vendor-specific objective evidence, or VSOE, of selling price, if it exists, or third-party evidence, or TPE, of selling price, if it exists. If neither VSOE nor TPE of selling price exist for a deliverable, the Company uses best estimated selling price, or BESP, for that deliverable. Assuming the elements meet the revenue recognition guidelines, the revenue recognition methodology prescribed for each unit of accounting is summarized below: Upfront Fees Funded Research and Development and Grant Revenue Milestones Royalties
Research and Development	Research and Development Research and development expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct and research-related overhead expenses. The Company expenses research and development costs as such costs are incurred.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for share-based payment arrangements in accordance with ASC 718, Compensation-Stock Compensation Equity-Equity Based Payments to Non-Employees
Income Taxes	Income Taxes The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. As part of the process of preparing the financial statements, the Company is required to estimate income taxes in each of the jurisdictions in which it operates. This process involves the Company estimating its current tax exposure under the most recent tax laws and assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities which are included in the Company’s consolidated balance sheets. The Company estimated its current tax exposure to be zero as it expects to be able to utilize its net operating loss carryovers (NOLs) to offset the income recognized in the quarter and year to date. The Company has updated its Section 382 analysis through December 31, 2015 and noted no additional changes since the last change in 2010. The Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including the historical levels of income and losses, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If the Company does not consider it more likely than not that it will recover its deferred tax assets, the Company records a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable. At June 30, 2016, and December 31, 2015 the Company believed that the amount of its deferred income taxes would not be ultimately recovered. Accordingly, the Company recorded a full valuation allowance for deferred tax assets. However, should there be a change in the Company’s ability to recover its deferred tax assets the Company would recognize a benefit to its tax provision in the period in which it determines that it is more likely than not that it will recover its deferred tax assets.
Net Income/(Loss) Per Common Share	Net Income/(Loss) Per Common Share Basic net income/(loss) per common share is computed using the weighted-average number of shares of common stock outstanding during the period less the weighted-average number of restricted shares of common stock subject to repurchase. Potentially dilutive securities were not included in the net loss per common share calculation for the three and six months ended June 30, 2016, and 2015 because the inclusion of such shares would have had an anti-dilutive effect.
Comprehensive Income (Loss)	Comprehensive Income (Loss) Comprehensive loss refers to revenues, expenses, gains and losses that under U.S. GAAP are included in comprehensive loss but are excluded from net loss as these amounts are recorded directly as an adjustment to shareholders’ equity. Comprehensive loss for the periods presented was comprised solely of the Company’s consolidated net loss. There were no changes in equity that were excluded from the Company’s consolidated net loss for all periods presented.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended June 30, 2016, as compared to the recent accounting pronouncements described in the Company’s 2015 Annual Report on Form 10-K that are of significance or potential significance to the Company.

Sublease Agreement and Lease 18

Sublease Agreement and Lease Exit Liability (Tables)	6 Months Ended
	Jun. 30, 2016
Restructuring and Related Activities [Abstract]
Schedule of Lease Exit Liability Activity	The lease exit liability activity for the six months ended June 30, 2016 is as follows (in thousands): Six Months Ended June 30, 2016 Balance at January 1, 2016 $ 104 Accretion expense 1 Lease payments (101 ) Balance at June 30, 2016 $ 4

Convertible Notes and Warrants

Convertible Notes and Warrants (Tables)	6 Months Ended
	Jun. 30, 2016
Text Block [Abstract]
Schedule of Fair Value Assumption Used to Measure Derivative and Warrants	The following assumptions were used in the Black-Scholes Model to measure the fair value of the derivative and Warrants as of June 9, 2016 and April 21, 2016: June 9, 2016 April 21, 2016 Fair value of underlying stock – per share $ 4.48 $ 4.55 Risk-free interest rate 1.20 % 1.35 % Expected life (years) 4.9 5 Expected volatility 73.16 % 73.95 % Dividend yield 0.0 % 0.0 %
Summary of activity in Derivative Liability and Warrant Liability	The following table summarizes the activity in the derivative liability and the warrant liability for the three months ended June 30, 2016: Three Months Ended June 30, 2016 (in thousands) Fair Value Fair Value of Change in Reclassifications to Equity Fair Value 2016 Derivative liability $ — $ 8,748 $ (386 ) $ (8,362 ) $ — Warrant liability — 11 — (11 ) — Total $ — $ 8,759 $ (386 ) $ (8,373 ) $ —
Summary of Convertible Notes	As of June 30, 2016, the Convertible Notes consisted of the following: June 30, 2016 (in thousands, except Principal value $ 20,000 Unamortized debt discount (8,537 ) Unamortized debt issuance costs (1,171 ) Carrying value of the convertible notes $ 10,292 Conversion rate (shares of common stock per $1,000 principal amount of notes) 191.9386 Conversion price (per share of common stock) $ 5.21
Summary of Interest Expense Associated with Convertible Notes	For the three and six months ended June 30, 2016, the Company recognized interest expense associated with its Convertible Notes as follows: Three and Six months (in thousands) Cash Interest Expense Coupon interest expense $ 325 Noncash Interest Expense Amortization of debt discount 222 Amortization of transaction costs 30 $ 577

Stock-Based Compensation and 20

Stock-Based Compensation and Stock Options and Awards (Tables)	6 Months Ended
	Jun. 30, 2016
Schedule of Stock-Based Compensation Expense	The following table shows the stock-based compensation expense included in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2016 and 2015 (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Costs and expenses: Research and development $ 207 $ 139 $ 374 $ 217 General and administrative 193 118 426 225 Total stock-based compensation expense $ 400 $ 257 $ 800 $ 442
Schedule of Activity Under Stock Option Plan	The following is a summary of activity under the 2005 Plan and the 2015 Plan for the six months ended June 30, 2016: Shares Available for Balance at January 1, 2016 252,725 Increase in authorized shares 2,400,000 Options granted (707,823 ) Options cancelled 10,616 Awards granted (166,000 ) Balance at June 30, 2016 1,789,518 Options Outstanding Number of Shares Weighted Average Exercise Price Weighted Aggregate Outstanding at January 1, 2016 947,142 $ 11.40 Options granted 707,823 $ 4.10 Options cancelled (10,616 ) $ 73.79 Outstanding at June 30, 2016 1,644,349 $ 7.85 8.45 $ 199,720 Exercisable at June 30, 2016 464,966 $ 13.06 6.75 $ 1,708
Restricted Stock Award [Member]
Schedule of Unvested Restricted Stock Award Activities	A summary of the Company’s unvested restricted stock award activities as of June 30, 2016 is presented below representing the maximum number of shares that could be earned or vested under the 2005 Plan and the 2015 Plan: Number Shares Weighted Average Grant Date Fair Balance at December 31, 2015 300 $ 57.60 Restricted shares granted 166,000 $ 3.87 Restricted share awards vested (4,687 ) $ 4.04 Balance at June 30, 2016 161,613 $ 3.97

Net Loss and Comprehensive Lo21

Net Loss and Comprehensive Loss Per Common Share (Tables)	6 Months Ended
	Jun. 30, 2016
Earnings Per Share [Abstract]
Schedule of Securities Excluded from Calculation of Diluted Net Loss per Common Share	The Company excluded the following securities from the calculation of diluted net loss per common share for the six months ended June 30, 2016 and 2015, as their effect would be anti-dilutive (in thousands): Six months ended June 30, 2016 2015 Common shares underlying convertible notes 3,839 — Outstanding stock options 1,644 885 Unvested restricted stock 162 — Unvested restricted stock units 10 10

Organization, Basis of Presen22

Organization, Basis of Presentation and Liquidity - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)Segment	Dec. 31, 2015USD ($)	Jun. 30, 2015USD ($)	Dec. 31, 2014USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segment | Segment	1
Accumulated deficit	$ (422,296)	$ (405,481)
Working capital	30,500
Shareholders' equity	15,528	23,110
Cash and cash equivalents	$ 31,213	$ 31,462	$ 48,987	$ 47,990

Summary of Significant Accoun23

Summary of Significant Accounting Policies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016USD ($)
Income Tax Disclosure [Abstract]
Restricted cash held in interest bearing escrow account	$ 1,800,000
Estimated current tax exposure	$ 0

Sublease Agreement and Lease 24

Sublease Agreement and Lease Exit Liability - Schedule of Lease Exit Liability Activity (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)
Leases [Abstract]
Balance at January 1, 2016	$ 104
Accretion expense	1
Lease payments	(101)
Balance at June 30, 2016	$ 4

Other Accrued Liabilities - Add

Other Accrued Liabilities - Additional Information (Detail) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Other Accrued Liabilities [Line Items]
Accrued expenses for interest	$ 325,000
Accrued payroll withholding liabilities	1,021,000	$ 1,159,000
Other Accrued Liabilities [Member]
Other Accrued Liabilities [Line Items]
Accrued expenses for services	316,000		$ 56,000
Accrued payroll withholding liabilities	55,000		$ 56,000
Convertible Debt [Member] | Other Accrued Liabilities [Member]
Other Accrued Liabilities [Line Items]
Accrued expenses for interest	$ 325,000

Convertible Notes and Warrant26

Convertible Notes and Warrants - Additional Information (Detail)	Dec. 01, 2017$ / shares	Jun. 09, 2016USD ($)	Apr. 25, 2016USD ($)Investorshares	Apr. 21, 2016USD ($)$ / sharesshares	Apr. 20, 2016USD ($)shares	Jun. 30, 2016USD ($)$ / shares	Jun. 30, 2016USD ($)$ / sharesshares
Debt Instrument [Line Items]
Aggregate principal amount						$ 20,000,000	$ 20,000,000
Debt conversion, initial conversion ratio, numerator | shares							191.9386
Debt conversion, initial conversion ratio, denominator							$ 1,000
Debt conversion, initial conversion price per share | $ / shares						$ 5.21	$ 5.21
Purchasable portion of notes equal to percentage of principal amount of notes				100.00%
Warrants exercisable, description							The warrants are exercisable at an exercise price of $5.21 per share beginning on the later of 180 days after the date of issuance or the date the Company issues a press release announcing data related to the ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Companyâ€s investigational product Pulmaquin inhaled ciprofloxacin.
Proceeds from issuance of convertible debt							$ 20,000,000
Accrued financing costs							264,000
Financing costs, derivative liability and warrant							936,000
Gain recognized on derivative and warrant liabilities						$ 386,000	500
Reclassifications to equity						8,373,000
Accrued interest payable						325,000	$ 325,000
Derivative Liability [Member]
Debt Instrument [Line Items]
Gain recognized on derivative and warrant liabilities						386,000
Reclassifications to equity		$ 8,400,000				8,362,000
Class of Warrant Issued April 22, 2016 [Member]
Debt Instrument [Line Items]
Warrants exercisable, description							The Warrants are exercisable commencing on the later of October 25, 2016 and the date of the public release of top line data related to the conclusion of ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Company’s investigational product Pulmaquin® inhaled ciprofloxacin. If, at any time from and after October 25, 2016, the daily volume-weighted average price of the shares of the Company’s common stock for each of ten consecutive trading days exceeds 150% of the Exercise Price, the Company will have the right to call all or a portion of the Warrants for redemption upon twenty business days prior notice to the holders, at a redemption price of $0.01 per Warrant; provided that the holders of the Warrants may elect to exercise their Warrants upon receipt of any redemption notice from the Company.
Amount funded by number of investors | Investor			2
Class of warrants or rights, issued | shares			4,319
Convertible Debt [Member]
Debt Instrument [Line Items]
Percentage of number of common stock outstanding					19.99%
Debt conversion, conversion share cap, numerator | shares					25.9476
Debt conversion, conversion share cap, denominator					$ 1,000
Financing cost						$ 2,100,000	$ 2,100,000
Financing cost paid							1,900,000
Accrued financing costs							264,000
Amortization of financing cost							1,200,000
Financing costs, derivative liability and warrant							$ 936,000
Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Proceeds from issuance of convertible debt			$ 20,000,000
Escrow deposit			$ 1,800,000
Number of common shares convertible to derivative liability due to Conversion Share Cap | shares			3,319,820
Effective interest rate on liability component						22.90%	22.90%
Unamortized debt discount remaining amortization period							4 years 10 months 2 days
Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member] | Grifols [Member]
Debt Instrument [Line Items]
Proceeds from related party convertible debt			$ 19,900,000
Private Placement [Member] | Class of Warrant Issued April 22, 2016 [Member]
Debt Instrument [Line Items]
Number of shares into which the class of warrant may be converted | shares				263,436
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member]
Debt Instrument [Line Items]
Debt conversion, initial conversion ratio, numerator | shares				191.9386
Debt conversion, initial conversion ratio, denominator				$ 1,000
Debt conversion, initial conversion price per share | $ / shares				$ 5.21
Debt conversion, initial conversion ratio				0.191939
Debt conversion, description							The Convertible Notes are initially convertible into the Company’s common stock at a conversion rate of 191.9386 shares of common stock per $1,000 principal amount of Convertible Notes, representing an initial effective conversion price of $5.21 per share of common stock.
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Aggregate principal amount				$ 23,000,000
Maturity date				May 1, 2021
Notes bear interest rate				9.00%
Frequency of periodic payment of interest							Payable semiannually in arrears on November 1 and May 1 of each year commencing on November 1, 2016.
Scenario, Forecast [Member]
Debt Instrument [Line Items]
Number of trading days for effectiveness preceding issuance of redemption notice	20 days
Redeemable portion of notes equal to percentage of principal amount of notes	100.00%
Scenario, Forecast [Member] | Minimum [Member]
Debt Instrument [Line Items]
Redeemable portion of notes equal to or greater than percentage of sale price of common stock	200.00%
Scenario, Forecast [Member] | Class of Warrant Issued April 22, 2016 [Member]
Debt Instrument [Line Items]
Warrants term	5 years
Warrants, exercise price | $ / shares	$ 5.21
Warrants, exercisable commencing date	Oct. 25, 2016
Warrants redemption Price | $ / shares	$ 0.01
Scenario, Forecast [Member] | Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member]
Debt Instrument [Line Items]
Percentage of principal amount of outstanding debt held by trustee or holders, in which they may declare debt to be due and payable immediately in event of default	25.00%

Convertible Notes and Warrant27

Convertible Notes and Warrants - Schedule of Fair Value Assumption Used to Measure Derivative and Warrants (Detail) - $ / shares	Jun. 09, 2016	Apr. 21, 2016
Fair Value Assumptions and Methodology for Assets and Liabilities [Abstract]
Fair value of underlying stock - per share	$ 4.48	$ 4.55
Risk-free interest rate	1.20%	1.35%
Expected life (years)	4 years 10 months 24 days	5 years
Expected volatility	73.16%	73.95%
Dividend yield	0.00%	0.00%

Convertible Notes and Warrant28

Convertible Notes and Warrants - Summary of Activity in Derivative Liability and Warrant Liability (Detail) - USD ($)	Jun. 09, 2016	Jun. 30, 2016	Jun. 30, 2016
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance		$ 0
Fair Value of Instruments Issued		8,759,000
Change in Fair value		(386,000)	$ (500)
Reclassifications to Equity		(8,373,000)
Ending balance		0	0
Derivative Liability [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance		0
Fair Value of Instruments Issued		8,748,000
Change in Fair value		(386,000)
Reclassifications to Equity	$ (8,400,000)	(8,362,000)
Ending balance		0	0
Warrants Liability [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance		0
Fair Value of Instruments Issued		11,000
Reclassifications to Equity		(11,000)
Ending balance		$ 0	$ 0

Convertible Notes and Warrant29

Convertible Notes and Warrants - Summary of Convertible Notes (Detail) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Convertible Debt [Abstract]
Principal value	$ 20,000
Unamortized debt discount	(8,537)
Unamortized debt issuance costs	(1,171)
Carrying value of the convertible notes	$ 10,292
Conversion rate (shares of common stock per $1,000 principal amount of notes) | shares	191.9386
Conversion price (per share of common stock) | $ / shares	$ 5.21

Convertible Notes and Warrant30

Convertible Notes and Warrants - Summary of Convertible Notes (Parenthetical) (Detail)	6 Months Ended
	Jun. 30, 2016USD ($)
Convertible Debt [Abstract]
Debt conversion, initial conversion ratio, denominator	$ 1,000

Convertible Notes and Warrant31

Convertible Notes and Warrants - Summary of Interest Expense Associated with Convertible Notes (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Interest Expense [Abstract]
Cash Interest Expense	$ 577	$ 577
Coupon interest expense	0	0
Noncash Interest Expense	222	222
Amortization of debt discount	30	252
Amortization of transaction costs	$ 577	$ 577

Collaboration Agreement - Grifo

Collaboration Agreement - Grifols License and Collaboration Agreement - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015	Sep. 30, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Contract revenue-related party	$ 0	$ 9,927,000	$ 0	$ 18,666,000
Long-term deferred revenue-related party	5,000,000		5,000,000		$ 5,000,000
Long term deferred revenue-related party, milestone payment received			5,000,000
Research and development	6,235,000	9,754,000	12,686,000	18,115,000
General and administrative	1,385,000	1,339,000	3,029,000	2,881,000
Maximum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Additional payments receivable upon the achievement of regulatory filing and approval milestones	20,000,000		20,000,000
License Agreement with Grifols [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Fully utilized reimbursable research and development expenses						$ 65,000,000
Reimbursable costs incurred under the Grifols License Agreement	$ 0	9,900,000	$ 0	18,700,000
Research and development		9,400,000		17,500,000
General and administrative		$ 600,000		$ 1,200,000

Stock-Based Compensation and 33

Stock-Based Compensation and Stock Options and Awards - Schedule of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Costs and expenses:
Total stock-based compensation expense	$ 400	$ 257	$ 800	$ 442
Research and Development [Member]
Costs and expenses:
Total stock-based compensation expense	207	139	374	217
General and Administrative [Member]
Costs and expenses:
Total stock-based compensation expense	$ 193	$ 118	$ 426	$ 225

Stock-Based Compensation and 34

Stock-Based Compensation and Stock Options and Awards - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Capitalized stock-based employee compensation cost		$ 0		$ 0
Tax benefit associated with stock-based compensation expense		0		$ 0
Vesting period			10 years
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Increasing in shares of common stock authorized for issuance			2,400,000
Stock options exercised during the period			0
Unvested Stock Options and Stock Purchases [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to unvested stock options and stock purchases	$ 2,000,000	$ 2,000,000	$ 2,000,000
Weighted average period over which unrecognized compensation costs expected to be recognized			1 year 4 months 21 days
2005 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Plan expiration date			2015-03
Increasing in shares of common stock authorized for issuance	2,400,000

Stock-Based Compensation and 35

Stock-Based Compensation and Stock Options and Awards - Schedule of Activity Under Stock Option Plan - Shares Available for Future Grant (Detail) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2016shares
Shares Available for Future Grant
Balance at January 1, 2016	252,725
Increase in authorized shares	2,400,000
Options granted	(707,823)
Options cancelled	10,616
Awards granted	(166,000)
Balance at June 30, 2016	1,789,518

Stock-Based Compensation and 36

Stock-Based Compensation and Stock Options and Awards - Schedule of Activity Under Stock Option Plan - Options Outstanding (Detail) - Stock Options [Member]	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Number of Shares
Outstanding at January 1, 2016 | shares	947,142
Options granted | shares	707,823
Options cancelled | shares	(10,616)
Outstanding at June 30, 2016 | shares	1,644,349
Exercisable at June 30, 2016 | shares	464,966
Weighted Average Exercise Price
Outstanding at January 1, 2016 | $ / shares	$ 11.40
Options granted | $ / shares	4.10
Options cancelled | $ / shares	73.79
Outstanding at June 30, 2016 | $ / shares	7.85
Exercisable at June 30, 2016 | $ / shares	$ 13.06
Weighted Average Remaining Contractual Term
Outstanding at June 30, 2016	8 years 5 months 12 days
Exercisable at June 30, 2016	6 years 9 months
Aggregate Intrinsic Value
Outstanding at June 30, 2016 | $	$ 199,720
Exercisable at June 30, 2016 | $	$ 1,708

Stock-Based Compensation and 37

Stock-Based Compensation and Stock Options and Awards - Schedule of Unvested Restricted Stock Award Activities (Detail) - Restricted Stock Award [Member]	6 Months Ended
	Jun. 30, 2016$ / sharesshares
Number of Shares
Balance at December 31, 2015 | shares	300
Number of Shares, granted | shares	166,000
Number of Shares, vested | shares	(4,687)
Balance at June 30, 2016 | shares	161,613
Weighted Average Grant Date Fair Value
Balance at December 31, 2015 | $ / shares	$ 57.60
Weighted Average Grant Date Fair Value, granted | $ / shares	3.87
Weighted Average Grant Date Fair Value, vested | $ / shares	4.04
Balance at June 30, 2016 | $ / shares	$ 3.97

Net Loss and Comprehensive Lo38

Net Loss and Comprehensive Loss Per Common Share - Schedule of Securities Excluded from Calculation of Diluted Net Loss per Common Share (Detail) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Convertible Shares Underlying Convertible Notes [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	3,839
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	1,644	885
Unvested Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	162
Unvested Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Dilutive securities outstanding	10	10

Subsequent Events - Additional

Subsequent Events - Additional Information (Detail)	Jul. 14, 2016USD ($)$ / sharesshares	Apr. 21, 2016USD ($)$ / sharesshares	Jun. 30, 2016USD ($)$ / sharesshares	Apr. 25, 2016USD ($)
Subsequent Event [Line Items]
Aggregate principal amount			$ 20,000,000
Debt conversion, initial conversion price of convertible notes per share | $ / shares			$ 5.21
Debt conversion, initial conversion ratio, numerator | shares			191.9386
Debt conversion, initial conversion ratio, denominator			$ 1,000
Warrants exercisable, description			The warrants are exercisable at an exercise price of $5.21 per share beginning on the later of 180 days after the date of issuance or the date the Company issues a press release announcing data related to the ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Companyâ€s investigational product Pulmaquin inhaled ciprofloxacin.
Class of Warrant Issued April 22, 2016 [Member]
Subsequent Event [Line Items]
Warrants exercisable, description			The Warrants are exercisable commencing on the later of October 25, 2016 and the date of the public release of top line data related to the conclusion of ORBIT-3 and ORBIT-4 Phase 3 pivotal clinical trials for the Company’s investigational product Pulmaquin® inhaled ciprofloxacin. If, at any time from and after October 25, 2016, the daily volume-weighted average price of the shares of the Company’s common stock for each of ten consecutive trading days exceeds 150% of the Exercise Price, the Company will have the right to call all or a portion of the Warrants for redemption upon twenty business days prior notice to the holders, at a redemption price of $0.01 per Warrant; provided that the holders of the Warrants may elect to exercise their Warrants upon receipt of any redemption notice from the Company.
Subsequent Event [Member]
Subsequent Event [Line Items]
Deposit in escrow account	$ 215,250
Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member]
Subsequent Event [Line Items]
Deposit in escrow account				$ 1,800,000
Private Placement [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Warrants, exercise price | $ / shares	$ 5.21
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member]
Subsequent Event [Line Items]
Debt conversion, initial conversion price of convertible notes per share | $ / shares		$ 5.21
Debt conversion, initial conversion ratio, numerator | shares		191.9386
Debt conversion, initial conversion ratio, denominator		$ 1,000
Debt conversion, initial conversion ratio		0.191939
Debt conversion, description			The Convertible Notes are initially convertible into the Company’s common stock at a conversion rate of 191.9386 shares of common stock per $1,000 principal amount of Convertible Notes, representing an initial effective conversion price of $5.21 per share of common stock.
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt conversion, initial conversion ratio, numerator | shares	191.9386
Debt conversion, initial conversion ratio, denominator	$ 1,000
Debt conversion, initial conversion ratio	0.191939
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member]
Subsequent Event [Line Items]
Aggregate principal amount		$ 23,000,000
Private Placement [Member] | Senior Convertible Notes Due 2021 [Member] | Convertible Debt [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt conversion, initial conversion price of convertible notes per share | $ / shares	$ 5.21
Second Closing [Member] | Private Placement [Member] | Subsequent Event [Member] | Class of Warrant Issued April 22, 2016 [Member]
Subsequent Event [Line Items]
Aggregate principal amount	$ 3,000,000