Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 22, 2019 | Jun. 29, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | ARENA PHARMACEUTICALS INC | ||
Entity Central Index Key | 1,080,709 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | ARNA | ||
Entity Common Stock, Shares Outstanding | 49,462,849 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 1.9 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 161,037 | $ 158,837 |
Short-term investments, available-for-sale | 284,594 | 88,240 |
Accounts receivable | 5,086 | 2,357 |
Prepaid expenses and other current assets | 10,008 | 2,681 |
Insurance recovery receivable | 12,025 | |
Assets of disposal group held for sale | 17,140 | |
Total current assets | 460,725 | 281,280 |
Investments, available-for-sale | 82,412 | 24,242 |
Land, property and equipment, net | 23,114 | 30,131 |
Deferred tax assets | 110,333 | |
Other non-current assets | 10,319 | 3,622 |
Total assets | 686,903 | 339,275 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 16,181 | 7,916 |
Accrued clinical and preclinical study fees | 10,454 | 7,706 |
Current portion of lease financing obligations | 3,283 | 4,000 |
Accrued litigation settlement | 24,000 | |
Current portion of deferred revenues | 1,110 | |
Liabilities of disposal group held for sale | 27,595 | |
Total current liabilities | 29,918 | 72,327 |
Lease financing obligations, less current portion | 49,426 | 57,748 |
Other long-term liabilities | 1,301 | 989 |
Deferred revenues, less current portion | 1,067 | |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Preferred stock, $0.0001 par value, 7,500,000 shares authorized, no shares issued and outstanding at December 31, 2018, and 2017 | ||
Common stock, $0.0001 par value, 73,500,000 shares authorized at December 31, 2018, and 2017; 49,422,991 shares issued and outstanding at December 31, 2018; 39,280,687 shares issued and outstanding at December 31, 2017 | 5 | 4 |
Additional paid-in capital | 2,106,960 | 1,698,543 |
Accumulated other comprehensive loss | (155) | (1,216) |
Accumulated deficit | (1,500,552) | (1,490,187) |
Total stockholders' equity | 606,258 | 207,144 |
Total liabilities and equity | $ 686,903 | $ 339,275 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 7,500,000 | 7,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 73,500,000 | 73,500,000 |
Common stock, shares issued | 49,422,991 | 39,280,687 |
Common stock, shares outstanding | 49,422,991 | 39,280,687 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | |||
Total revenues | $ 17,970,000 | $ 21,337,000 | $ 92,163,000 |
Operating costs and expenses | |||
Research and development | 115,029,000 | 70,988,000 | 63,782,000 |
General and administrative | 47,724,000 | 30,341,000 | 27,529,000 |
Litigation settlement expense, net | 11,975,000 | ||
Restructuring charges | 6,115,000 | ||
Total operating costs and expenses | 162,753,000 | 113,304,000 | 97,426,000 |
Loss from operations | (144,783,000) | (91,967,000) | (5,263,000) |
Interest and other income (expense) | |||
Interest income | 8,772,000 | 492,000 | 290,000 |
Interest expense | (5,695,000) | (6,119,000) | (6,512,000) |
Other income (expense) | 2,872,000 | 1,740,000 | (815,000) |
Total interest and other income (expense), net | 5,949,000 | (3,887,000) | (7,037,000) |
Loss from continuing operations before income taxes | (138,834,000) | (95,854,000) | (12,300,000) |
Income tax benefit | 110,265,000 | 0 | 0 |
Loss from continuing operations | (28,569,000) | (95,854,000) | (12,300,000) |
Income (loss) from discontinued operations | (830,000) | 3,122,000 | (10,596,000) |
Net loss | (29,399,000) | (92,732,000) | (22,896,000) |
Less net loss attributable to noncontrolling interest in consolidated variable interest entity | 1,325,000 | 380,000 | |
Net loss attributable to stockholders of Arena | (29,399,000) | (91,407,000) | (22,516,000) |
Amounts attributable to stockholders of Arena: | |||
Loss from continuing operations | (28,569,000) | (94,529,000) | (11,920,000) |
Income (loss) from discontinued operations | (830,000) | 3,122,000 | (10,596,000) |
Net loss attributable to stockholders of Arena | $ (29,399,000) | $ (91,407,000) | $ (22,516,000) |
Net income (loss) attributable to stockholders of Arena per share, basic and diluted: | |||
Continuing operations | $ (0.61) | $ (2.87) | $ (0.49) |
Discontinued operations | (0.02) | 0.10 | (0.44) |
Net income (loss) attributable to stockholders of Arena per share, basic and diluted | $ (0.63) | $ (2.77) | $ (0.93) |
Shares used in calculating net income (loss) attributable to stockholders of Arena per share, basic and diluted | 47,041 | 32,990 | 24,313 |
Comprehensive Loss: | |||
Net loss | $ (29,399,000) | $ (92,732,000) | $ (22,896,000) |
Foreign currency translation adjustment | 72,000 | 2,016,000 | (1,920,000) |
Unrealized loss on available-for-sale investments | (113,000) | (133,000) | |
Comprehensive loss | (29,440,000) | (90,849,000) | (24,816,000) |
Less comprehensive loss attributable to noncontrolling interest in consolidated variable interest entity | 1,325,000 | 380,000 | |
Comprehensive loss attributable to stockholders of Arena | (29,440,000) | (89,524,000) | (24,436,000) |
Collaboration and Other Revenue | |||
Revenues | |||
Total revenues | 11,402,000 | 19,632,000 | $ 92,163,000 |
Royalty Revenue | |||
Revenues | |||
Total revenues | $ 6,568,000 | $ 1,705,000 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Underwriters | ATM facility | Common Stock | Common StockUnderwriters | Common StockATM facility | Additional Paid-In Capital | Additional Paid-In CapitalUnderwriters | Additional Paid-In CapitalATM facility | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Equity Attributable to Stockholders of Arena | Total Equity Attributable to Stockholders of ArenaUnderwriters | Total Equity Attributable to Stockholders of ArenaATM facility | Equity Attributable to Noncontrolling Interest in Consolidated Variable Interest Entity |
Beginning Balance at Dec. 31, 2015 | $ 53,542 | $ 2 | $ 1,430,939 | $ (1,179) | $ (1,376,220) | $ 53,542 | |||||||||
Beginning Balance (in shares) at Dec. 31, 2015 | 24,287,118 | ||||||||||||||
Issuance of common stock upon exercise of options | 179 | 179 | 179 | ||||||||||||
Issuance of common stock upon exercise of options (in shares) | 11,556 | ||||||||||||||
Issuance of common stock under employee stock purchase plan | $ 203 | 203 | 203 | ||||||||||||
Issuance of common stock under employee stock purchase plan (in shares) | 14,140 | 14,140 | |||||||||||||
Issuance of common stock upon vesting of restricted stock unit awards (in shares) | 27,266 | ||||||||||||||
Share-based compensation expense | Expensed | $ 11,117 | 11,117 | 11,117 | ||||||||||||
Share-based compensation expense | Capitalized Cost | 170 | 170 | 170 | ||||||||||||
Contribution to variable interest entity | (871) | (871) | $ 871 | ||||||||||||
Translation gain (loss) | (1,920) | (1,920) | (1,920) | ||||||||||||
Net loss | (22,896) | (22,516) | (22,516) | (380) | |||||||||||
Ending Balance at Dec. 31, 2016 | 40,395 | $ 2 | 1,441,737 | (3,099) | (1,398,736) | 39,904 | 491 | ||||||||
Ending Balance (in shares) at Dec. 31, 2016 | 24,340,080 | ||||||||||||||
Adoption of ASU No. 2016-09 | ASU No. 2016-09 | 44 | (44) | |||||||||||||
Issuance of common stock | $ 236,388 | $ 6,987 | $ 2 | $ 236,386 | $ 6,987 | $ 236,388 | $ 6,987 | ||||||||
Issuance of common stock (in shares) | 14,087,500 | 489,023 | |||||||||||||
Issuance of common stock upon exercise of options | $ 5,404 | 5,404 | 5,404 | ||||||||||||
Issuance of common stock upon exercise of options (in shares) | 323,431 | ||||||||||||||
Issuance of common stock under employee stock purchase plan (in shares) | 2,236 | ||||||||||||||
Issuance of common stock under employee stockpurchase plan and upon vesting of restrictedstock unit awards | $ 12 | 12 | 12 | ||||||||||||
Issuance of common stock under employee stock purchase plan and upon vesting of restricted stock unit awards (in shares) | 40,653 | ||||||||||||||
Share-based compensation expense | 7,990 | 7,973 | 7,973 | 17 | |||||||||||
Unrealized loss on available-for-sale investments | (133) | (133) | (133) | ||||||||||||
Translation gain (loss) | 2,016 | 2,016 | 2,016 | ||||||||||||
Net loss | (92,732) | (91,407) | (91,407) | (1,325) | |||||||||||
Deconsolidation of variable interest entity | 817 | $ 817 | |||||||||||||
Ending Balance at Dec. 31, 2017 | $ 207,144 | $ 4 | 1,698,543 | (1,216) | (1,490,187) | 207,144 | |||||||||
Ending Balance (in shares) at Dec. 31, 2017 | 39,280,687 | 39,280,687 | |||||||||||||
Adoption of ASU No. 2016-09 | ASC 606 | $ 20,136 | 1,102 | 19,034 | 20,136 | |||||||||||
Issuance of common stock | $ 383,142 | $ 1 | $ 383,141 | $ 383,142 | |||||||||||
Issuance of common stock (in shares) | 9,775,000 | ||||||||||||||
Issuance of common stock upon exercise of options | 5,888 | 5,888 | 5,888 | ||||||||||||
Issuance of common stock upon exercise of options (in shares) | 317,636 | ||||||||||||||
Issuance of common stock upon vesting of restricted stock unit awards | (166) | (166) | (166) | ||||||||||||
Issuance of common stock upon vesting of restricted stock unit awards (in shares) | 49,668 | ||||||||||||||
Share-based compensation expense | 19,554 | 19,554 | 19,554 | ||||||||||||
Unrealized loss on available-for-sale investments | (113) | (113) | (113) | ||||||||||||
Translation gain (loss) | 72 | 72 | 72 | ||||||||||||
Net loss | (29,399) | (29,399) | (29,399) | ||||||||||||
Ending Balance at Dec. 31, 2018 | $ 606,258 | $ 5 | $ 2,106,960 | $ (155) | $ (1,500,552) | $ 606,258 | |||||||||
Ending Balance (in shares) at Dec. 31, 2018 | 49,422,991 | 49,422,991 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities: | |||
Net loss | $ (29,399) | $ (92,732) | $ (22,896) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
(Income) loss from discontinued operations | 830 | (3,122) | 10,596 |
Depreciation and amortization | 3,759 | 4,278 | 4,994 |
Deferred income taxes | (110,333) | ||
Non-cash collaboration revenue | (1,500) | ||
Non-cash royalty revenue | (3,315) | ||
Share-based compensation | 19,543 | 7,855 | 11,075 |
Litigation settlement expense, net | 11,975 | ||
Amortization of prepaid financing costs | 110 | 136 | 136 |
Amortization of original issue discounts, net of premiums, on available- for-sale investments | (664) | ||
Loss (gain) on disposal of property and equipment | (791) | (379) | 1,270 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,760) | 10,787 | (12,246) |
Prepaid expenses and other assets | (2,929) | 585 | 2,416 |
Payables and accrued liabilities | 10,871 | 1,803 | 2,410 |
Accrued litigation settlement | (11,975) | ||
Deferred revenues | (2,061) | (4,401) | (69,078) |
Other long-term liabilities | (1,265) | (577) | 30 |
Net cash used in operating activities - continuing operations | (131,879) | (63,792) | (71,293) |
Net cash provided by (used in) operating activities - discontinued operations | (333) | (2,850) | 9,817 |
Net cash used in operating activities | (132,212) | (66,642) | (61,476) |
Investing activities: | |||
Purchases of available-for-sale investments | (364,539) | (112,615) | |
Proceeds from sale and maturity of available-for-sale investments | 110,564 | ||
Deconsolidation of variable interest entity | (406) | ||
Purchases of property and equipment | (692) | (113) | (814) |
Proceeds from sale of property and equipment | 789 | 954 | |
Other non-current assets | (11) | (5) | (654) |
Net cash used in investing activities - continuing operations | (254,678) | (112,350) | (514) |
Net cash provided by (used in) investing activities - discontinued operations | 3,405 | (40) | (236) |
Net cash used in investing activities | (251,273) | (112,390) | (750) |
Financing activities: | |||
Principal payments on lease financing obligations | (4,000) | (3,518) | (2,979) |
Proceeds from issuance of common stock | 389,031 | 248,805 | 370 |
Other financing activities | 320 | ||
Net cash provided by (used in) financing activities | 385,031 | 245,287 | (2,289) |
Effect of exchange rate changes on cash | 654 | 1,870 | (294) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 2,200 | 68,125 | (64,809) |
Cash, cash equivalents and restricted cash at beginning of year | 159,700 | 91,575 | 156,384 |
Cash, cash equivalents and restricted cash at end of year | 161,900 | 159,700 | 91,575 |
Supplemental disclosure of cash flow information: | |||
Interest paid | 5,696 | $ 5,967 | $ 6,303 |
Supplemental disclosure of non-cash investing and financing information: | |||
Disposition of property and land upon lease expiration | 3,944 | ||
Reduction in lease financing obligation from release of residual value upon lease expiration | $ 5,039 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
The Company and Summary of Significant Accounting Policies | 1. The Company and Summary of Significant Accounting Policies The Company Arena Pharmaceuticals, Inc., or Arena, was incorporated on April 14, 1997, and commenced operations in July 1997. We are a biopharmaceutical company focused on delivering novel, transformational medicines with optimized pharmacology and pharmacokinetics to patients globally. Our proprietary, internally-developed pipeline includes multiple potentially first- or best-in-class assets with broad clinical utility. Our most advanced investigational clinical programs are: etrasimod, which we are evaluating in late-stage clinical programs in ulcerative colitis and Crohn’s disease, as well as progressing programs for atopic dermatitis and other indications; olorinab for a broad range of visceral pain conditions and which we are evaluating in a Phase 2 trial for treatment of gastrointestinal pain; and ralinepag, which our licensee, United Therapeutics, is evaluating in a Phase 3 program for pulmonary arterial hypertension. We continue to assess other earlier research and development stage drug candidates, including APD418, a first-in-class calcium-independent myofilament derepressor which we are studying in a preclinical program the treatment of decompensated heart failure. We operate in one business segment. Our primary clinical operations are conducted in San Diego, California and Boston, Massachusetts; and in Zug, Switzerland by Arena Pharmaceuticals Development GmbH, or APD GmbH, our wholly-owned subsidiary. In November 2018, we entered into a collaboration and license agreement, or the United Therapeutics Agreement, with United Therapeutics Corporation, or United Therapeutics. Under the United Therapeutics Agreement, we granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. This transaction was completed on January 24, 2019. Upon the closing of this transaction, in January 2019, we received a non-refundable upfront payment of $800.0 million. We are also eligible to receive up to an aggregate of $400.0 million in regulatory milestone payments related to ralinepag, consisting of a payment of $150.0 million upon first marketing approval of an oral formulation of ralinepag in a major non-U.S. market, and a payment of $250.0 million upon U.S. marketing approval of an inhaled formulation of ralinepag to treat pulmonary arterial hypertension, as well as low double-digit, tiered royalties on net sales of ralinepag products, subject to certain adjustments for third party license payments Additionally, we have collaborations and license agreements with the following pharmaceutical companies: Everest Medicines Limited, or Everest, (etrasimod in Greater China and select countries in Asia), Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, (undisclosed target – preclinical), Outpost Medicine, LLC, or Outpost Medicine, (undisclosed compound with potential utility in treating genitourinary disorders - preclinical) Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with the US generally accepted accounting principles, or GAAP, and reflect all of our activities, including those of our wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. As a result of the sale of our Manufacturing Operations (see Note 5), the operations and cash flows of the Manufacturing Operations are reflected as discontinued operations and the related assets and liabilities as held for sale. The accompanying consolidated financial statements also include the activity of Beacon Discovery, Inc., or Beacon, a variable interest entity in which we had a controlling financial interest until December 2017 at which point we deconsolidated Beacon (see Note 13). The results of operations and comprehensive loss attributable to the noncontrolling interest in Beacon are presented as separate components from the results of operations and comprehensive loss attributable to the stockholders of Arena in the consolidated statements of operations and comprehensive loss. On June 14, 2017, we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware to effect a one-for-ten reverse split of our issued and outstanding common stock. The accompanying consolidated financial statements and notes thereto give retrospective effect to the reverse stock split for all periods presented. All issued and outstanding common stock, options exercisable for common stock, restricted stock units, performance restricted stock units, and per share amounts contained in the consolidated financial statements have been retrospectively adjusted to reflect this reverse stock split for all periods presented. Concurrent with the reverse stock split we effected a reduction in the number of authorized shares of common stock from 367,500,000 shares to 73,500,000 shares. Liquidity As of December 31, 2018, we had cash, cash equivalents and available-for-sale investments of approximately $528.0 million. In January 2019, we received an $800.0 million upfront payment from United Therapeutics. We will require substantial cash to achieve our objectives of discovering, developing and commercializing drugs, as this process typically takes many years and potentially hundreds of millions of dollars for an individual drug. We may not have adequate available cash, or assets that could be readily turned into cash, to meet these objectives in the long term. We will need to obtain significant funds under our existing collaborations and license agreements, under new collaboration, licensing or other commercial agreements for one or more of our drug candidates and programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions . Recent Accounting Pronouncements Leases. In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases Land Easement Practical Expedient for Transition to Topic 842 Codification Improvements to Topic 842 Targeted Improvements A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We will The new standard provides a number of optional practical expedients in transition. We expect to elect the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We do not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. We expect that this standard will not have a material effect on our financial statements. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on our balance sheet for our real property operating lease; and (2) providing significant new disclosures about our leasing activities. On adoption, we currently expect to recognize an additional operating lease liability with a corresponding ROU asset based on the present value of the remaining minimum rental payments under current leasing standards for an existing operating lease. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently expect to elect the short-term lease recognition exemption for our office equipment leases. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. Other. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Restricted Cash The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total of the amount presented in the consolidated statements of cash flows, in thousands: December 31, December 31, 2018 2017 Cash and cash equivalents $ 161,037 $ 158,837 Restricted cash included in other non-current assets 863 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 161,900 $ 159,700 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Accounting Standard Codification 606, Revenue from Contracts with Customers , or ASC 606, Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. The amounts reported could differ under different estimates and assumptions. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities of three months or less when purchased. Available-for-Sale Investments We define investments as income-yielding securities that can be readily converted to cash, and classify such investments as available-for-sale. We carry these securities at fair value, and report unrealized gains and losses as a separate component of accumulated other comprehensive income or loss. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses and declines in securities judged to be other than temporary are included in other income or expense. The cost of securities sold is based on the specific identification method. Interest and dividends on available Concentrations of Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and available-for-sale investments. We limit our exposure to credit loss by holding our cash primarily in US dollars or placing our cash and investments in US government, agency or government-sponsored enterprise obligations and in corporate debt instruments that are rated investment grade, in accordance with an investment policy approved by our Board of Directors. Our customers are typically other biopharmaceutical companies to which we license our intellectual property, or sell research and development services or other services under license or collaboration agreements. For the year ended December 31, 2018, Eisai, Boehringer Ingelheim, Outpost Medicine, Axovant and Everest accounted for 36.6%, 24.8%, 15.3%, 12.1% and 11.1%, respectively, of our total revenues. For the year ended December 31, 2017, Everest, Boehringer Ingelheim and Axovant accounted for 56.2%, 23.8%, and 10.5%, respectively, of our total revenues. For the year ended December 31, 2016, more than 90% of our annual revenues was from Eisai and other BELVIQ distributors. As of December 31, 2018, Boehringer Ingelheim and Eisai accounted for 72.0%, and 27.1% of our accounts receivable. As of December 31, 2017, Eisai, Axovant and Boehringer Ingelheim accounted for 61.1%, 17.6%, and 14.8%, respectively of our accounts receivable. We monitor our customers' financial credit worthiness in order to assess and respond to any changes in their credit profile. During the years ended December 31, 2018, 2017, and 2016, we did not record any write-offs or reserves against accounts receivable . Property and Equipment Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets (generally 3 to 15 years) using the straight-line method. Buildings are stated at cost and depreciated over an estimated useful life of approximately 20 years using the straight-line method. Leasehold improvements are stated at cost and amortized over the shorter of the estimated useful lives of the assets or the lease term using the straight-line method. Capital improvements are stated at cost and amortized over the estimated useful lives of the underlying assets using the straight-line method . Long-lived Assets If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted cash flows. If impairment is indicated, we measure the impairment loss by comparing the fair value to the carrying value of the asset. Deferred Rent For financial reporting purposes, rent expense and rental income are recognized on a straight-line basis over the term of the underlying lease or sublease. The difference between rent expense or rental income and amounts paid under lease agreements is recorded as an asset or a liability in our consolidated balance sheets. Foreign Currency The functional currency of our wholly owned subsidiaries in Switzerland, APD GmbH and, until March 31, 2108, Arena Pharmaceuticals GmbH, or Arena GmbH, was the Swiss franc. Accordingly, all assets and liabilities of these subsidiaries are translated to US dollars based on the applicable exchange rate on the balance sheet date. Revenue and expense components are translated to US dollars at weighted-average exchange rates in effect during the period. Gains and losses resulting from foreign currency translation are reported as a separate component of accumulated other comprehensive income or loss in the equity section of our consolidated balance sheets. Foreign currency transaction gains and losses are primarily the result of remeasuring US dollar-denominated receivables and payables of our foreign subsidiaries. Foreign currency transaction gains and losses recorded by Arena GmbH are included in net income (loss) from discontinued operations. Share-based Compensation Our share-based awards are measured at fair value and recognized over the requisite service or performance period. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model, based on the market price of the underlying common stock, expected term, expected stock price volatility and expected risk-free interest rate. Expected volatility is computed using a combination of historical volatility for a period equal to the expected term and implied volatilities from traded options to buy our common stock, with historical volatility being weighted at 75%. The expected term of options is determined based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and post-vesting terminations. The risk-free interest rates are based on the US Treasury yield curve, with a remaining term approximately equal to the expected term used in the option pricing model. We account for the forfeitures in the period they occur. The fair value of each restricted stock unit award is estimated based on the market price of the underlying common stock on the date of the grant. The fair value of restricted stock unit awards that include market-based performance conditions is estimated on the date of grant using a Monte Carlo simulation model, based on the market price of the underlying common stock, expected performance measurement period, expected stock price volatility and expected risk-free interest rate. Revenue Recognition Our revenues to date have been generated primarily through collaboration and license agreements. Our collaboration and license agreements frequently contain multiple elements including (i) intellectual property licenses, (ii) product research, development and regulatory services and (iii) product manufacturing. Consideration we receive under these arrangements may include upfront payments, research and development funding, cost reimbursements, milestone payments, payments for product sales and royalty payments. Our customers include Everest, Outpost Medicine, Eisai, Axovant Sciences GmbH, or Axovant, Boehringer Ingelheim, and Siegfried AG, or Siegfried. Effective January 1, 2018, we adopted Accounting Standard Codification 606, Revenue from Contracts with Customers , or ASC 606, issued by the Accounting Standards Board, or FASB. As a result, we have changed our accounting policy for revenue recognition as detailed below. We implemented ASC 606 using the modified retrospective method by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of our accumulated deficit at January 1, 2018. Therefore, the comparative period information has not been adjusted. We applied ASC 606 using a practical expedient for contracts that were modified before the implementation date, which allowed us to determine an aggregate effect of all modifications that occurred before January 1, 2018, when determining the satisfied and unsatisfied performance obligations, the transaction price, and allocating that transaction price to the performance obligations instead of retrospectively restating the contracts for such contract modifications. The cumulative impact to our accumulated deficit balance at January 1, 2018, as a result of the adoption of ASC 606 was a decrease of $19.0 million. The decrease arose primarily from a reduction of deferred revenue balances related to upfront payments received from customers and recognition of contract assets due to a combination of (i) the effects of applying the practical expedient for contract modifications and our conclusions related to satisfied and unsatisfied performance obligations, which resulted in a relatively higher portion of the total transaction price recognized as revenue in periods prior to our adoption of ASC 606, (ii) the effect of the bill-and-hold accounting guidance for inventory in ASC 606 and (iii) the inclusion of estimated future royalty payments related to our intellectual property in the total transaction price to the extent such intellectual property was legally sold to our customer rather than licensed. The cumulative effect adjustment is net of an impairment loss of $13.1 million which was a direct effect of the adoption of ASC 606 on the asset group of the Manufacturing Operations, which was classified as assets of disposal group held for sale since December 2017. The following table summarizes the impacts of adopting ASC 606 on our consolidated financial statements, in thousands. Impact of Changes in Accounting Policies Three months ended December 31, 2018 (unaudited) As reported Adjustments Balances without adoption of ASC 606 Collaboration and other revenue $ 6,878 $ 56 $ 6,934 Royalty revenue 1,770 (393 ) 1,377 Total revenues 8,648 (337 ) 8,311 Loss from operations (44,644 ) (337 ) (44,981 ) Loss from continuing operations 68,711 (337 ) 68,374 Net loss 68,711 (337 ) 68,374 Net loss attributable to stockholders of Arena 68,711 (337 ) 68,374 Year ended December 31, 2018 Collaboration and other revenue $ 11,402 $ 105 $ 11,507 Royalty revenue 6,568 (1,847 ) 4,721 Total revenues 17,970 (1,742 ) 16,228 Loss from operations (144,783 ) (1,742 ) (146,525 ) Loss from continuing operations (28,569 ) (594 ) (29,163 ) Income (loss) from discontinued operations (830 ) 13,660 12,830 Net loss (29,399 ) 13,066 (16,333 ) Net loss attributable to stockholders of Arena (29,399 ) 13,066 (16,333 ) As of December 31, 2018 Prepaid expenses and other current assets $ 10,008 $ (1,484 ) $ 8,524 Total current assets 460,725 (1,484 ) 459,241 Other non-current assets 10,319 (4,471 ) 5,848 Total assets 686,903 (5,955 ) 680,948 Current portion of deferred revenues — 10 10 Total current liabilities 29,918 10 29,928 Accumulated deficit (1,500,552 ) (5,965 ) (1,506,517 ) Total stockholders' equity 606,258 (5,965 ) 600,293 Total liabilities and stockholders' equity 686,903 (5,955 ) 680,948 Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services and excludes sales incentives and amounts collected i) Identify the contract with a customer . We consider the terms and conditions of our collaboration and license agreements to identify contracts within the scope of ASC 606. We consider that we have a contract with a customer when the contract is approved, we can identify each party's rights regarding the goods and services to be transferred, we can identify the payment terms for the goods and services, we have determined the customer has the ability and intent to pay and the contract has commercial substance. We use judgment in determining the customer's ability and intent to pay, which is based upon factors including the customer's historical payment experience or, for new customers, credit and financial information pertaining to the customers. ii) Identify the performance obligations in the contract. Performance obligations in our collaboration and license agreements are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. Our performance obligations generally consist of intellectual property licenses, research, development and/or regulatory services and manufacturing and supply commitments. iii) Determine the transaction price. We determine the transaction price based on the consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. In determining the transaction price, any variable consideration would be considered, to the extent applicable, if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. In accordance with the royalty exception under ASC 606 for licenses of intellectual property, the transaction price excludes future royalty payments to be received from our customers. None of our collaboration and license agreements contain consideration payable to our customer or a significant financing component. iv) Allocate the transaction price to performance obligations in the contract. v) Recognize revenue when or as we satisfy a performance obligation. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised goods or services to a customer. We recognize revenue when we transfer control of the goods or services to our customers for an amount that reflects the consideration that we expect to receive in exchange for those services. Performance Obligations. The following is a description of principal goods and services from which we generate revenue. Intellectual property licenses We generate revenue from licensing our intellectual property including know-how and development and commercialization rights. These licenses provide customers with a term-based license to further research, develop and commercialize our internally-discovered drug candidates. The consideration we receive in the form of nonrefundable upfront consideration related to the functional intellectual property licenses is recognized when we transfer such license to the customer unless the license is combined with other goods or services into one performance obligation, in which case the revenue is recognized over a period of time based on our estimated pattern in which we satisfy the combined performance obligation. Intellectual property sales We generate royalty revenue from sales of our intellectual property. We estimate the future royalty payments and recognize revenue with a corresponding contract asset at a point in time when we transfer the intellectual property to the customer. We periodically reassess our estimate of the future royalty payments and recognize any estimate adjustments as revenue in the current period. Research, development and regulatory services We generate revenue from research, development and regulatory services we provide to our customers in connection with the licensed intellectual property. The services we provide to our customers primarily include scientific research activities, preparation for and management of clinical trials, and assistance during the regulatory approval application process. Revenue associated with these services is recognized based on our estimate of total consideration to be received for such services and the pattern in which we perform the services. The pattern of performance is generally determined to be the amount of incurred expenses reimbursed by the customer as a percentage of total expected reimbursable expenses associated with the contract. Product manufacturing We generate revenue from manufacturing and clinical supply promises to our customers in connection with securing a supply of drug products for development and clinical trial purposes. The drug products are generally manufactured by our contract manufacturing organizations. We used our product manufacturing facility in Zofingen, Switzerland for a portion of the product manufacturing requirements until we sold the Manufacturing Operations on March 31, 2018 (see Note 2). Revenue associated with product manufacturing obligations is recognized at a point in time as control of the related product is transferred to the customer. Contracts with Multiple Performance Obligations. Most of our collaboration and license agreements with customers contain multiple promised goods or services. Based on the characteristics of the promised goods and services we analyze whether they are separate or combined performance obligations. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine standalone selling price based on our overall pricing and discounting objectives, taking into consideration the type of services, estimates of hourly market rates, and stage of the development and clinical trials. Variable Consideration. Our contracts with customers primarily include two types of variable consideration: (i) development and regulatory milestone payments, which are due to us upon achievement of specific development and regulatory milestones and (ii) one-time sales-based payments and sales-based royalties associated with sold or licensed intellectual property. Due to uncertainty associated with achievement of the development and Product sales-based royalties under licensed intellectual property and one-time payments are accounted for under the royalty exception. We recognize revenue for sales-based royalties under licensed intellectual property and one-time payments at the later of when the sales occur or the performance obligation is satisfied or partially satisfied. Disaggregation of Revenue. We operate in one reportable business segment. We provide goods and services to our customers in collaboration and license agreements pursuant to various geographical markets. In the following table, revenue is disaggregated by major customers, timing of revenue recognition and revenue classification, in thousands. Customers Three months ended December 31, 2018 Year ended December 31, 2018 Eisai $ 1,770 $ 8,070 Boehringer Ingelheim 3,663 4,448 Outpost Medicine — 2,750 Axovant 1,215 2,183 Everest 2,000 $ 2,000 Siegfried — 942 Other — 84 Total $ 8,648 $ 20,477 Timing of revenue recognition Revenue recognized at a point in time $ 7,537 $ 14,092 Revenue recognized over time 1,111 6,385 Total $ 8,648 $ 20,477 Classification Revenue from continuing operations $ 8,648 $ 17,970 Revenue reported under discontinued operations — 2,507 Total $ 8,648 $ 20,477 Contract Assets and Contract Liabilities. We receive payments from customers based on contractual terms. Accounts receivable are recorded when the right to consideration becomes unconditional. For research and development services, we generally bill our customers monthly or quarterly as the services are performed. Product sales are generally billed as completed. Payment terms on invoiced amounts are typically 30 days. Contract assets include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced and for which we do not yet have the right to payment. The current portion of contract asset is included in prepaid expenses and other current assets in the consolidated balance sheet. The non-current portion of contract assets is included in other non-current assets in the consolidated balance sheet. As of January 1, 2018, we recorded a contract asset of $4.1 million, of which $1.4 million was classified as current and $2.7 million was classified as non-current, related to future royalties associated with intellectual property patents previously sold to a customer which do not qualify for the royalty exception in ASC 606. We estimated the amount of the contract asset by applying the expected value method to our estimate of future royalty payments we will receive from this customer. Any future changes to this estimate will be recorded as an adjustment to revenue in the period in which the change in estimate is made. Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. The following table provides detail of changes in our contract assets and deferred revenues, in thousands. The deferred revenue balances as of December 31, 2017, presented in the following table include balances classified as liabilities of disposal group held for sale: Contract Assets - Current Contract Assets - Non-Current Current Portion of Deferred Revenues Deferred Revenues, Less Current Portion Balances at December 31, 2017 $ — $ — $ 26,560 $ 1,067 ASC 606 implementation adjustments 7,527 2,694 (25,526 ) (40 ) Reductions of contract assets (2,524 ) (659 ) — — Impact of the sale of the Manufacturing Operations (see Note 5) (4,543 ) — — — Foreign currency translation adjustment 145 — — — Recognized as revenue during the period 879 2,436 (1,034 ) (1,027 ) Balances at December 31, 2018 $ 1,484 $ 4,471 $ — $ — Cost to Obtain and Fulfill a Contract. We generally do not incur costs to obtain new contracts. Costs to fulfill contracts are expensed as incurred. Remaining Performance Obligations. The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) pursuant to our existing collaboration agreements as of December 31, 2018 is immaterial. Under the royalty exception in ASC 606 for licensed intellectual property we do not recognize any revenue for the variable amounts related to sales-based royalties and milestones until the later of when the sales occur or the performance obligation is satisfied or partially satisfied. Accordingly, the revenue related to future sales-based royalties and milestones are excluded from the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied Previous Revenue Recognition Policy Prior to January 1, 2018, we recognized revenue when (i) persuasive evidence of an arrangement existed, (ii) delivery had occurred and title had passed, (iii) the price was fixed or determinable and (iv) collectability was reasonably assured. Any advance payments we received in excess of amounts earned were classified as deferred revenues. We historically evaluated deliverables in a multiple-element arrangement to determine whether each deliverable represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value to the customer. If the delivered element does not have standalone value without one of the undelivered elements in the arrangement, we combine such elements and account for them as a single unit of accounting. We allocate the consideration to each unit of accounting at the inception of the arrangement based on the rel |
Fair Value Disclosures
Fair Value Disclosures | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | 2. Fair Value Disclosures We measure our financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial assets and liabilities: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments. Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly. Level 3 - Significant unobservable inputs based on our assumptions. The following tables present our valuation hierarchy for our financial assets and liabilities that are measured at fair value on a recurring basis, in thousands: Fair Value Measurements at December 31, 2018 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 62,438 $ 62,438 $ — $ — US government and government agency notes(2) 171,278 171,278 — — Corporate debt instruments(2) 240,481 — 240,481 — Fair Value Measurements at December 31, 2017 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 48,750 $ 48,750 $ — $ — US government and government agency notes(2) 50,335 50,335 — — Corporate debt instruments(2) 94,639 — 94,639 — (1) Included in cash and cash equivalents in the accompanying (2) Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheet. |
Investments, Available-for-Sale
Investments, Available-for-Sale | 12 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Investments, Available-for-Sale | 3. Investments, Available-for-Sale Investments, available-for-sale, consisted of the following, in thousands: December 31, 2018 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 139,274 $ — $ (18 ) $ 139,256 Corporate debt securities Less than 1 145,468 — (130 ) 145,338 Short-term investments, available-for-sale $ 284,742 $ — $ (148 ) $ 284,594 US government and government agency notes 1 - 5 $ 16,998 $ 6 $ — $ 17,004 Corporate debt securities 1 - 5 65,512 — (104 ) 65,408 Investments, available-for-sale $ 82,510 $ 6 $ (104 ) $ 82,412 December 31, 2017 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 34,873 $ — $ (8 ) $ 34,865 Corporate debt securities Less than 1 53,438 — (63 ) 53,375 Short-term investments, available-for-sale $ 88,311 $ — $ (71 ) $ 88,240 Corporate debt securities 1 - 5 $ 24,304 $ — $ (62 ) $ 24,242 Investments, available-for-sale $ 24,304 $ — $ (62 ) $ 24,242 |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Details | 4. Balance Sheet Details Land, property and equipment, net consisted of the following, in thousands: December 31, 2018 2017 Land $ 4,950 $ 7,650 Building and capital improvements 45,246 54,584 Leasehold improvements 14,915 17,769 Machinery and equipment 173 1,737 Computers and software 3,083 4,890 Furniture and office equipment 1,175 1,614 69,542 88,244 Less accumulated depreciation and amortization (46,428 ) (58,113 ) Land, property and equipment, net $ 23,114 $ 30,131 As of December 31, 2018, substantially all of our long-lived assets are located in the United States. Accounts payable and other accrued liabilities consisted of the following, in thousands: December 31, 2018 2017 Accounts payable $ 6,192 $ 1,599 Accrued compensation 8,622 5,255 Other accrued liabilities 1,367 1,062 Total accounts payable and other accrued liabilities $ 16,181 $ 7,916 |
Sale of Manufacturing Operation
Sale of Manufacturing Operations | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Sale of Manufacturing Operations | 5. Sale of Manufacturing Operations In order to further focus our efforts and resources on our strategic objectives of developing our pipeline drug candidates, in March 2018, we entered into an Asset Purchase Agreement, or Sale Agreement, with Siegfried Pharma AG and Siegfried AG, (collectively and individually, Siegfried). Under the Sale Agreement, we agreed to sell and assign to Siegfried, and Siegfried agreed to purchase and assume from Arena GmbH, certain drug product finishing facility assets and know-how, including fixtures, equipment, other personal property and real estate assets located in Zofingen, Switzerland and related contracts and certain related liabilities, or collectively, the Manufacturing Operations. We refer to this transaction as the Siegfried Transaction. The Siegfried Transaction was completed on March 31, 2018. In connection with the Siegfried Transaction, all of Arena GmbH’s approximately 50 employees transferred to Siegfried. We have excluded from our continuing operations for all periods presented in this report revenues and expenses associated with the disposed Manufacturing Operations, which are reported as discontinued operations. The total sales price for the Manufacturing Operations was approximately CHF 4 million of which approximately CHF 3 million was received in cash in March 2018 with the remaining portion to be received in March 2019, net of any qualifying claims by Siegfried. We have retrospectively revised the consolidated statements of operations and cash flows for the year ended December 31, 2016 to reflect the operations and cash flows of the Manufacturing Operations as discontinued operations. The following table summarizes the results of discontinued operations for the periods presented in the consolidated statements of operations for the years ended December 31, 2018, 2017, and 2016, in thousands: Years ended December 31, Revenues 2018 2017 2016 Net product sales $ 1,129 $ 9,189 $ 26,349 Other collaboration revenue 372 6,671 1,334 Toll manufacturing 1,006 3,179 4,129 Total revenues 2,507 19,039 31,812 Operating costs and expenses Cost of product sales 1,858 7,472 9,297 Cost of toll manufacturing 1,411 4,756 6,044 Research and development — 643 2,643 General and administrative 329 1,672 3,714 Impairment of long-lived assets — — 21,766 Restructuring charges — — 231 Other (income) expense, net 464 1,374 (1,287 ) Total costs and expenses 4,062 15,917 42,408 Income (loss) from operations of discontinued operations (1,555 ) 3,122 (10,596 ) Gain on sale of discontinued operations 725 — — Income (loss) from discontinued operations $ (830 ) $ 3,122 $ (10,596 ) The following table summarizes the assets and liabilities of the Manufacturing Operations which were classified as held for sale as of December 31, 2017, in thousands: December 31, 2017 Assets Current assets: Accounts receivable $ 813 Inventories 6,949 Prepaid expenses and other current assets 634 Total current assets 8,396 Land, property and equipment, net 7,511 Intangible assets, net 1,233 Total non-current assets(1) 8,744 Total assets of disposal group held for sale $ 17,140 Liabilities Current liabilities: Accounts payable and other accrued liabilities $ 2,145 Deferred revenues 25,450 Total liabilities of disposal group held for sale $ 27,595 (1) The assets and liabilities of the Manufacturing Operations classified as held for sale are classified as current in the consolidated balance sheet at December 31, 2017, because it was probable that the sale would occur and proceeds would be collected within one year. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments | 6. Commitments We have three properties in California under sale and leaseback agreements. The terms of these leases stipulate annual increases in monthly rental payments of 2.5%. We account for our sale and leaseback transactions using the financing method. Under the financing method, the book value of the properties and related accumulated depreciation remain on our balance sheet and no sale is recognized. The sales price of the properties is recorded as a financing obligation, and a portion of each lease payment is recorded as interest expense. We recorded interest expense of $5.7 million, $6.1 million, and $6.4 million for the years ended December 31, 2018, 2017, and 2016, respectively, related to these leases. We expect interest expense related to our facilities to total $26.0 million from December 31, 2018, through the remaining terms of the leases in fiscal year 2027. At December 31, 2018, the total financing obligation for these facilities was $52.7 million. The aggregate residual value of the facilities at the end of the lease terms is $5.0 million. We lease an additional property in California under an operating lease, which expires in May 2027, and contains a purchase option and stipulates annual increases in monthly rental payments of 2.5%. We also lease office space in Zug, Switzerland under an operating lease which expires in September 2020 and office space in Boston, Massachusetts under a short-term lease. In accordance with the lease terms for certain of our properties, we are required to maintain deposits for the benefit of the landlord throughout the term of the leases. A total of $0.7 million and $0.7 million were recorded in other non-current assets in our consolidated balance sheets at December 31, 2018, and 2017, respectively, related to such leases. We recognize rent expense on a straight-line basis over the term of each lease. Rent expense of $1.2 million, $1.5 million and $1.2 million was recognized for the years ended December 31, 2018, 2017, and 2016, respectively. At December 31, 2018, the future minimum lease payments under our existing financing and operating lease obligations are as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases 2019 $ 7,391 $ 1,050 2020 8,254 1,100 2021 8,461 976 2022 8,672 1,000 2023 8,889 1,025 Thereafter 32,052 3,698 Total minimum lease payments 73,719 $ 8,849 Less amounts representing interest (25,960 ) Add amounts representing residual value 4,950 Lease financing obligations 52,709 Less current portion (3,283 ) $ 49,426 In 2016, we entered into agreements to sublease several of our California properties including an agreement to sublease one of our properties to Beacon. In 2017, we entered into an agreement to sublease another of our California properties. All our subleases expire in May 2027. The terms of the subleases stipulate annual increases in monthly rental payments. We recognize rent income on a straight-line basis over the term of the subleases. Expected minimum rental payments to be received under the sublease are as follows: Year ending December 31, 2019 $ 1,520 2020 1,873 2021 2,477 2022 3,487 2023 3,794 Thereafter 13,735 Total $ 26,886 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity In March 2018, we completed the sale of an aggregate of 9,775,000 shares of our common stock under an underwritten public offering. Net proceeds from the offering were approximately $383.1 million after deducting underwriting discounts and commissions and offering expenses payable by us. In July 2017, we completed the sale of an additional 7,187,500 shares of our common stock under an underwritten public offering. Net proceeds from the offering were $162.0 million after deducting underwriting discounts and commissions, and offering expenses payable by us. In April 2017, we completed the sale of an aggregate of 6,900,000 shares of our common stock under an underwritten public offering. Net proceeds from the offering were approximately $74.4 million after deducting underwriting discounts and commissions, and offering expenses payable by us. In January 2017, we entered into an Equity Distribution Agreement, or ATM, with Citigroup Global Markets, Inc., or the Sales Agent, under which we may offer and sell common stock having an aggregate offering price of up to $50.0 million from time to time though our Sales Agent. Sales of the shares under the ATM were made in transactions that are deemed to be “at‑the‑market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Stock Market. sold 489,023 shares of million . Equity Compensation Plans. In June 2017, our stockholders approved our 2017 Long-Term Incentive Plan, or 2017 LTIP. Upon such approval, our 2013 Long-Term Incentive Plan, or 2013 LTIP, was terminated. Notwithstanding such termination or the previous termination of our 2012 Long-Term Incentive Plan, 2009 Long-Term Incentive Plan, and 2006 Long-Term Incentive Plan, as amended, or, together with the 2013 LTIP, the Prior Plans, all outstanding awards under the Prior Plans continue to be governed under the terms of the Prior Plans. In June 2018, our stockholders approved amendment and restatement of our 2017 Long-Term Incentive Plan, to, among other things, increase the number of shares authorized for issuance under the 2017 LTIP. The aggregate number of shares of our common stock that initially may be issued pursuant to stock awards granted under the 2017 LTIP is 6,958,560 shares, less 1 share for every share that was subject to an option or stock appreciation right granted under the 2017 Plan and 1.9 shares for every 1 share that share that was subject to an award other than an option or stock appreciation right granted under the 2017 LTIP after March 31, 2018. Shares issued pursuant to the exercise of stock options and stock appreciation rights granted under the 2017 LTIP reduce the available number of shares by 1 share for every share issued while awards other than stock options and stock appreciation rights granted under the 2017 LTIP reduce the available number of shares by 1.9 shares for every share issued. Shares under the 2017 LTIP may be granted as incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance awards. Performance awards may be based on the achievement of operational, financial, research and development, collaboration and license arrangements and other performance metrics provided under the 2017 LTIP, such as total stockholder return, revenue, research, development and regulatory achievements and strategic and operational initiatives. Stock options granted under the 2017 LTIP generally vest over four years with 25% of the shares subject to each option vesting on the first anniversary of the grant date and the remainder of the shares vesting monthly over the following three years in equal installments and, to the extent vested, are exercisable for up to seven years from the date of grant. The recipient of a restricted stock award has all rights of a stockholder at the date of grant, subject to certain restrictions on transferability and a risk of forfeiture. Restricted stock unit awards generally vest over one or four years from the date of grant. The minimum performance period under a performance award is 12 months. Neither the exercise price of an option nor the grant price of a stock appreciation right may be less than 100% of the fair market value of the common stock on the date such equity award is granted, except in specified situations. The 2017 LTIP prohibits option and stock appreciation right repricings (other than to reflect stock splits, spin-offs or certain other corporate events) without stockholder approval. The following table summarizes our stock option activity under the Prior Plans and the 2017 LTIP, or collectively, our Equity Compensation Plans, for the year ended December 31, 2018, in thousands (except per share data): Options Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2017 3,755 $ 20.00 Granted 3,514 $ 38.00 Exercised (318 ) $ 18.54 Forfeited/cancelled/expired (410 ) $ 34.53 Outstanding at December 31, 2018 6,541 $ 28.83 5.47 $ 75,149 Vested and expected to vest at December 31, 2018 6,541 $ 28.83 5.47 $ 75,149 Vested and exercisable at December 31, 2018 1,808 $ 21.01 4.29 $ 36,698 The aggregate intrinsic value in the above table is calculated as the difference between the closing price of our common stock at December 31, 2018, of $38.95 per share and the exercise price of stock options that had strike prices below the closing price. The intrinsic value of all stock options exercised during the years ended December 31, 2018, 2017, and 2016, was $7.1 million, $2.8 million, and $0.1 million, respectively. During the year ended December 31, 2018, cash of $5.9 million was received from stock option exercises. There is no tax impact related to share-based compensation or stock option exercises because we are in a net operating loss position with a full valuation allowance on our deferred tax assets. In March 2015, March 2014 and March 2013, we granted our executive officers PRSU awards. The PRSUs may be earned and converted into outstanding shares of our common stock based on the TSR of our common stock relative to the TSR over a three-year performance period beginning March 1 of the year granted of the Nasdaq Biotechnology Index. In the aggregate, the target number of shares of common stock that could be earned under the PRSUs granted in March 2015, March 2014 and March 2013 were originally 74,500, 69,500 and 78,000, respectively; however, the actual number of shares that could be earned ranges from 0% to 200% of such amounts. In addition, there is a cap on the number of shares that could be earned under the PRSUs equal to six times the grant-date fair value of each award, and funding is capped at 100% if the absolute 3-year TSR is negative even if performance is above the median. As these awards contain a market condition, we used a Monte Carlo simulation model to estimate the grant-date fair value, which totaled $3.4 million, $5.0 million and $5.9 million for the March 2015, 2014 and March 2013 grants, respectively. The grant-date fair value is recognized as compensation expense over the performance period as service is provided; no compensation expense is recognized for service not provided in case of separation from the Company. There is no adjustment of compensation expense recognized for service performed regardless of the number of PRSUs, if any, that ultimately vest. In February 2016, the remaining PRSUs granted in March 2013 were forfeited without any earnout based on the TSR of our common stock relative to the TSR of the Nasdaq Biotechnology Index over the three-year performance period that began on March 1, 2013. In February 2017, the remaining PRSUs granted in March 2014 were forfeited without any earnout based on the TSR of our common stock relative to the TSR Nasdaq Biotechnology Index over the three-year performance period that began on March 1, 2014. In March 2018, 32,322 shares were issued to the holders of the remaining PRSUs granted in March 2015 based on the TSR of our common stock relative to the TSR Nasdaq Biotechnology Index over the three-year performance period that began on March 1, 2015. Subsequent to December 31, 2018, we granted an additional stock options and PRSUs to our employees under the 2017 LTIP. Employee Stock Purchase Plan. In June 2015, our stockholders approved our 2009 Employee Stock Purchase Plan, as amended, or 2009 ESPP. Under the 2009 ESPP substantially all employees could choose to have up to 15% of their annual compensation withheld to purchase up to 625 shares of our common stock per purchase period, subject to certain limitations. The shares of our common stock could be purchased over an offering period with a maximum duration of 24 months and at a price of not less than 85% of the lesser of the fair market value of the common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of the applicable three-month purchase period. Under applicable accounting guidance, the 2009 ESPP was considered a compensatory plan. The 2009 ESPP was terminated in June 2017. During the years ended December 31, 2017, and 2016, a total of 2,236 and 14,140 shares, respectively, were purchased by our employees under the 2009 ESPP. Share-based Compensation. We estimate the grant-date fair value of all of our share-based awards in determining our share-based compensation expense. Our share-based awards include stock options, options to purchase stock granted under our employee stock purchase plan, RSUs, and PRSU awards. The table below sets forth the weighted-average assumptions and estimated fair value of stock options we granted under our Equity Compensation Plans during the years presented: Years ended December 31, 2018 2017 2016 Risk-free interest rate 2.6 % 1.9 % 1.4 % Dividend yield 0 % 0 % 0 % Expected volatility 63 % 69 % 79 % Expected life (years) 4.58 4.58 4.81 Weighted-average estimated fair value per share of stock options granted $ 20.01 $ 9.17 $ 10.17 We recognized share-based compensation expense as follows for the years presented, in thousands, except per share data: Years ended December 31, 2018 2017 2016 Research and development $ 8,385 $ 1,945 $ 5,596 General and administrative 11,158 5,925 4,447 Restructuring charges — — 1,032 Discontinued operations 11 120 42 Total share-based compensation expense $ 19,554 $ 7,990 $ 11,117 Impact on net loss per share, basic and diluted $ 0.42 $ 0.24 $ 0.46 The table below sets forth our total unrecognized estimated compensation expense at December 31, 2018, by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized: Unrecognized Expense (in thousands) Remaining Weighted-Average Recognition Period (in years) Unvested stock options $ 65,069 2.86 RSUs 626 0.71 Common Stock Reserved for Future Issuance. A total of 12,491,648 shares of our common stock were reserved for future issuance at December 31, 2018, pursuant to our Equity Compensation Plans. |
Collaborations and License Agre
Collaborations and License Agreements | 12 Months Ended |
Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Collaborations and License Agreements | 8. Collaborations and License Agreements Everest. In December 2017, we and Everest entered into an exclusive agreement, or the Everest Agreement, to conduct joint development In connection with entering into the Everest Agreement, we received from Everest an upfront payment of $12.0 million in December 2017. We are also eligible to receive up to an aggregate of $115.0 million in success milestones in case of full commercial success of etrasimod products. We are also eligible to receive tiered royalties on net sales of . The promised goods and services under the Everest Agreement are accounted for as a single performance obligation consisting of a development and commercialization license. The amount of the upfront payment was recognized as revenue in December 2017 as we determined (i) that the license is a deliverable with standalone value to Everest and (ii) the upfront payment represents consideration to be allocated to the delivered license. In the fourth quarter of 2018, the Chinese National Medical Products Administration accepted the initial clinical trial applications for etrasimod and the oral formulation of ralinepag. Under the terms of the Everest Agreement, we recognized revenue of $2.0 million from the achievement of these milestones. As of December 31, 2018, all future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained. Eisai. In July 2010, we granted Eisai exclusive commercialization rights for lorcaserin (marketed as BELVIQ/BELVIQ XR) solely in the United States and its territories and possessions. In May 2012, we and Eisai entered into the first amended and restated agreement, which expanded Eisai’s exclusive commercialization rights to include most of North and South America. In November 2013, we and Eisai entered into the second amended and restated agreement, or Second Amended Agreement, which expanded Eisai’s exclusive commercialization rights for lorcaserin to all countries in the world, except for South Korea, Taiwan, Australia, New Zealand and Israel. In December 2016, we and Eisai amended and restated the terms of marketing and supply agreement for lorcaserin with Eisai by entering into a Transaction Agreement and a Supply Agreement (collectively, the Eisai Agreement) with Eisai. Under the Transaction Agreement, Eisai acquired an exclusive royalty-bearing license or transfer of intellectual property to global commercialization and manufacturing rights to lorcaserin, including in the territories retained by us under the prior agreement, with control over global development and commercialization decisions. Eisai is responsible for all lorcaserin development expenses in the future. We also assigned to Eisai our rights under the commercial lorcaserin distribution agreements with Ildong Pharmaceutical Co., Ltd., or Ildong, for South Korea; CY Biotech Company Limited, or CYB, for Taiwan; and Teva Pharmaceuticals Ltd.’s Israeli subsidiary, Abic Marketing Limited, or Teva, for Israel. Under the Supply Agreement, Eisai paid us $10.0 million in December 2016 to acquire our entire on-hand inventory of bulk lorcaserin and the precursor material for manufacturing lorcaserin. Eisai also paid us for finished drug product plus monthly manufacturing support payments through March 2018 totaling Until March 31, 2018, when we sold the Manufacturing Operations, including the assignment of the Supply Agreement, to Siegfried (see Note 5), we manufactured lorcaserin at our manufacturing facility in Zofingen, Switzerland. Revenues earned for (i) lorcaserin sold by us to Eisai under the manufacturing and supply commitment within the Supply Agreement and (ii) the manufacturing support payments are classified within discontinued operations as part of the Manufacturing Operations in the consolidated statements of operations (see Note 5). All other revenues earned under the Transaction Agreement, such as royalties, are classified within continuing operations in the consolidated statements of operations. Royalty payments. Pursuant to the Transaction Agreement, we are eligible to receive royalty payments from Eisai based on the global net sales of lorcaserin. The royalty rates are as follows: • 9.5% on annual net sales less than or equal to $175.0 million • 13.5% on annual net sales greater than $175.0 million but less than or equal to $500.0 million • 18.5% of annual net sales greater than $500.0 million Upfront payments. Prior to the Transaction Agreement, we received from Eisai total upfront payments of $115.0 million under prior lorcaserin collaboration agreements and $7.5 million from the prior commercial lorcaserin distribution agreements with Ildong and CYB described below, and Teva . Milestone payments. For the year ended December 31, 2016, we recognized revenue of $12.0 million related to the following milestone payments from our Second Amended Agreement with Eisai. In July 2016, the US Food and Drug Administration, or FDA, approved the New Drug Application for BELVIQ XR. We earned from Eisai a $10.0 million substantive milestone payment from this achievement. In October 2016, Eisai announced the commercial launch of BELVIQ XR in the United States. In July 2016, the Federal Commission for the Protection Against Sanitary Risk approved the Marketing Authorization Application in Mexico for our twice-daily formulation of lorcaserin for chronic weight management. We earned from Eisai a $1.0 million substantive milestone payment from this achievement. In December 2016, the Brazilian Health Surveillance Agency provided regulatory approval in Brazil for BELVIQ. We earned from Eisai a $1.0 million substantive milestone payment from this achievement. In total, prior to the Transaction Agreement, we received a total of $102.1 million in milestone payments from Eisai, Ildong, CYB, and Teva. These payments were recognized as revenue upon the achievement of the milestones. Accounting for Eisai Agreement under ASC 606. Upon implementation of ASC 606 on January 1, 2018, we applied a practical expedient for contract modifications applicable to contracts that were modified before the implementation date. The promised goods and services under the Eisai Agreement were assessed in combination with promised goods and services under our previous agreements with Eisai and commercial lorcaserin distribution agreements with Ildong, CYB, and Teva. The total estimated transaction price of these contracts at the implementation date was $344.4 million, which included previously received upfront payments, milestone payments, proceeds from net products sales, reimbursement of development expenses, reimbursement of patent expenses, manufacturing support payments received and expected to be received under the Supply Agreement, proceeds from the sale of on-hand inventory of bulk lorcaserin and the precursor material, royalty payments received through December 31, 2017, and estimated future royalty payments related to intellectual property sold to Eisai. The future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained due to our assessment of the probability of a significant revenue reversal. The future royalties related to licensed intellectual property were excluded from the estimated total transaction price under the royalty exception in ASC 606. The estimated future royalties that relate to intellectual property sold to Eisai do not qualify for the royalty exception in ASC 606 and were included in the estimated total transaction price. The estimated total transaction price was allocated between satisfied and unsatisfied performance obligations based on the relative standalone selling prices of the identified performance obligations. The remaining manufacturing and supply obligations under the Supply Agreement was the only unsatisfied performance obligation. As a result of this allocation, on January 1, 2018, we reduced the balance of deferred revenues associated with the Eisai Agreement at the implementation date by $25.5 million, recognized a contract asset of $6.1 million related to future manufacturing support payments under the Supply Agreement and recognized a contract asset of $4.1 million related to estimated future royalty payments from intellectual property sold to Eisai under the Transaction Agreement. In connection with the sale of the Manufacturing Operations on March 31, 2018, we derecognized the remaining portion of the contract asset associated with the Supply Agreement. During 2018, we adjusted our estimate of future royalty payments from intellectual property sold to Eisai under the Transaction Agreement based on the positive CVOT study results reported by Eisai and our estimate of the qualifying sales of BELVIQ in the future years and recorded associated royalty revenue and an increase to the contract asset of $3.3 million. Based on the bill-and-hold accounting guidance in ASC 606, effective January 1, 2018, we derecognized $3.6 million of inventory of bulk lorcaserin and the precursor material previously sold to Eisai for which the revenue recognition criteria were met on the implementation date under ASC 606. For the years ended December 31, 2018 and 2017, we recorded royalty revenue of $6.6 million and $1.7 million, respectively related to the Transaction Agreement. For the year ended December 31, 2018 and 2017, we recognized revenue of $1.5 million and $15.9 million, respectively, related to the Supply Agreement (classified under discontinued operations), all of which was recorded during the first quarter of 2018 and primarily consisting of net product sales and other collaboration revenue. Accounting for Eisai Agreement under previous revenue recognition policy. The total arrangement consideration of $115.6 million primarily consists of (i) the December 28, 2016, balances of deferred revenues from the upfront payments received under the prior Eisai agreements and the distribution agreements with Ildong, CYB and Teva; (ii) the $10.0 million payment received from Eisai on December 28, 2016; and (iii) the product purchase payments and manufacturing support payments we expect to receive from Eisai for the initial two-year manufacturing and supply commitment period. All of the deliverables were determined to have standalone value and to meet the criteria to be accounted for as separate units of accounting. Factors considered in the determination included, among other things, for the license, the manufacturing experience and capabilities of Eisai and their sublicense rights, and for the remaining deliverables the fact that they are not proprietary and can be provided by other vendors. The total arrangement consideration was allocated to the units of accounting on the basis of their relative estimated selling prices as follows: • $64.0 million was allocated to the License Deliverable. As the License Deliverable was delivered on December 28, 2016, this amount was recognized as collaboration revenue of continuing operations for the year ended December 31, 2016. • $30.8 million was allocated to the Inventory Deliverable. Title to this entire inventory passed to Eisai on December 28, 2016. However, none of this inventory was physically transferred from the manufacturing facility on that date. There is no fixed schedule for delivery given a portion has been and will be delivered on a continuous basis as we perform under the manufacturing commitment, another portion has been and will be physically transferred to Eisai upon request by Eisai and the rest is expected to be physically transferred at the end of the manufacturing and supply commitment period. Also, the risks of ownership for this inventory did not pass to Eisai in 2016 as we have financial responsibility for loss, damage or destruction which occurs while in our possession. • $20.8 million was allocated to the Manufacturing and Supply Commitment Deliverable. This deliverable was provided over 2017 and 2018 as product was shipped to Eisai until March 31, 2018 The estimated selling price represents the price at which we would contract if the deliverable was sold regularly on a standalone basis. The estimated selling price for each unit of accounting was determined as follows: • The estimated selling price for the License Deliverable was determined using an income approach that estimates the net present value of royalties Eisai is expected to earn under the Eisai Agreement as compared to the Second Amended Agreement, net of the development costs we are no longer obligated to spend. This model includes several assumptions, including the potential market for lorcaserin in each relevant jurisdiction, probabilities of obtaining regulatory approval in additional jurisdictions, the impact of competition, the potential impact of Eisai’s ongoing development and regulatory activities related to lorcaserin, and the appropriate discount rate. • The estimated selling price for the Inventory Deliverable was determined by considering the historical cost of the precursor materials, adjusted for any changes in market condition and supplier relationships. We believe that the Eisai Agreement pricing represents pricing that would be charged if it were sold on a standalone basis. • The estimated selling price for the Manufacturing and Supply Commitment Deliverable was determined to be the aggregate product purchase payments we expect to receive from Eisai for the initial two-year manufacturing and supply commitment period. As noted above, we believe that the Eisai Agreement pricing represents pricing that would be charged if it were sold on a standalone basis. In the consolidated balance sheet at December 31, 2017, the deferred revenues of $25.5 million relating to the Eisai Agreement (primarily comprised of the deferred portion of the previously received upfront payments and the $10.0 million payment received from Eisai in December 2016) were classified as liabilities of disposal group held for sale. Prior to December 2016, we deferred recognition of revenue and the related cost at the time we sold lorcaserin to Eisai because we did not have the ability to estimate the amount of product that could have been returned to us and thus recognized revenues and the related costs from net product sales when Eisai shipped BELVIQ to its distributors. Pursuant the Transaction Agreement, we determined that we achieved the ability to reasonably estimate the amount of product returns and recognize revenue and the related cost from product sales when we ship BELVIQ to Eisai. On December 28, 2016, we recognized revenues of $6.7 million and costs of $1.9 million on net product sales which had been previously deferred, which is a component of discontinued operations in the consolidated statement of operations. Development payments. As part of the US approval of BELVIQ, the FDA, is requiring the evaluation of the effect of long-term treatment with BELVIQ on the incidence of major adverse cardiovascular events, or MACE, in overweight and obese patients with cardiovascular disease or multiple cardiovascular risk factors (which is the FDA-required portion of the cardiovascular outcomes trial), as well as the conduct of postmarketing studies to assess the safety and efficacy of BELVIQ for weight management in obese pediatric and adolescent patients. Under the Second Amended Agreement, Eisai and we were responsible for 90% and 10%, respectively, of the cost for the FDA-required portion of the cardiovascular outcomes trial, or CVOT, 50% and 50%, respectively, of the non-FDA portion of the studies and we were also obligated to share the cost of FDA-required studies in obese pediatric patients and for additional clinical studies in other territories. Under the Eisai Agreement, Eisai is solely responsible for all costs and expenses in connection with further development of lorcaserin from and after July 1, 2016, and we were relieved of any obligations under the Second Amended Agreement to pay our share of future development costs of lorcaserin. Accordingly, on December 28, 2016, we recorded a reduction of research and development expenses which would have been otherwise due to Eisai under the Second Amended Agreement of $3.7 million for the period from July 1, 2016, through December 28, 2016. For the year ended December 31, 2016, we recognized expenses of $4.2 million for external clinical study fees related to lorcaserin, which are included in continuing operations. There were no such expenses in 2018 and 2017. Additionally, for the years ended December 31, 2017, and 2016, we recognized expenses of $1.4 million, and $3.1 million, respectively for internal non-commercial manufacturing costs primarily related to lorcaserin, which are included in discontinued operations. Ildong Pharmaceutical Co., Ltd. In November 2012, we and Ildong entered into the Marketing and Supply Agreement, or Ildong Agreement. Under this agreement, we granted Ildong exclusive rights to commercialize BELVIQ in South Korea for weight loss or weight management in obese and overweight patients. We also provided certain services and manufacture and sold BELVIQ to Ildong. As noted above, the Ildong Agreement was assigned to Eisai pursuant to the Eisai Agreement on December 28, 2016. In connection with entering into the Ildong Agreement, we received from Ildong an upfront payment of $5.0 million, less withholding taxes. Revenues from this upfront payment were deferred, as we determined that the exclusive rights did not have standalone value without our ongoing development and regulatory activities. Accordingly, this payment was recognized ratably as revenue over the period in which we expected the services to be rendered. The assignment of the Ildong Agreement pursuant to the Transaction Agreement with Eisai effectively eliminated our obligation to continue performing the development and regulatory activities required in the Ildong Agreement. Therefore, on December 28, 2016, the $3.5 million of deferred revenues from this upfront payment was allocated to the value of the License provided to Eisai and recognized as revenue in 2016. Under the Ildong Agreement, we manufactured BELVIQ at our facility in Zofingen, Switzerland, and sold BELVIQ to Ildong for a purchase price starting at the higher of the defined minimum amount or 35% of Ildong’s annual net product sales (which are the gross invoiced sales less certain deductions described in the Ildong Agreement), or the Ildong Product Purchase Price. The Ildong Product Purchase Price increased on a tiered basis up to the higher of the defined minimum amount or 45% on the portion of annual net product sales exceeding $15.0 million. Since the inception of commercial sales of BELVIQ in South Korea in 2015, the Ildong Product Purchase Price equaled the defined minimum amount (which exceeded the amounts calculated using the applicable percentages for the applicable tiers of Ildong’s annual net product sales). Prior to December 2016, we deferred recognition of revenue and the related cost at the time we sold BELVIQ to Ildong because we did not have the ability to estimate the amount of product that could have been returned to us and thus recognized revenues and the related costs from net product sales when Ildong shipped BELVIQ to its distributors. In December 2016, we determined that we achieved the ability to reasonably estimate product returns under the Ildong Agreement. Accordingly, we recognized revenues of $2.0 million and costs of $0.7 million in December 2016 on net product sales which had been previously deferred, of which is a component of discontinued operations in the consolidated statement of operations. For the year ended December 31, 2016, we recognized revenues of $11.4 million under the Ildong agreement, of which $7.2 million is included in discontinued operations. No revenues were recognized during the years ended December 31, 2018 and 2017, under this agreement as a result of the assignment of our rights under the Ildong Agreement to Eisai. CY Biotech Company Limited. In July 2013, we entered into the CYB Agreement. Under this agreement, we granted CYB exclusive rights to commercialize BELVIQ in Taiwan for weight loss or weight management in obese and overweight patients, subject to regulatory approval of BELVIQ by the Taiwan Food and Drug Administration, or TFDA. The CYB Agreement provided for us to perform certain services and to manufacture and sell BELVIQ to CYB. As noted above, the CYB Agreement was assigned to Eisai pursuant to the Transaction Agreement with Eisai on December 28, 2016. In connection with entering into the CYB agreement, we received from CYB an upfront payment of $2.0 million, less withholding taxes. Revenues from this upfront payment were deferred, as we determined that the exclusive rights did not have standalone value without our ongoing development and regulatory activities. Accordingly, this payment was recognized ratably as revenue over the period in which we expected the services to be rendered. The assignment of the CYB Agreement pursuant to the Eisai Agreement effectively eliminated our obligation to continue performing the development and regulatory activities required in the CYB Agreement. Therefore, on December 28, 2016, the $1.7 million of deferred revenues from this upfront payment was allocated to the value of the License provided to Eisai and recognized as revenue in 2016. For the year ended December 31, 2016, we recognized revenues of $1.8 million under this agreement. No revenues were recognized during the years ended December 31, 2018 and 2017, under this agreement as a result of the assignment of our rights under the CYB Agreement to Eisai. Boehringer Ingelheim International GmbH. In December 2015, we and Boehringer Ingelheim entered into a collaboration and license agreement, or Boehringer Ingelheim Agreement, under which we and Boehringer Ingelheim conduct joint research to identify drug candidates targeting an undisclosed G protein-coupled receptor, or GPCR, that belongs to the group of orphan central nervous system, or CNS, receptors. Under Boehringer Ingelheim Agreement, we granted Boehringer Ingelheim exclusive rights to our internally discovered, novel compounds and intellectual property for an orphan CNS receptor. The Boehringer Ingelheim Agreement was in effect through January 2018. We and Boehringer Ingelheim agreed to extend the original term of the Boehringer Ingelheim Agreement by twelve months through January 2019 and by additional six months through July 2019. In part consideration of the exclusive rights to our intellectual property necessary or useful to conduct the joint research under the Boehringer Ingelheim Agreement In December 2018, we earned a milestone payment of $3.5 million upon Boehringer Ingelheim’s start of preclinical development We are also eligible to receive up to an aggregate of $247.5 million (of which the first $8.5 million is payable to Beacon) in success milestone payments in case of full commercial success of multiple drug products. The promised goods and services under the Boehringer Ingelheim Agreement are accounted for as a single combined performance obligation consisting of a research license, a development and commercialization license and research services. Our performance obligation under the original term of the Boehringer Ingelheim Agreement was fully satisfied as of January 2018, and accordingly the estimated total transaction price of the Boehringer Ingelheim Agreement under the original contractual term of $10.5 million was fully recognized as revenue over the period from January 2016 through January 2018. We recognize revenue for the combined performance obligation based on the amount of incurred development expenses reimbursed by the customer as a percentage of total expected reimbursable expenses associated with the contract. For the years ended December 31, 2018, 2017, and 2016, we recognized revenues of $4.4 million, $5.1 million and $5.1 million, respectively from the Boehringer Ingelheim Agreement Outpost Medicine LLC. In April 2018, we and Outpost Medicine entered into a license agreement, or Outpost Agreement, under which Outpost Medicine has an exclusive right to advance an undisclosed, preclinical compound with potential utility in treating genitourinary disorders. Under the Outpost Agreement, we received an upfront payment of $3.0 million, of which $1.5 million was in the form of an equity interest in Outpost Medicine. We are eligible to receive up to an aggregate of $96.5 million in success milestone payments success The promised goods and services under the Outpost Agreement are accounted for as a single performance obligation consisting of a research, development and commercialization license. Our performance obligation under the Outpost Agreement was fully satisfied at the inception of the Outpost Agreement and, accordingly, the estimated total transaction price of the Outpost Agreement was fully recognized as revenue in the second quarter of 2018. As of December 31, 2018, all future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained. For the years ended December 31, 2018 and 2017, we recognized revenues of 2.8 million and $0.2 million, respectively from the Outpost Agreement Axovant Sciences GmbH. In May 2015, we entered into a development, marketing and supply agreement with Roivant Sciences Ltd., or Roivant. In October 2015, Roivant, assigned the exclusive rights to develop and commercialize nelotanserin to its subsidiary, Axovant. Under this agreement, Axovant has exclusive worldwide rights to develop and commercialize nelotanserin, subject to regulatory approval. We also provide certain services and will manufacture and sell nelotanserin to Axovant. We refer to this agreement as the Axovant Agreement. Under the Axovant Agreement , we received an upfront payment of $4.0 million. We are entitled to receive payments from sales of nelotanserin under the agreement and are eligible to receive purchase price adjustment payments based on Axovant’s annual net product sales. We are also eligible to receive up to an aggregate of $41.5 million in success milestones in case of full development and regulatory success of nelotanserin. The promised goods and services under the Axovant Agreement are accounted for as two separate performance obligations: (i) a combined performance obligation consisting of commercialization rights and development and regulatory services and (ii) a manufacturing and supply commitment. We recognize revenue for the combined performance obligation consisting of commercialization rights and development and regulatory services based on the amount of incurred development expenses reimbursed by the customer as a percentage of total expected reimbursable expenses associated with the contract. In December 2018, Axovant announced negative results of an exploratory Phase 2 clinical study and a discontinuation of further clinical development activities under the nelotanserin program. As a result, we revised our estimate of the total transaction price as of December 31, 2018, based on our assessment that we will not perform any research and development services for Axovant in the future and concluded that all our performance obligations have been satisfied. As of December 31, 2018, all future potential purchase price adjustment payments and milestone payments were excluded from the estimated total transaction price as they are considered constrained. For the years ended December 31, 2018, 2017, and 2016, and we recognized revenues of $2.2 million, $2.2 million and $2.1 million, respectively, from the Axovant Agreement |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The following table summarizes our loss attributable to stockholders of Arena before benefit for income taxes by region for the years presented, in thousands: Years ended December 31, 2018 2017 2016 United States $ (138,522 ) $ (62,109 ) $ (10,268 ) Foreign (1,142 ) (29,298 ) (12,248 ) Total loss attributable to stockholders of Arena before income taxes $ (139,664 ) $ (91,407 ) $ (22,516 ) For the year ended December 31, 2018, we have recorded a benefit for income taxes for the release of a portion of the valuation allowance due to the estimated taxable gain from the transaction pursuant to the United Therapeutics Agreement that closed on January 24, 2019. We have not recorded a benefit for income taxes for the years ended December 31, 2017, and 2016, because we had a full valuation allowance. Our effective income tax rate differs from the statutory federal rate of 21% for 2018 and 34% for 2017 and 2016 due to the following, in thousands: Years ended December 31, 2018 2017 2016 Benefit for income taxes at statutory federal rate $ (29,090 ) $ (32,140 ) $ (4,053 ) Change in valuation allowance due to tax reform — 96,333 — Change in federal and foreign valuation allowance (76,336 ) (68,604 ) (3,867 ) Permanent differences and other 1,963 (782 ) 3,412 Share-based compensation expense 889 7,071 4,001 Foreign losses at lower effective rates 257 1,428 3,944 Research and development and Orphan Drug credits (7,948 ) (3,306 ) (3,437 ) Benefit for income taxes $ (110,265 ) $ — $ — The components of our net deferred tax assets are as follows, in thousands: December 31, 2018 2017 Deferred tax assets: Federal and California NOL carryforwards $ 210,853 $ 179,323 Federal and California research and development credit carryforwards 69,221 61,272 Foreign NOL carryforwards 15,131 15,425 Share-based compensation expense 6,124 4,884 Depreciation 2,914 3,896 Deferred revenues — 3,554 Other, net 784 5,758 Total deferred tax assets 305,027 274,112 Deferred tax liabilities — — Net deferred tax assets 305,027 274,112 Valuation allowance (194,694 ) (274,112 ) Net deferred tax assets $ 110,333 $ — A valuation allowance is recorded against a portion of our deferred tax assets, as realization of a portion of these assets is not more-likely-than-not. The realization of our deferred tax assets is dependent upon future taxable income. In January 2019, a taxable income generating event, the transaction pursuant to the United Therapeutics Agreement, resulted in it being more-likely-than-not that a portion of our deferred tax assets would be realized in 2019, thus a portion of the valuation allowance in 2018 was released. We believe our net operating losses will be sufficient to offset our estimate of taxable income in 2019. Our ability to generate taxable income is analyzed regularly on a jurisdiction-by-jurisdiction basis. At such time as it is more-likely-than-not that we will generate taxable income in a jurisdiction, we will further reduce or remove the valuation allowance. The valuation allowance decreased by $79.4 million from December 31, 2017, to December 31, 2018. On December 22, 2017, H.R. 1/Public Law No. 115-97 known as the Tax Cuts and Jobs Act, or the Tax Act, was signed into law. The effects of this new federal legislation are recognized upon enactment, which is the date a bill is signed into law. The Tax Act includes numerous changes in existing tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. The rate reduction took effect on January 1, 2018. As a result of the Tax Act, we have revalued our net deferred tax assets as of December 31, 2017 to reflect the rate reduction. Pursuant to the SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act At December 31, 2018, we had federal NOL carryforwards of $869.4 million that will begin to expire in 2023 unless previously utilized. At the same date, we had California NOL carryforwards of $404.8 million, which begin expiring in 2028 and foreign NOL carryforwards of $184.3 million, which begin expiring in 2019. Net operating losses generated after December 31, 2017 carry forward indefinitely. Net operating losses generated in 2018 are subject to an 80% limitation. At December 31, 2018, we also had federal and California research and development tax credit carryforwards, net of reserves, of $33.8 million and $24.2 million, respectively. At December 31, 2018, we had a Federal Orphan Drug Credit carryforward, net of reserves, of $15.9 million. Federal credit carryforwards will begin to expire after 2026 unless previously utilized. The California research and development credit carries forward indefinitely. Sections 382 and 383 of the IRC limit the utilization of tax attribute carryforwards that arise prior to certain cumulative changes in a corporation’s ownership. We have completed an IRC Section 382/383 analysis through 2018 and identified ownership changes that limit our utilization of tax attribute carryforwards. Pursuant to IRC Section 382 and 383, use of our net operating loss and research and development income tax credit carryforwards may be limited in the event of cumulative changes in ownership subsequent to 2018 of more than 50% within a three-year period. In accordance with authoritative guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The following table reconciles the beginning and ending amount of unrecognized tax benefits for the years presented, in thousands: Years ended December 31, 2018 2017 2016 Gross unrecognized tax benefits at the beginning of the year $ 7,762 $ 5,906 $ 5,619 Additions from tax positions taken in the current year 1,269 1,133 287 Additions from tax positions taken in prior years 2 723 — Reductions from tax positions taken in prior years — — — Tax settlements — — — Gross unrecognized tax benefits at end of the year $ 9,033 $ 7,762 $ 5,906 Of our total unrecognized tax benefits at December 31, 2018, $7.5 million will impact our effective tax rate in the event the valuation allowance is removed. We do not anticipate that there will be a substantial change in unrecognized tax benefits within the next 12 months. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. Because we have incurred net losses since our inception, we did not have any accrued interest or penalties included in our consolidated balance sheets at December 31, 2018, or 2017, and did not recognize any interest and/or penalties in our consolidated statements of operations and comprehensive loss for the years ended December 31, 2018, 2017, and 2016. We are subject to income taxation in the United States at the Federal and state levels. All tax years are subject to examination by US and California tax authorities due to the carryforward of unutilized NOLs and tax credits. We are also subject to foreign income taxes in the countries in which we operate. To our knowledge, we are not currently under examination by any taxing authorities. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | 10. Legal Proceedings Beginning in September 2010, a number of complaints were filed in the US District Court for the Southern District of California, or District Court, against us and certain of our current and former employees and directors on behalf of certain purchasers of our common stock. The complaints were brought as purported stockholder class actions, and, in general, include allegations that we and certain of our current and former employees and directors violated federal securities laws by making materially false and misleading statements regarding our BELVIQ program, thereby artificially inflating the price of our common stock. The plaintiffs sought unspecified monetary damages and other relief. In August 2011, the District Court consolidated the actions and appointed a lead plaintiff and lead counsel. In November 2017, we and the Lead Plaintiff signed a stipulation and agreement of settlement, or Stipulation, to resolve the consolidated class action. Under the terms of the Stipulation, and in exchange for a release of all claims by class members and a dismissal of the consolidated class action with prejudice, we have agreed that (i) our insurers would pay class members and their attorneys a total of approximately $12.025 million and (ii) Arena would pay class members and their attorneys approximately $11.975 million in either shares of our common stock or cash at our election. On November 30, 2017, the District Court preliminary approved the settlement and the form of notice to potential class members of the proposed settlement and the procedure by which they can become class members. On March 8, 2018, the lead plaintiff filed motions for final approval of the settlement, the plan of allocation and award of attorney fees. On April 12, 2018, the District Court entered its final approval order approving the settlement and the plan of allocation and request for attorneys’ fees and expense. We recognized $11.975 million of net expense for the portion of the settlement that we agreed to pay in either common stock or cash in the consolidated statements of operations for the year ended December 31, 2017, and $24.0 million as a current liability in the consolidated balance sheet as of December 31, 2017 for the gross settlement liability, with a corresponding $12.025 million insurance recovery receivable. In the second quarter of 2018, we and our insurer made settlement payments in cash to the class members and their attorneys to settle our liability under the Stipulation. On September 30, 2016, we and Eisai Inc. filed a patent infringement lawsuit against Lupin Limited and Lupin Pharmaceuticals, Inc. (collectively, Lupin) in the U.S. District Court for the District of Delaware. The lawsuit relates to a “Paragraph IV certification” notification that we and Eisai Inc. received regarding an abbreviated new drug application, or ANDA, submitted to the FDA by Lupin requesting approval to engage in the commercial manufacture, use, importation, offer for sale or sale of a generic version of BELVIQ (lorcaserin hydrochloride tablets, 10 mg). In its notification, Lupin alleged that no valid, enforceable claim of any of the patents that are listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, or Orange Book, for BELVIQ will be infringed by Lupin’s manufacture, importation, use, sale or offer for sale of the product described in its ANDA for 10 mg lorcaserin hydrochloride tablets. Lupin is accused of infringing U.S. Patent Nos. 6,953,787; 7,514,422; 7,977,329; 8,207,158 and 8,273,734. In accordance with the Hatch-Waxman Act, as a result of filing a patent infringement lawsuit within 45 days of receipt of Lupin’s notification, the FDA cannot approve Lupin’s ANDA any earlier than 7.5 years from NDA approval unless a District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable or not infringed. On January 11, 2017, Lupin filed an answer, defenses and counterclaims to the September 30, 2016 complaint. We and Eisai Inc. filed an answer to Lupin’s counterclaims on February 1, 2017. We and Eisai Inc. are seeking a determination from the court that, among other things, Lupin has infringed our patents, Lupin’s ANDA for 10 mg lorcaserin hydrochloride tablets should not be approved until the expiration date of our patents, and Lupin should be enjoined from commercializing a product that infringes our patents. Trial is currently scheduled to begin on April 15, 2019. The parties have completed the expert discovery phase of the case and are now in the pretrial phase of the case. On March 6, 2017, we and Eisai Inc. filed a patent infringement lawsuit against Teva Pharmaceuticals USA, Inc. and Teva Pharmaceutical Industries Ltd. (collectively, Teva) in the U.S. District Court for the District of Delaware. The lawsuit also relates to a “Paragraph IV certification” notification that we and Eisai Inc. received regarding an ANDA submitted to the FDA by Teva requesting approval to engage in the commercial manufacture, use, importation, offer for sale or sale of a generic version of BELVIQ XR (lorcaserin hydrochloride extended-release tablets, 20 mg). In its notification, Teva alleged that no valid, enforceable claim of any of the patents that are listed in the Orange Book for BELVIQ XR will be infringed by Teva’s manufacture, importation, use, sale or offer for sale of the product described in its ANDA. Teva is accused of infringing U.S. Patent Nos. 6,953,787; 7,514,422; 7,977,329; 8,207,158 and 8,273,734. In accordance with the Hatch-Waxman Act, as a result of filing a patent infringement lawsuit within 45 days of receipt of Teva’s notification, the FDA cannot approve Teva’s ANDA any earlier than 7.5 years from NDA approval unless a District Court finds that all of the asserted claims of the patents-in-suit are invalid, unenforceable or not infringed. On April 18, 2017, Teva filed an amended answer, defenses and counterclaims to the March 6, 2017 complaint. We and Eisai Inc. are seeking a determination from the court that, among other things, Teva has infringed our patents, Teva’s ANDA should not be approved until the expiration date of our patents, and Teva should be enjoined from commercializing a product that infringes our patents. On May 1, 2017, the Teva and Lupin actions were consolidated for all purposes and will follow the case schedule that was previously entered in the Lupin action. We and Eisai Inc. filed an answer to Teva’s amended counterclaims on May 3, 2017. On or about October 16, 2017, we and Eisai Inc. received a “Paragraph IV certification” notification from Teva alleging that no valid, enforceable claim of U.S. Patent No. 9,770,455, which was listed in the Orange Book for BELVIQ and BELVIQ XR We and Eisai Inc. also received a “Paragraph IV certification” notification from Lupin alleging that no valid, enforceable claim of any of the patents that are listed in the Orange Book for BELVIQ and BELVIQ XR will be infringed by Lupin’s manufacture, importation, use, sale or offer for sale of the product described in its ANDA for 20 mg lorcaserin hydrochloride extended-release tablets. Because Lupin is not the first applicant to submit a substantially complete application containing a Paragraph IV certification for approval of a generic equivalent of BELVIQ XR, absent extenuating circumstances, Lupin would not be able to launch its 20 mg lorcaserin hydrochloride extended-release tablets before Teva was able to launch its respective product. On March 23, 2018, we and Eisai Inc. filed a second amended complaint against Lupin and Teva, adding infringement of U.S. Patent Nos. 6,953,787, 7,514,422, 7,977,329, 8,207,158, 8,273,734, and 9,770,455 by Lupin’s generic equivalent of BELVIQ XR. This consolidated action against Lupin and Teva is currently in the pretrial phase of the case with trial scheduled to begin on April 15, 2019. We cannot predict the ultimate outcome of any of the proceedings with Lupin and Teva. |
Restructuring Activities
Restructuring Activities | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring Activities | 11. Restructuring Activities In the second quarter of 2016, we committed to a reduction in our US workforce of approximately 73%, or approximately 100 employees, which we substantially completed in the third quarter of 2016. As a result of this workforce reduction, we recorded a restructuring charge in the second quarter of 2016 of $6.1 million for termination benefits, including severance and other benefits. Included within this amount is non-cash, share-based compensation expense of $1.0 million related to the accelerated vesting of stock options and the extension of the exercise period of vested options for employees impacted by the workforce reduction. Substantially all of this charge had been paid in 2016. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | 12. Quarterly Financial Data (Unaudited) The following tables present selected quarterly financial data for the years presented, in thousands, except per share data: 2018 Quarter ended December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 8,648 $ 3,573 $ 3,994 $ 1,755 Operating costs and expenses 53,292 39,577 37,160 32,724 Net income (loss): Income (loss) from continuing operations $ 68,711 $ (34,314 ) $ (31,833 ) $ (31,133 ) Loss from discontinued operations — — — (830 ) $ 68,711 $ (34,314 ) $ (31,833 ) $ (31,963 ) Net income (loss) per share, basic: Continuing operations $ 1.39 $ (0.70 ) $ (0.65 ) $ (0.78 ) Discontinued operations — — — (0.02 ) $ 1.39 $ (0.70 ) $ (0.65 ) $ (0.80 ) Net income (loss) per share, diluted: Continuing operations $ 1.35 $ (0.70 ) $ (0.65 ) $ (0.78 ) Discontinued operations — — — (0.02 ) $ 1.35 $ (0.70 ) $ (0.65 ) $ (0.80 ) 2017 Quarter December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 15,364 $ 2,415 $ 1,898 $ 1,660 Operating costs and expenses 28,964 36,626 24,850 22,864 Net income (loss): Loss from continuing operations $ (14,270 ) $ (35,270 ) $ (23,763 ) $ (22,551 ) Income from discontinued operations 315 2,606 147 54 $ (13,955 ) $ (32,664 ) $ (23,616 ) $ (22,497 ) Amounts attributable to stockholders of Arena: Loss from continuing operations $ (13,999 ) $ (34,959 ) $ (23,464 ) $ (22,107 ) Income from discontinued operations 315 2,606 147 54 $ (13,684 ) $ (32,353 ) $ (23,317 ) $ (22,053 ) Net income (loss) attributable to stockholders of Arena per share, basic and diluted: Continuing operations $ (0.36 ) $ (0.93 ) $ (0.77 ) $ (0.90 ) Discontinued operations 0.01 0.07 — — $ (0.35 ) $ (0.86 ) $ (0.77 ) $ (0.90 ) |
Beacon Discovery, Inc.
Beacon Discovery, Inc. | 12 Months Ended |
Dec. 31, 2018 | |
Variable Interest Entity Disclosure [Abstract] | |
Beacon Discovery, Inc. | 13. Beacon Discovery, Inc. On September 1, 2016, we entered into a We entered into an agreement, or License and Collaboration Agreement, with Beacon, pursuant to which we transferred certain equipment to Beacon and granted Beacon a non-exclusive, non-assignable and non-sublicensable license to certain database information relating to compounds, receptors and pharmacology, and transferred certain equipment to Beacon. Beacon will seek to engage global partners to facilitate discovery and development. Beacon has agreed to assign to us any intellectual property relating to our existing research and development programs developed in the course of performing research for us, and grant us a non-exclusive license to any intellectual property developed outside the course of performing work for us that is reasonably necessary or useful for developing or commercializing the products under our research and development programs. We are also entitled to rights of negotiation and rights of first refusal to potentially obtain licenses to compounds discovered and developed by Beacon. In addition, we are entitled to receive (i) a percentage of any revenue received by Beacon on or after the second anniversary of the effective date of the agreement from any third party pursuant to a third-party license, including upfront payments, milestone payments and royalties; (ii) single-digit royalties on the aggregate net sales of any related products sold by Beacon and its affiliates; and (iii) in the event that Beacon is sold, a percentage of the consideration for such sale transaction. We entered a services agreement with Beacon, or Master Services Agreement, pursuant to which Beacon performs certain research services for us. We also entered into a separate services agreement with Beacon, or Beacon Services Agreement, pursuant to which Beacon now performs our research obligations under our December 2015 agreement with Boehringer Ingelheim. In consideration for performing these research obligations, Beacon is entitled to receive the applicable FTE payments that are paid to us by Boehringer Ingelheim for the research services and certain milestone payments. We also entered into a sublease agreement, or Sublease, with Beacon, pursuant to which we sublease approximately 15,000 square feet of laboratory, office and meeting room space to Beacon until August 2021. In August 2018, we and Beason amended the Sublease and extended the term of the Sublease until May 2027. Beacon can defer payments due to us under the Sublease by increasing the outstanding principal amount under a secured promissory note, or Note, we issued to Beacon. The outstanding principal amount and all accrued or unpaid interest thereon (calculated at a simple interest rate of 7% per annum) shall be due and payable on the earlier of (i) August 31, 2022 or (ii) Beacon receiving cumulative cash proceeds of $10.0 million from the sale of equity, issuance of debt or third-party license revenue. As Beacon’s equity investment at risk is not sufficient to permit Beacon to finance its activities without subordinated financial support, Beacon is considered a variable interest entity in which we hold a significant variable interest pursuant to the License and Collaboration Agreement. We do not own any equity interest in Beacon; however, as the agreements described above provided us the controlling financial interest in Beacon until December 2017, we consolidated Beacon’s balances and activity within our consolidated financial statements until December 2017 as we were determined to be the primary beneficiary of Beacon. Pursuant to a contract Beacon entered into with a third party in December 2017 which provided Beacon with a certain amount of upfront funding, we determined we no longer held the controlling financial interest as of that date and, therefore, deconsolidated Beacon from our consolidated financial statements as we were no longer deemed to be the primary beneficiary. Our consolidated financial statements for the year ended December 31, 2017, include Beacon’s results of operations and cash flows until the December 2017 deconsolidation. As of December 31, 2018, Beacon’s total assets of $10.0 million, total liabilities of $6.0 million and total stockholders’ equity of $4.0 million are excluded from our consolidated balance sheet. As of December 31, 2017, Beacon’s total assets of $1.0 million, total liabilities of $1.8 million and total stockholders’ deficit of $0.8 million are excluded from our consolidated balance sheet. For the year ended December 31, 2018, Beacon recognized revenues of $11.1 million of which $4.5 million was earned by Beacon from agreements with us. For the year ended December 31, 2018, Beacon reported net income of $3.6 million. For the year ended December 31, 2017, Beacon recognized revenues of $2.7 million of which less than $0.1 million was earned from third parties and is included on our consolidated statement of operations. For the year ended December 31, 2017, Beacon incurred a net and comprehensive loss of $1.3 million which is fully presented as net loss attributable to noncontrolling interest in consolidated variable interest entity in our consolidated statement of operations and comprehensive loss as we do not own any equity interest in Beacon. As of December 31, 2018, a note receivable from Beacon with a balance of $0.4 million is included in prepaid expenses and other current assets in our consolidated balance sheet. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events See Notes 1 and 8 regarding the completion of the transaction pursuant to the United Therapeutics Agreement with United Therapeutics and Note 10 for the update to our legal proceedings, which occurred subsequent to December 31, 2018 . |
The Company and Summary of Si_2
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with the US generally accepted accounting principles, or GAAP, and reflect all of our activities, including those of our wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. As a result of the sale of our Manufacturing Operations (see Note 5), the operations and cash flows of the Manufacturing Operations are reflected as discontinued operations and the related assets and liabilities as held for sale. The accompanying consolidated financial statements also include the activity of Beacon Discovery, Inc., or Beacon, a variable interest entity in which we had a controlling financial interest until December 2017 at which point we deconsolidated Beacon (see Note 13). The results of operations and comprehensive loss attributable to the noncontrolling interest in Beacon are presented as separate components from the results of operations and comprehensive loss attributable to the stockholders of Arena in the consolidated statements of operations and comprehensive loss. On June 14, 2017, we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware to effect a one-for-ten reverse split of our issued and outstanding common stock. The accompanying consolidated financial statements and notes thereto give retrospective effect to the reverse stock split for all periods presented. All issued and outstanding common stock, options exercisable for common stock, restricted stock units, performance restricted stock units, and per share amounts contained in the consolidated financial statements have been retrospectively adjusted to reflect this reverse stock split for all periods presented. Concurrent with the reverse stock split we effected a reduction in the number of authorized shares of common stock from 367,500,000 shares to 73,500,000 shares. |
Liquidity | Liquidity As of December 31, 2018, we had cash, cash equivalents and available-for-sale investments of approximately $528.0 million. In January 2019, we received an $800.0 million upfront payment from United Therapeutics. We will require substantial cash to achieve our objectives of discovering, developing and commercializing drugs, as this process typically takes many years and potentially hundreds of millions of dollars for an individual drug. We may not have adequate available cash, or assets that could be readily turned into cash, to meet these objectives in the long term. We will need to obtain significant funds under our existing collaborations and license agreements, under new collaboration, licensing or other commercial agreements for one or more of our drug candidates and programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Leases. In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases Land Easement Practical Expedient for Transition to Topic 842 Codification Improvements to Topic 842 Targeted Improvements A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. We will The new standard provides a number of optional practical expedients in transition. We expect to elect the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We do not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us. We expect that this standard will not have a material effect on our financial statements. While we continue to assess all of the effects of adoption, we currently believe the most significant effects relate to (1) the recognition of new ROU assets and lease liabilities on our balance sheet for our real property operating lease; and (2) providing significant new disclosures about our leasing activities. On adoption, we currently expect to recognize an additional operating lease liability with a corresponding ROU asset based on the present value of the remaining minimum rental payments under current leasing standards for an existing operating lease. The new standard also provides practical expedients for an entity’s ongoing accounting. We currently expect to elect the short-term lease recognition exemption for our office equipment leases. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. Other. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities Restricted Cash The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total of the amount presented in the consolidated statements of cash flows, in thousands: December 31, December 31, 2018 2017 Cash and cash equivalents $ 161,037 $ 158,837 Restricted cash included in other non-current assets 863 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 161,900 $ 159,700 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Accounting Standard Codification 606, Revenue from Contracts with Customers , or ASC 606, |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. The amounts reported could differ under different estimates and assumptions. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities of three months or less when purchased. |
Available-for-Sale Investments | Available-for-Sale Investments We define investments as income-yielding securities that can be readily converted to cash, and classify such investments as available-for-sale. We carry these securities at fair value, and report unrealized gains and losses as a separate component of accumulated other comprehensive income or loss. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income. Realized gains and losses and declines in securities judged to be other than temporary are included in other income or expense. The cost of securities sold is based on the specific identification method. Interest and dividends on available |
Concentrations of Risk | Concentrations of Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and available-for-sale investments. We limit our exposure to credit loss by holding our cash primarily in US dollars or placing our cash and investments in US government, agency or government-sponsored enterprise obligations and in corporate debt instruments that are rated investment grade, in accordance with an investment policy approved by our Board of Directors. Our customers are typically other biopharmaceutical companies to which we license our intellectual property, or sell research and development services or other services under license or collaboration agreements. For the year ended December 31, 2018, Eisai, Boehringer Ingelheim, Outpost Medicine, Axovant and Everest accounted for 36.6%, 24.8%, 15.3%, 12.1% and 11.1%, respectively, of our total revenues. For the year ended December 31, 2017, Everest, Boehringer Ingelheim and Axovant accounted for 56.2%, 23.8%, and 10.5%, respectively, of our total revenues. For the year ended December 31, 2016, more than 90% of our annual revenues was from Eisai and other BELVIQ distributors. As of December 31, 2018, Boehringer Ingelheim and Eisai accounted for 72.0%, and 27.1% of our accounts receivable. As of December 31, 2017, Eisai, Axovant and Boehringer Ingelheim accounted for 61.1%, 17.6%, and 14.8%, respectively of our accounts receivable. We monitor our customers' financial credit worthiness in order to assess and respond to any changes in their credit profile. During the years ended December 31, 2018, 2017, and 2016, we did not record any write-offs or reserves against accounts receivable . |
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets (generally 3 to 15 years) using the straight-line method. Buildings are stated at cost and depreciated over an estimated useful life of approximately 20 years using the straight-line method. Leasehold improvements are stated at cost and amortized over the shorter of the estimated useful lives of the assets or the lease term using the straight-line method. Capital improvements are stated at cost and amortized over the estimated useful lives of the underlying assets using the straight-line method . |
Long-lived Assets | Long-lived Assets If indicators of impairment exist, we assess the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted cash flows. If impairment is indicated, we measure the impairment loss by comparing the fair value to the carrying value of the asset. |
Deferred Rent | Deferred Rent For financial reporting purposes, rent expense and rental income are recognized on a straight-line basis over the term of the underlying lease or sublease. The difference between rent expense or rental income and amounts paid under lease agreements is recorded as an asset or a liability in our consolidated balance sheets. |
Foreign Currency | Foreign Currency The functional currency of our wholly owned subsidiaries in Switzerland, APD GmbH and, until March 31, 2108, Arena Pharmaceuticals GmbH, or Arena GmbH, was the Swiss franc. Accordingly, all assets and liabilities of these subsidiaries are translated to US dollars based on the applicable exchange rate on the balance sheet date. Revenue and expense components are translated to US dollars at weighted-average exchange rates in effect during the period. Gains and losses resulting from foreign currency translation are reported as a separate component of accumulated other comprehensive income or loss in the equity section of our consolidated balance sheets. Foreign currency transaction gains and losses are primarily the result of remeasuring US dollar-denominated receivables and payables of our foreign subsidiaries. Foreign currency transaction gains and losses recorded by Arena GmbH are included in net income (loss) from discontinued operations. |
Share-based Compensation | Share-based Compensation Our share-based awards are measured at fair value and recognized over the requisite service or performance period. The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model, based on the market price of the underlying common stock, expected term, expected stock price volatility and expected risk-free interest rate. Expected volatility is computed using a combination of historical volatility for a period equal to the expected term and implied volatilities from traded options to buy our common stock, with historical volatility being weighted at 75%. The expected term of options is determined based on historical experience of similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and post-vesting terminations. The risk-free interest rates are based on the US Treasury yield curve, with a remaining term approximately equal to the expected term used in the option pricing model. We account for the forfeitures in the period they occur. The fair value of each restricted stock unit award is estimated based on the market price of the underlying common stock on the date of the grant. The fair value of restricted stock unit awards that include market-based performance conditions is estimated on the date of grant using a Monte Carlo simulation model, based on the market price of the underlying common stock, expected performance measurement period, expected stock price volatility and expected risk-free interest rate. |
Research and Development Expenses | Research and Development Expenses Research and development expenses, which consist primarily of salaries and other personnel costs, clinical trial costs and preclinical study fees, manufacturing costs for non-commercial products, and the development of earlier-stage programs and technologies, are expensed as incurred when these expenditures have no alternative future uses. We accrue clinical trial expenses based on work performed. In determining the amount to accrue, we rely on estimates of total costs incurred based on enrollment, the completion of trials and other events. We follow this method because we believe reasonably dependable estimates of the costs applicable to various stages of a clinical trial can be made. However, the actual costs and timing of clinical trials are uncertain, subject to risks and may change depending on a number of factors. Differences between the actual clinical trial costs and the estimated clinical trial costs that we have accrued in any prior period are recognized in the subsequent period in which the actual costs become known. Historically, these differences have not been material; however, material differences could occur in the future. Payments made to reimburse collaborators for our share of their research and development activities are recorded as research and development expenses, and are recognized as the work is performed. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. We report components of comprehensive loss in the period in which they are recognized. For the years ended December 31, 2018 and 2017, comprehensive loss consisted of net loss, foreign currency translation gains and losses, and unrealized gains and losses related to available-for-sale investments. For the year ended 2016, comprehensive loss consisted of net loss and foreign currency translation gains and losses. |
Income (Loss) Per Share | Income (Loss) Per Share We calculate basic and diluted loss from continuing operations, income (loss) from discontinued operations and net loss per share using the weighted-average number of shares of common stock outstanding during the period. Since we have a loss from continuing operations for the years ended December 31, 2018, 2017, and 2016, in addition to excluding potentially dilutive out-of-the money securities, we have excluded from our calculation of income (loss) per share all potentially dilutive in-the-money (i) stock options, (ii) restricted stock unit awards, or RSUs, (iii) Total Stockholder Return, or TSR, performance restricted stock unit, or PRSU, awards, and (iv) unvested restricted stock in our deferred compensation plan, and our diluted net loss per share is the same as our basic net loss per share. The table below presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted income (loss) per share for the years presented, in thousands. Years ended December 31, 2018 2017 2016 Stock options 5,835 3,664 2,495 RSUs and unvested restricted stock 20 3 21 Total 5,855 3,667 2,516 Because the market condition for the PRSUs was not satisfied at December 31, 2017, and 2016, such securities are excluded from the table above. |
Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Our deferred tax assets and liabilities are determined using the enacted tax rates expected to be in effect for the years in which those tax assets are expected to be realized. The realization of our deferred tax assets is dependent upon our ability to generate sufficient future taxable income. We establish a valuation allowance when it is more-likely-than-not the future realization of all or some of the deferred tax assets will not be achieved. The evaluation of the need for a valuation allowance is performed on a jurisdiction-by-jurisdiction basis, and includes a review of all available evidence, both positive and negative. The impact of an uncertain income tax position is recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. |
Fair Value Measurements | We measure our financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial assets and liabilities: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments. Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly. Level 3 - Significant unobservable inputs based on our assumptions. |
ASC 606 | |
Revenue Recognition | Revenue Recognition Our revenues to date have been generated primarily through collaboration and license agreements. Our collaboration and license agreements frequently contain multiple elements including (i) intellectual property licenses, (ii) product research, development and regulatory services and (iii) product manufacturing. Consideration we receive under these arrangements may include upfront payments, research and development funding, cost reimbursements, milestone payments, payments for product sales and royalty payments. Our customers include Everest, Outpost Medicine, Eisai, Axovant Sciences GmbH, or Axovant, Boehringer Ingelheim, and Siegfried AG, or Siegfried. Effective January 1, 2018, we adopted Accounting Standard Codification 606, Revenue from Contracts with Customers , or ASC 606, issued by the Accounting Standards Board, or FASB. As a result, we have changed our accounting policy for revenue recognition as detailed below. We implemented ASC 606 using the modified retrospective method by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of our accumulated deficit at January 1, 2018. Therefore, the comparative period information has not been adjusted. We applied ASC 606 using a practical expedient for contracts that were modified before the implementation date, which allowed us to determine an aggregate effect of all modifications that occurred before January 1, 2018, when determining the satisfied and unsatisfied performance obligations, the transaction price, and allocating that transaction price to the performance obligations instead of retrospectively restating the contracts for such contract modifications. The cumulative impact to our accumulated deficit balance at January 1, 2018, as a result of the adoption of ASC 606 was a decrease of $19.0 million. The decrease arose primarily from a reduction of deferred revenue balances related to upfront payments received from customers and recognition of contract assets due to a combination of (i) the effects of applying the practical expedient for contract modifications and our conclusions related to satisfied and unsatisfied performance obligations, which resulted in a relatively higher portion of the total transaction price recognized as revenue in periods prior to our adoption of ASC 606, (ii) the effect of the bill-and-hold accounting guidance for inventory in ASC 606 and (iii) the inclusion of estimated future royalty payments related to our intellectual property in the total transaction price to the extent such intellectual property was legally sold to our customer rather than licensed. The cumulative effect adjustment is net of an impairment loss of $13.1 million which was a direct effect of the adoption of ASC 606 on the asset group of the Manufacturing Operations, which was classified as assets of disposal group held for sale since December 2017. The following table summarizes the impacts of adopting ASC 606 on our consolidated financial statements, in thousands. Impact of Changes in Accounting Policies Three months ended December 31, 2018 (unaudited) As reported Adjustments Balances without adoption of ASC 606 Collaboration and other revenue $ 6,878 $ 56 $ 6,934 Royalty revenue 1,770 (393 ) 1,377 Total revenues 8,648 (337 ) 8,311 Loss from operations (44,644 ) (337 ) (44,981 ) Loss from continuing operations 68,711 (337 ) 68,374 Net loss 68,711 (337 ) 68,374 Net loss attributable to stockholders of Arena 68,711 (337 ) 68,374 Year ended December 31, 2018 Collaboration and other revenue $ 11,402 $ 105 $ 11,507 Royalty revenue 6,568 (1,847 ) 4,721 Total revenues 17,970 (1,742 ) 16,228 Loss from operations (144,783 ) (1,742 ) (146,525 ) Loss from continuing operations (28,569 ) (594 ) (29,163 ) Income (loss) from discontinued operations (830 ) 13,660 12,830 Net loss (29,399 ) 13,066 (16,333 ) Net loss attributable to stockholders of Arena (29,399 ) 13,066 (16,333 ) As of December 31, 2018 Prepaid expenses and other current assets $ 10,008 $ (1,484 ) $ 8,524 Total current assets 460,725 (1,484 ) 459,241 Other non-current assets 10,319 (4,471 ) 5,848 Total assets 686,903 (5,955 ) 680,948 Current portion of deferred revenues — 10 10 Total current liabilities 29,918 10 29,928 Accumulated deficit (1,500,552 ) (5,965 ) (1,506,517 ) Total stockholders' equity 606,258 (5,965 ) 600,293 Total liabilities and stockholders' equity 686,903 (5,955 ) 680,948 Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services and excludes sales incentives and amounts collected i) Identify the contract with a customer . We consider the terms and conditions of our collaboration and license agreements to identify contracts within the scope of ASC 606. We consider that we have a contract with a customer when the contract is approved, we can identify each party's rights regarding the goods and services to be transferred, we can identify the payment terms for the goods and services, we have determined the customer has the ability and intent to pay and the contract has commercial substance. We use judgment in determining the customer's ability and intent to pay, which is based upon factors including the customer's historical payment experience or, for new customers, credit and financial information pertaining to the customers. ii) Identify the performance obligations in the contract. Performance obligations in our collaboration and license agreements are identified based on the goods and services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. Our performance obligations generally consist of intellectual property licenses, research, development and/or regulatory services and manufacturing and supply commitments. iii) Determine the transaction price. We determine the transaction price based on the consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. In determining the transaction price, any variable consideration would be considered, to the extent applicable, if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. In accordance with the royalty exception under ASC 606 for licenses of intellectual property, the transaction price excludes future royalty payments to be received from our customers. None of our collaboration and license agreements contain consideration payable to our customer or a significant financing component. iv) Allocate the transaction price to performance obligations in the contract. v) Recognize revenue when or as we satisfy a performance obligation. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised goods or services to a customer. We recognize revenue when we transfer control of the goods or services to our customers for an amount that reflects the consideration that we expect to receive in exchange for those services. Performance Obligations. The following is a description of principal goods and services from which we generate revenue. Intellectual property licenses We generate revenue from licensing our intellectual property including know-how and development and commercialization rights. These licenses provide customers with a term-based license to further research, develop and commercialize our internally-discovered drug candidates. The consideration we receive in the form of nonrefundable upfront consideration related to the functional intellectual property licenses is recognized when we transfer such license to the customer unless the license is combined with other goods or services into one performance obligation, in which case the revenue is recognized over a period of time based on our estimated pattern in which we satisfy the combined performance obligation. Intellectual property sales We generate royalty revenue from sales of our intellectual property. We estimate the future royalty payments and recognize revenue with a corresponding contract asset at a point in time when we transfer the intellectual property to the customer. We periodically reassess our estimate of the future royalty payments and recognize any estimate adjustments as revenue in the current period. Research, development and regulatory services We generate revenue from research, development and regulatory services we provide to our customers in connection with the licensed intellectual property. The services we provide to our customers primarily include scientific research activities, preparation for and management of clinical trials, and assistance during the regulatory approval application process. Revenue associated with these services is recognized based on our estimate of total consideration to be received for such services and the pattern in which we perform the services. The pattern of performance is generally determined to be the amount of incurred expenses reimbursed by the customer as a percentage of total expected reimbursable expenses associated with the contract. Product manufacturing We generate revenue from manufacturing and clinical supply promises to our customers in connection with securing a supply of drug products for development and clinical trial purposes. The drug products are generally manufactured by our contract manufacturing organizations. We used our product manufacturing facility in Zofingen, Switzerland for a portion of the product manufacturing requirements until we sold the Manufacturing Operations on March 31, 2018 (see Note 2). Revenue associated with product manufacturing obligations is recognized at a point in time as control of the related product is transferred to the customer. Contracts with Multiple Performance Obligations. Most of our collaboration and license agreements with customers contain multiple promised goods or services. Based on the characteristics of the promised goods and services we analyze whether they are separate or combined performance obligations. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine standalone selling price based on our overall pricing and discounting objectives, taking into consideration the type of services, estimates of hourly market rates, and stage of the development and clinical trials. Variable Consideration. Our contracts with customers primarily include two types of variable consideration: (i) development and regulatory milestone payments, which are due to us upon achievement of specific development and regulatory milestones and (ii) one-time sales-based payments and sales-based royalties associated with sold or licensed intellectual property. Due to uncertainty associated with achievement of the development and Product sales-based royalties under licensed intellectual property and one-time payments are accounted for under the royalty exception. We recognize revenue for sales-based royalties under licensed intellectual property and one-time payments at the later of when the sales occur or the performance obligation is satisfied or partially satisfied. Disaggregation of Revenue. We operate in one reportable business segment. We provide goods and services to our customers in collaboration and license agreements pursuant to various geographical markets. In the following table, revenue is disaggregated by major customers, timing of revenue recognition and revenue classification, in thousands. Customers Three months ended December 31, 2018 Year ended December 31, 2018 Eisai $ 1,770 $ 8,070 Boehringer Ingelheim 3,663 4,448 Outpost Medicine — 2,750 Axovant 1,215 2,183 Everest 2,000 $ 2,000 Siegfried — 942 Other — 84 Total $ 8,648 $ 20,477 Timing of revenue recognition Revenue recognized at a point in time $ 7,537 $ 14,092 Revenue recognized over time 1,111 6,385 Total $ 8,648 $ 20,477 Classification Revenue from continuing operations $ 8,648 $ 17,970 Revenue reported under discontinued operations — 2,507 Total $ 8,648 $ 20,477 Contract Assets and Contract Liabilities. We receive payments from customers based on contractual terms. Accounts receivable are recorded when the right to consideration becomes unconditional. For research and development services, we generally bill our customers monthly or quarterly as the services are performed. Product sales are generally billed as completed. Payment terms on invoiced amounts are typically 30 days. Contract assets include amounts related to our contractual right to consideration for both completed and partially completed performance obligations that have not been invoiced and for which we do not yet have the right to payment. The current portion of contract asset is included in prepaid expenses and other current assets in the consolidated balance sheet. The non-current portion of contract assets is included in other non-current assets in the consolidated balance sheet. As of January 1, 2018, we recorded a contract asset of $4.1 million, of which $1.4 million was classified as current and $2.7 million was classified as non-current, related to future royalties associated with intellectual property patents previously sold to a customer which do not qualify for the royalty exception in ASC 606. We estimated the amount of the contract asset by applying the expected value method to our estimate of future royalty payments we will receive from this customer. Any future changes to this estimate will be recorded as an adjustment to revenue in the period in which the change in estimate is made. Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. The following table provides detail of changes in our contract assets and deferred revenues, in thousands. The deferred revenue balances as of December 31, 2017, presented in the following table include balances classified as liabilities of disposal group held for sale: Contract Assets - Current Contract Assets - Non-Current Current Portion of Deferred Revenues Deferred Revenues, Less Current Portion Balances at December 31, 2017 $ — $ — $ 26,560 $ 1,067 ASC 606 implementation adjustments 7,527 2,694 (25,526 ) (40 ) Reductions of contract assets (2,524 ) (659 ) — — Impact of the sale of the Manufacturing Operations (see Note 5) (4,543 ) — — — Foreign currency translation adjustment 145 — — — Recognized as revenue during the period 879 2,436 (1,034 ) (1,027 ) Balances at December 31, 2018 $ 1,484 $ 4,471 $ — $ — Cost to Obtain and Fulfill a Contract. We generally do not incur costs to obtain new contracts. Costs to fulfill contracts are expensed as incurred. Remaining Performance Obligations. The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) pursuant to our existing collaboration agreements as of December 31, 2018 is immaterial. Under the royalty exception in ASC 606 for licensed intellectual property we do not recognize any revenue for the variable amounts related to sales-based royalties and milestones until the later of when the sales occur or the performance obligation is satisfied or partially satisfied. Accordingly, the revenue related to future sales-based royalties and milestones are excluded from the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied Previous Revenue Recognition Policy Prior to January 1, 2018, we recognized revenue when (i) persuasive evidence of an arrangement existed, (ii) delivery had occurred and title had passed, (iii) the price was fixed or determinable and (iv) collectability was reasonably assured. Any advance payments we received in excess of amounts earned were classified as deferred revenues. We historically evaluated deliverables in a multiple-element arrangement to determine whether each deliverable represents a separate unit of accounting. A deliverable constitutes a separate unit of accounting when it has standalone value to the customer. If the delivered element does not have standalone value without one of the undelivered elements in the arrangement, we combine such elements and account for them as a single unit of accounting. We allocate the consideration to each unit of accounting at the inception of the arrangement based on the relative selling price. To determine the selling price of a separate deliverable, we used the hierarchy as prescribed in Accounting Standards Codification Topic 605-25 based on vendor-specific objective evidence, or VSOE, third-party evidence, or TPE, or best estimate of selling price, or BESP. VSOE was based on the price charged when the element was sold separately and was the price actually charged for that deliverable. TPE was determined based on third-party evidence for a similar deliverable when sold separately. BESP was the estimated selling price at which we would transact a sale if the elements of collaboration and license arrangements were sold on a stand-alone basis to the buyer. Non-refundable upfront payments received under our collaboration and license agreements for commercialization rights were deferred if such rights were not deemed to have standalone value without ongoing services which may be required under the agreement. If deferred, such amounts were recognized as revenues on a straight-line basis over the period in which we expected to perform the services. Amounts we received as reimbursement for our research and development expenditures were recognized as revenue as the services are performed. Under the milestone method, we recognized revenue that was contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone was achieved. A milestone is an event (i) that can be achieved in whole or in part on either our performance or on the occurrence of a specific outcome resulting from our performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due us. A milestone payment is considered substantive when the consideration payable to us for each milestone (a) is consistent with our performance necessary to achieve the milestone or the increase in value to the collaboration resulting from our performance, (b) relates solely to our past performance and (c) is reasonable relative to all of the other deliverables and payments under the arrangement. In making this assessment, we considered all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone and whether any portion of the milestone consideration is related to future performance or deliverables. Other contingent-based payments received were recognized when earned. |
The Company and Summary of Si_3
The Company and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Reconciliation of Components of Cash, Cash Equivalents, and Restricted Cash | The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total of the amount presented in the consolidated statements of cash flows, in thousands: December 31, December 31, 2018 2017 Cash and cash equivalents $ 161,037 $ 158,837 Restricted cash included in other non-current assets 863 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 161,900 $ 159,700 |
Potentially Dilutive Securities Excluded from Calculation of Diluted Income (Loss) Per Share | The table below presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted income (loss) per share for the years presented, in thousands. Years ended December 31, 2018 2017 2016 Stock options 5,835 3,664 2,495 RSUs and unvested restricted stock 20 3 21 Total 5,855 3,667 2,516 |
ASC 606 | |
Summary of Impacts of Adopting ASC 606 on Consolidated Statements of Financial Statements | The following table summarizes the impacts of adopting ASC 606 on our consolidated financial statements, in thousands. Impact of Changes in Accounting Policies Three months ended December 31, 2018 (unaudited) As reported Adjustments Balances without adoption of ASC 606 Collaboration and other revenue $ 6,878 $ 56 $ 6,934 Royalty revenue 1,770 (393 ) 1,377 Total revenues 8,648 (337 ) 8,311 Loss from operations (44,644 ) (337 ) (44,981 ) Loss from continuing operations 68,711 (337 ) 68,374 Net loss 68,711 (337 ) 68,374 Net loss attributable to stockholders of Arena 68,711 (337 ) 68,374 Year ended December 31, 2018 Collaboration and other revenue $ 11,402 $ 105 $ 11,507 Royalty revenue 6,568 (1,847 ) 4,721 Total revenues 17,970 (1,742 ) 16,228 Loss from operations (144,783 ) (1,742 ) (146,525 ) Loss from continuing operations (28,569 ) (594 ) (29,163 ) Income (loss) from discontinued operations (830 ) 13,660 12,830 Net loss (29,399 ) 13,066 (16,333 ) Net loss attributable to stockholders of Arena (29,399 ) 13,066 (16,333 ) As of December 31, 2018 Prepaid expenses and other current assets $ 10,008 $ (1,484 ) $ 8,524 Total current assets 460,725 (1,484 ) 459,241 Other non-current assets 10,319 (4,471 ) 5,848 Total assets 686,903 (5,955 ) 680,948 Current portion of deferred revenues — 10 10 Total current liabilities 29,918 10 29,928 Accumulated deficit (1,500,552 ) (5,965 ) (1,506,517 ) Total stockholders' equity 606,258 (5,965 ) 600,293 Total liabilities and stockholders' equity 686,903 (5,955 ) 680,948 |
Summary of Revenue Disaggregated by Major Customers, Timing of Revenue Recognition and Revenue Classification | In the following table, revenue is disaggregated by major customers, timing of revenue recognition and revenue classification, in thousands. Customers Three months ended December 31, 2018 Year ended December 31, 2018 Eisai $ 1,770 $ 8,070 Boehringer Ingelheim 3,663 4,448 Outpost Medicine — 2,750 Axovant 1,215 2,183 Everest 2,000 $ 2,000 Siegfried — 942 Other — 84 Total $ 8,648 $ 20,477 Timing of revenue recognition Revenue recognized at a point in time $ 7,537 $ 14,092 Revenue recognized over time 1,111 6,385 Total $ 8,648 $ 20,477 Classification Revenue from continuing operations $ 8,648 $ 17,970 Revenue reported under discontinued operations — 2,507 Total $ 8,648 $ 20,477 |
Summary of Changes in Contract Assets and Deferred Revenues | The following table provides detail of changes in our contract assets and deferred revenues, in thousands. The deferred revenue balances as of December 31, 2017, presented in the following table include balances classified as liabilities of disposal group held for sale: Contract Assets - Current Contract Assets - Non-Current Current Portion of Deferred Revenues Deferred Revenues, Less Current Portion Balances at December 31, 2017 $ — $ — $ 26,560 $ 1,067 ASC 606 implementation adjustments 7,527 2,694 (25,526 ) (40 ) Reductions of contract assets (2,524 ) (659 ) — — Impact of the sale of the Manufacturing Operations (see Note 5) (4,543 ) — — — Foreign currency translation adjustment 145 — — — Recognized as revenue during the period 879 2,436 (1,034 ) (1,027 ) Balances at December 31, 2018 $ 1,484 $ 4,471 $ — $ — |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present our valuation hierarchy for our financial assets and liabilities that are measured at fair value on a recurring basis, in thousands: Fair Value Measurements at December 31, 2018 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 62,438 $ 62,438 $ — $ — US government and government agency notes(2) 171,278 171,278 — — Corporate debt instruments(2) 240,481 — 240,481 — Fair Value Measurements at December 31, 2017 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 48,750 $ 48,750 $ — $ — US government and government agency notes(2) 50,335 50,335 — — Corporate debt instruments(2) 94,639 — 94,639 — (1) Included in cash and cash equivalents in the accompanying (2) Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheet. |
Investments, Available-for-Sa_2
Investments, Available-for-Sale (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Investments, Available-for-Sale | Investments, available-for-sale, consisted of the following, in thousands: December 31, 2018 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 139,274 $ — $ (18 ) $ 139,256 Corporate debt securities Less than 1 145,468 — (130 ) 145,338 Short-term investments, available-for-sale $ 284,742 $ — $ (148 ) $ 284,594 US government and government agency notes 1 - 5 $ 16,998 $ 6 $ — $ 17,004 Corporate debt securities 1 - 5 65,512 — (104 ) 65,408 Investments, available-for-sale $ 82,510 $ 6 $ (104 ) $ 82,412 December 31, 2017 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 34,873 $ — $ (8 ) $ 34,865 Corporate debt securities Less than 1 53,438 — (63 ) 53,375 Short-term investments, available-for-sale $ 88,311 $ — $ (71 ) $ 88,240 Corporate debt securities 1 - 5 $ 24,304 $ — $ (62 ) $ 24,242 Investments, available-for-sale $ 24,304 $ — $ (62 ) $ 24,242 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Land, Property and Equipment, Net | Land, property and equipment, net consisted of the following, in thousands: December 31, 2018 2017 Land $ 4,950 $ 7,650 Building and capital improvements 45,246 54,584 Leasehold improvements 14,915 17,769 Machinery and equipment 173 1,737 Computers and software 3,083 4,890 Furniture and office equipment 1,175 1,614 69,542 88,244 Less accumulated depreciation and amortization (46,428 ) (58,113 ) Land, property and equipment, net $ 23,114 $ 30,131 |
Accounts Payable and Other Accrued Liabilities | Accounts payable and other accrued liabilities consisted of the following, in thousands: December 31, 2018 2017 Accounts payable $ 6,192 $ 1,599 Accrued compensation 8,622 5,255 Other accrued liabilities 1,367 1,062 Total accounts payable and other accrued liabilities $ 16,181 $ 7,916 |
Sale of Manufacturing Operati_2
Sale of Manufacturing Operations (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Summary of Discontinued Operations for Periods Presented in Consolidated Statements of Operations and Assets and Liabilities Classified as Held for Sale | The following table summarizes the results of discontinued operations for the periods presented in the consolidated statements of operations for the years ended December 31, 2018, 2017, and 2016, in thousands: Years ended December 31, Revenues 2018 2017 2016 Net product sales $ 1,129 $ 9,189 $ 26,349 Other collaboration revenue 372 6,671 1,334 Toll manufacturing 1,006 3,179 4,129 Total revenues 2,507 19,039 31,812 Operating costs and expenses Cost of product sales 1,858 7,472 9,297 Cost of toll manufacturing 1,411 4,756 6,044 Research and development — 643 2,643 General and administrative 329 1,672 3,714 Impairment of long-lived assets — — 21,766 Restructuring charges — — 231 Other (income) expense, net 464 1,374 (1,287 ) Total costs and expenses 4,062 15,917 42,408 Income (loss) from operations of discontinued operations (1,555 ) 3,122 (10,596 ) Gain on sale of discontinued operations 725 — — Income (loss) from discontinued operations $ (830 ) $ 3,122 $ (10,596 ) The following table summarizes the assets and liabilities of the Manufacturing Operations which were classified as held for sale as of December 31, 2017, in thousands: December 31, 2017 Assets Current assets: Accounts receivable $ 813 Inventories 6,949 Prepaid expenses and other current assets 634 Total current assets 8,396 Land, property and equipment, net 7,511 Intangible assets, net 1,233 Total non-current assets(1) 8,744 Total assets of disposal group held for sale $ 17,140 Liabilities Current liabilities: Accounts payable and other accrued liabilities $ 2,145 Deferred revenues 25,450 Total liabilities of disposal group held for sale $ 27,595 (1) The assets and liabilities of the Manufacturing Operations classified as held for sale are classified as current in the consolidated balance sheet at December 31, 2017, because it was probable that the sale would occur and proceeds would be collected within one year. |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Operating Leased Assets [Line Items] | |
Future Minimum Lease Payments | At December 31, 2018, the future minimum lease payments under our existing financing and operating lease obligations are as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases 2019 $ 7,391 $ 1,050 2020 8,254 1,100 2021 8,461 976 2022 8,672 1,000 2023 8,889 1,025 Thereafter 32,052 3,698 Total minimum lease payments 73,719 $ 8,849 Less amounts representing interest (25,960 ) Add amounts representing residual value 4,950 Lease financing obligations 52,709 Less current portion (3,283 ) $ 49,426 |
Sublease Agreement | |
Operating Leased Assets [Line Items] | |
Expected Minimum Rental Payments to be Received under Sublease | Expected minimum rental payments to be received under the sublease are as follows: Year ending December 31, 2019 $ 1,520 2020 1,873 2021 2,477 2022 3,487 2023 3,794 Thereafter 13,735 Total $ 26,886 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Option Activity | The following table summarizes our stock option activity under the Prior Plans and the 2017 LTIP, or collectively, our Equity Compensation Plans, for the year ended December 31, 2018, in thousands (except per share data): Options Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2017 3,755 $ 20.00 Granted 3,514 $ 38.00 Exercised (318 ) $ 18.54 Forfeited/cancelled/expired (410 ) $ 34.53 Outstanding at December 31, 2018 6,541 $ 28.83 5.47 $ 75,149 Vested and expected to vest at December 31, 2018 6,541 $ 28.83 5.47 $ 75,149 Vested and exercisable at December 31, 2018 1,808 $ 21.01 4.29 $ 36,698 |
Weighted-Average Assumptions and Estimated Fair Value of Stock Options | The table below sets forth the weighted-average assumptions and estimated fair value of stock options we granted under our Equity Compensation Plans during the years presented: Years ended December 31, 2018 2017 2016 Risk-free interest rate 2.6 % 1.9 % 1.4 % Dividend yield 0 % 0 % 0 % Expected volatility 63 % 69 % 79 % Expected life (years) 4.58 4.58 4.81 Weighted-average estimated fair value per share of stock options granted $ 20.01 $ 9.17 $ 10.17 |
Share Based Compensation Expense | We recognized share-based compensation expense as follows for the years presented, in thousands, except per share data: Years ended December 31, 2018 2017 2016 Research and development $ 8,385 $ 1,945 $ 5,596 General and administrative 11,158 5,925 4,447 Restructuring charges — — 1,032 Discontinued operations 11 120 42 Total share-based compensation expense $ 19,554 $ 7,990 $ 11,117 Impact on net loss per share, basic and diluted $ 0.42 $ 0.24 $ 0.46 |
Total Unrecognized Estimated Compensation Expense | The table below sets forth our total unrecognized estimated compensation expense at December 31, 2018, by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized: Unrecognized Expense (in thousands) Remaining Weighted-Average Recognition Period (in years) Unvested stock options $ 65,069 2.86 RSUs 626 0.71 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Summary of Loss Before Provision (Benefit) for Income Taxes by Region | The following table summarizes our loss attributable to stockholders of Arena before benefit for income taxes by region for the years presented, in thousands: Years ended December 31, 2018 2017 2016 United States $ (138,522 ) $ (62,109 ) $ (10,268 ) Foreign (1,142 ) (29,298 ) (12,248 ) Total loss attributable to stockholders of Arena before income taxes $ (139,664 ) $ (91,407 ) $ (22,516 ) |
Reconciliation of Provision (Benefit) for Income Taxes at Statutory Federal Rate to Provision (Benefit) for Income Taxes | Our effective income tax rate differs from the statutory federal rate of 21% for 2018 and 34% for 2017 and 2016 due to the following, in thousands: Years ended December 31, 2018 2017 2016 Benefit for income taxes at statutory federal rate $ (29,090 ) $ (32,140 ) $ (4,053 ) Change in valuation allowance due to tax reform — 96,333 — Change in federal and foreign valuation allowance (76,336 ) (68,604 ) (3,867 ) Permanent differences and other 1,963 (782 ) 3,412 Share-based compensation expense 889 7,071 4,001 Foreign losses at lower effective rates 257 1,428 3,944 Research and development and Orphan Drug credits (7,948 ) (3,306 ) (3,437 ) Benefit for income taxes $ (110,265 ) $ — $ — |
Components of Net Deferred Tax Assets | The components of our net deferred tax assets are as follows, in thousands: December 31, 2018 2017 Deferred tax assets: Federal and California NOL carryforwards $ 210,853 $ 179,323 Federal and California research and development credit carryforwards 69,221 61,272 Foreign NOL carryforwards 15,131 15,425 Share-based compensation expense 6,124 4,884 Depreciation 2,914 3,896 Deferred revenues — 3,554 Other, net 784 5,758 Total deferred tax assets 305,027 274,112 Deferred tax liabilities — — Net deferred tax assets 305,027 274,112 Valuation allowance (194,694 ) (274,112 ) Net deferred tax assets $ 110,333 $ — |
Reconciliation of Unrecognized Tax Benefits | The following table reconciles the beginning and ending amount of unrecognized tax benefits for the years presented, in thousands: Years ended December 31, 2018 2017 2016 Gross unrecognized tax benefits at the beginning of the year $ 7,762 $ 5,906 $ 5,619 Additions from tax positions taken in the current year 1,269 1,133 287 Additions from tax positions taken in prior years 2 723 — Reductions from tax positions taken in prior years — — — Tax settlements — — — Gross unrecognized tax benefits at end of the year $ 9,033 $ 7,762 $ 5,906 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Data | The following tables present selected quarterly financial data for the years presented, in thousands, except per share data: 2018 Quarter ended December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 8,648 $ 3,573 $ 3,994 $ 1,755 Operating costs and expenses 53,292 39,577 37,160 32,724 Net income (loss): Income (loss) from continuing operations $ 68,711 $ (34,314 ) $ (31,833 ) $ (31,133 ) Loss from discontinued operations — — — (830 ) $ 68,711 $ (34,314 ) $ (31,833 ) $ (31,963 ) Net income (loss) per share, basic: Continuing operations $ 1.39 $ (0.70 ) $ (0.65 ) $ (0.78 ) Discontinued operations — — — (0.02 ) $ 1.39 $ (0.70 ) $ (0.65 ) $ (0.80 ) Net income (loss) per share, diluted: Continuing operations $ 1.35 $ (0.70 ) $ (0.65 ) $ (0.78 ) Discontinued operations — — — (0.02 ) $ 1.35 $ (0.70 ) $ (0.65 ) $ (0.80 ) 2017 Quarter December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 15,364 $ 2,415 $ 1,898 $ 1,660 Operating costs and expenses 28,964 36,626 24,850 22,864 Net income (loss): Loss from continuing operations $ (14,270 ) $ (35,270 ) $ (23,763 ) $ (22,551 ) Income from discontinued operations 315 2,606 147 54 $ (13,955 ) $ (32,664 ) $ (23,616 ) $ (22,497 ) Amounts attributable to stockholders of Arena: Loss from continuing operations $ (13,999 ) $ (34,959 ) $ (23,464 ) $ (22,107 ) Income from discontinued operations 315 2,606 147 54 $ (13,684 ) $ (32,353 ) $ (23,317 ) $ (22,053 ) Net income (loss) attributable to stockholders of Arena per share, basic and diluted: Continuing operations $ (0.36 ) $ (0.93 ) $ (0.77 ) $ (0.90 ) Discontinued operations 0.01 0.07 — — $ (0.35 ) $ (0.86 ) $ (0.77 ) $ (0.90 ) |
The Company and Summary of Si_4
The Company and Summary of Significant Accounting Policies - Additional Information (Detail) | Jan. 24, 2019USD ($) | Jan. 31, 2019USD ($) | Dec. 31, 2018USD ($)Segmentshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($) | Jan. 01, 2018USD ($) | Jun. 14, 2017shares | Jun. 13, 2017shares |
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Number of business segments | Segment | 1 | |||||||
Reverse split of issued and outstanding common stock, description | one-for-ten | |||||||
Reverse split of issued and outstanding common stock, ratio | 0.1 | |||||||
Number of authorized shares of common stock | shares | 73,500,000 | 73,500,000 | 73,500,000 | 367,500,000 | ||||
cash, cash equivalents and available-for-sale investments | $ 528,000,000 | |||||||
Write-offs or reserves against accounts receivable | 0 | $ 0 | $ 0 | |||||
Accumulated deficit | $ (1,500,552,000) | (1,490,187,000) | ||||||
Number of reportable business segment | Segment | 1 | |||||||
Customers billing method, description | We receive payments from customers based on contractual terms. Accounts receivable are recorded when the right to consideration becomes unconditional. For research and development services, we generally bill our customers monthly or quarterly as the services are performed | |||||||
Payment terms on invoiced amounts | 30 days | |||||||
Contract asstes | $ 4,100,000 | |||||||
Current contract assets with related to future royalties | $ 1,484,000 | 1,400,000 | ||||||
Non-current contract assets with related to future royalties | 4,471,000 | 2,700,000 | ||||||
ASC 606 | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Impairment loss | $ 13,100,000 | |||||||
ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Accumulated deficit | $ (5,965,000) | $ (19,000,000) | ||||||
Measurement Input, Price Volatility | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Weighted average volatility | 0.75 | |||||||
Building | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, estimated useful life | 20 years | |||||||
Sales Revenue, Net | Eisai | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 36.60% | |||||||
Sales Revenue, Net | Boehringer Ingelheim | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 24.80% | 23.80% | ||||||
Sales Revenue, Net | Outpost Medicine | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 15.30% | |||||||
Sales Revenue, Net | Everest | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 11.10% | 56.20% | ||||||
Sales Revenue, Net | Axovant | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 12.10% | 10.50% | ||||||
Accounts Receivable | Eisai | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 27.10% | 61.10% | ||||||
Accounts Receivable | Boehringer Ingelheim | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 72.00% | 14.80% | ||||||
Accounts Receivable | Axovant | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 17.60% | |||||||
Maximum | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, estimated useful life | 15 years | |||||||
Minimum | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Property and equipment, estimated useful life | 3 years | |||||||
Minimum | Sales Revenue, Net | Eisai and other BELVIQ distributors | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Concentrations of risk percentage | 90.00% | |||||||
Subsequent Event | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Upfront Payment Received | $ 800,000,000 | |||||||
United Therapeutics | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Collaborative arrangement right description | In November 2018, we entered into a collaboration and license agreement, or the United Therapeutics Agreement, with United Therapeutics Corporation, or United Therapeutics. Under the United Therapeutics Agreement, we granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. This transaction was completed on January 24, 2019. | |||||||
United Therapeutics | General and administrative expenses | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Collaborative arrangement cost incurred related to advisory fees | $ 2,400,000 | |||||||
United Therapeutics | Subsequent Event | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Collaborative agreement completion date | Jan. 24, 2019 | |||||||
Collaborative agreement non refundable upfront payment | $ 800,000,000 | |||||||
Collaborative arrangement cost incurred related to advisory fees | 17,000,000 | |||||||
United Therapeutics | Subsequent Event | Maximum | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Additional milestone payments on achievement | 400,000,000 | |||||||
Non U.S. Market | United Therapeutics | Subsequent Event | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Additional milestone payments on achievement | 150,000,000 | |||||||
U.S. Market | United Therapeutics | Subsequent Event | ||||||||
Schedule Of Significant Accounting Policies [Line Items] | ||||||||
Additional milestone payments on achievement | $ 250,000,000 |
The Company and Summary of Si_5
The Company and Summary of Significant Accounting Policies - Reconciliation of Components of Cash, Cash Equivalents, and Restricted Cash (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 161,037 | $ 158,837 |
Restricted cash included in other non-current assets | $ 863 | $ 863 |
Restricted Cash, Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows | $ 161,900 | $ 159,700 |
The Company and Summary of Si_6
The Company and Summary of Significant Accounting Policies - Summary of Impacts of Adopting ASC 606 on Consolidated Statements of Financial Statements (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | $ 8,648 | $ 17,970 | $ 21,337 | $ 92,163 | ||||||||
Loss from operations | (44,644) | (144,783) | (91,967) | (5,263) | ||||||||
Loss from continuing operations | 68,711 | $ (34,314) | $ (31,833) | $ (31,133) | $ (14,270) | $ (35,270) | $ (23,763) | $ (22,551) | (28,569) | (95,854) | (12,300) | |
Income (loss) from discontinued operations | (830) | 3,122 | (10,596) | |||||||||
Net loss | 68,711 | $ (34,314) | $ (31,833) | $ (31,963) | (13,955) | (32,664) | (23,616) | (22,497) | (29,399) | (92,732) | (22,896) | |
Net loss attributable to stockholders of Arena | 68,711 | (13,684) | $ (32,353) | $ (23,317) | $ (22,053) | (29,399) | (91,407) | (22,516) | ||||
Prepaid expenses and other current assets | 10,008 | 2,681 | 10,008 | 2,681 | ||||||||
Total current assets | 460,725 | 281,280 | 460,725 | 281,280 | ||||||||
Other non-current assets | 10,319 | 3,622 | 10,319 | 3,622 | ||||||||
Total assets | 686,903 | 339,275 | 686,903 | 339,275 | ||||||||
Current portion of deferred revenues | 1,110 | 1,110 | ||||||||||
Total current liabilities | 29,918 | 72,327 | 29,918 | 72,327 | ||||||||
Accumulated deficit | (1,500,552) | (1,490,187) | (1,500,552) | (1,490,187) | ||||||||
Total stockholders' equity | 606,258 | 207,144 | 606,258 | 207,144 | ||||||||
Total liabilities and stockholders' equity | 686,903 | $ 339,275 | 686,903 | 339,275 | ||||||||
Collaboration and Other Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 6,878 | 11,402 | 19,632 | $ 92,163 | ||||||||
Royalty Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 1,770 | 6,568 | $ 1,705 | |||||||||
ASC 606 | Adjustments | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | (337) | (1,742) | ||||||||||
Loss from operations | (337) | (1,742) | ||||||||||
Loss from continuing operations | (337) | (594) | ||||||||||
Income (loss) from discontinued operations | 13,660 | |||||||||||
Net loss | (337) | 13,066 | ||||||||||
Net loss attributable to stockholders of Arena | (337) | 13,066 | ||||||||||
Prepaid expenses and other current assets | (1,484) | (1,484) | ||||||||||
Total current assets | (1,484) | (1,484) | ||||||||||
Other non-current assets | (4,471) | (4,471) | ||||||||||
Total assets | (5,955) | (5,955) | ||||||||||
Current portion of deferred revenues | 10 | 10 | ||||||||||
Total current liabilities | 10 | 10 | ||||||||||
Accumulated deficit | (5,965) | (5,965) | $ (19,000) | |||||||||
Total stockholders' equity | (5,965) | (5,965) | ||||||||||
Total liabilities and stockholders' equity | (5,955) | (5,955) | ||||||||||
ASC 606 | Adjustments | Collaboration and Other Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 56 | 105 | ||||||||||
ASC 606 | Adjustments | Royalty Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | (393) | (1,847) | ||||||||||
ASC 606 | Balances without adoption of ASC 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 8,311 | 16,228 | ||||||||||
Loss from operations | (44,981) | (146,525) | ||||||||||
Loss from continuing operations | 68,374 | (29,163) | ||||||||||
Income (loss) from discontinued operations | 12,830 | |||||||||||
Net loss | 68,374 | (16,333) | ||||||||||
Net loss attributable to stockholders of Arena | 68,374 | (16,333) | ||||||||||
Prepaid expenses and other current assets | 8,524 | 8,524 | ||||||||||
Total current assets | 459,241 | 459,241 | ||||||||||
Other non-current assets | 5,848 | 5,848 | ||||||||||
Total assets | 680,948 | 680,948 | ||||||||||
Current portion of deferred revenues | 10 | 10 | ||||||||||
Total current liabilities | 29,928 | 29,928 | ||||||||||
Accumulated deficit | (1,506,517) | (1,506,517) | ||||||||||
Total stockholders' equity | 600,293 | 600,293 | ||||||||||
Total liabilities and stockholders' equity | 680,948 | 680,948 | ||||||||||
ASC 606 | Balances without adoption of ASC 606 | Collaboration and Other Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 6,934 | 11,507 | ||||||||||
ASC 606 | Balances without adoption of ASC 606 | Royalty Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | $ 1,377 | $ 4,721 |
The Company and Summary of Si_7
The Company and Summary of Significant Accounting Policies- Summary of Revenue Disaggregated by Major Customers, Timing of Revenue Recognition and Revenue Classification (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 8,648 | $ 20,477 | ||
Revenue from continuing operations | 8,648 | 17,970 | $ 21,337 | $ 92,163 |
Revenue reported under discontinued operations | 2,507 | $ 19,039 | $ 31,812 | |
Revenue recognized at a point in time | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 7,537 | 14,092 | ||
Revenue recognized over time | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 1,111 | 6,385 | ||
Eisai | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 1,770 | 8,070 | ||
Boehringer Ingelheim | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 3,663 | 4,448 | ||
Outpost Medicine | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 2,750 | |||
Axovant | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 1,215 | 2,183 | ||
Everest | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 2,000 | 2,000 | ||
Siegfried | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | 942 | |||
Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenue | $ 84 |
The Company and Summary of Si_8
The Company and Summary of Significant Accounting Policies - Summary of Changes in Contract Assets and Deferred Revenues (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Change In Contract With Customer Asset Liability And Deferred Revenues [Line Items] | |
Contract Assets - Current, Reductions of contract assets | $ (2,524) |
Contract Assets - Current, Impact of the disposal of the Manufacturing Operations (see Note 2) | (4,543) |
Contract Asset - Current, Foreign currency translation adjustment | 145 |
Contract Assets - Current, Recognized as revenue during the period | 879 |
Contract Assets - Current, Ending balance | 1,484 |
Contract Assets - Non-Current, Reductions of contract assets | (659) |
Contract Assets - Non-Current, Recognized as revenue during the period | 2,436 |
Contract Assets - Non-Current, Ending balance | 4,471 |
Current Portion of Deferred Revenues, Beginning balance | 26,560 |
Current Portion of Deferred Revenues, Recognized as revenue during the period | (1,034) |
Deferred Revenues less Current Portion, Beginning balance | 1,067 |
Deferred Revenues less Current Portion, Recognized as revenue during the period | (1,027) |
ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | |
Change In Contract With Customer Asset Liability And Deferred Revenues [Line Items] | |
Contract Assets - Current, Implementation adjustments | 7,527 |
Contract Assets - Non-Current, Implementation adjustments | 2,694 |
Current Portion of Deferred Revenues, Implementation adjustments | (25,526) |
Deferred Revenues less Current Portion, Implementation adjustments | $ (40) |
The Company and Summary of Si_9
The Company and Summary of Significant Accounting Policies - Potentially Dilutive Securities Excluded From Calculation of Diluted Income (Loss) Per Share (Detail) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 5,855 | 3,667 | 2,516 |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 5,835 | 3,664 | 2,495 |
RSUs and unvested restricted stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 20 | 3 | 21 |
Fair Value Disclosures - Financ
Fair Value Disclosures - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - Fair Value Measurements, Recurring - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets: | ||
Money market funds | $ 62,438 | $ 48,750 |
US government and government agency notes | 171,278 | 50,335 |
Corporate debt instruments | 240,481 | 94,639 |
Quoted Prices in Active Markets (Level 1) | ||
Assets: | ||
Money market funds | 62,438 | 48,750 |
US government and government agency notes | 171,278 | 50,335 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Corporate debt instruments | $ 240,481 | $ 94,639 |
Investments, Available-for-Sa_3
Investments, Available-for-Sale - Schedule of Investments, Available-for-Sale (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Short-term investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 284,742 | $ 88,311 |
Gross Unrealized Losses | (148) | (71) |
Estimated Fair Value | 284,594 | 88,240 |
Short-term investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 139,274 | 34,873 |
Gross Unrealized Losses | (18) | (8) |
Estimated Fair Value | 139,256 | 34,865 |
Short-term investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 145,468 | 53,438 |
Gross Unrealized Losses | (130) | (63) |
Estimated Fair Value | 145,338 | 53,375 |
Investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 82,510 | 24,304 |
Gross Unrealized Gains | 6 | |
Gross Unrealized Losses | (104) | (62) |
Estimated Fair Value | 82,412 | 24,242 |
Investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 16,998 | |
Gross Unrealized Gains | 6 | |
Estimated Fair Value | $ 17,004 | |
Investments, available-for-sale | US government and government agency notes | Minimum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 1 year | |
Investments, available-for-sale | US government and government agency notes | Maximum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 5 years | |
Investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 65,512 | 24,304 |
Gross Unrealized Losses | (104) | (62) |
Estimated Fair Value | $ 65,408 | $ 24,242 |
Investments, available-for-sale | Corporate debt securities | Minimum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 1 year | 1 year |
Investments, available-for-sale | Corporate debt securities | Maximum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 5 years | 5 years |
Balance Sheet Details - Land, P
Balance Sheet Details - Land, Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | $ 69,542 | $ 88,244 |
Less accumulated depreciation and amortization | (46,428) | (58,113) |
Land, property and equipment, net | 23,114 | 30,131 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 4,950 | 7,650 |
Building and capital improvements | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 45,246 | 54,584 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 14,915 | 17,769 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 173 | 1,737 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 3,083 | 4,890 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | $ 1,175 | $ 1,614 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Payable and Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 6,192 | $ 1,599 |
Accrued compensation | 8,622 | 5,255 |
Other accrued liabilities | 1,367 | 1,062 |
Total accounts payable and other accrued liabilities | $ 16,181 | $ 7,916 |
Sale of Manufacturing Operati_3
Sale of Manufacturing Operations - Additional Information (Detail) SFr in Millions | 1 Months Ended | |
Mar. 31, 2018CHF (SFr) | Dec. 31, 2018employee | |
Siegfried | ||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Number of employees transferred | employee | 50 | |
Arena Gmb H | ||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||
Sales price of business | SFr 4 | |
Cash received from sale of business | SFr 3 |
Sale of Manufacturing Operati_4
Sale of Manufacturing Operations - Summary of Discontinued Operations for Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | ||||||||
Net product sales | $ 1,129 | $ 9,189 | $ 26,349 | |||||
Other collaboration revenue | 372 | 6,671 | 1,334 | |||||
Toll manufacturing | 1,006 | 3,179 | 4,129 | |||||
Total revenues | 2,507 | 19,039 | 31,812 | |||||
Operating costs and expenses | ||||||||
Cost of product sales | 1,858 | 7,472 | 9,297 | |||||
Cost of toll manufacturing | 1,411 | 4,756 | 6,044 | |||||
Research and development | 643 | 2,643 | ||||||
General and administrative | 329 | 1,672 | 3,714 | |||||
Impairment of long-lived assets | 21,766 | |||||||
Restructuring charges | 231 | |||||||
Other (income) expense, net | 464 | 1,374 | (1,287) | |||||
Total costs and expenses | 4,062 | 15,917 | 42,408 | |||||
Income (loss) from operations of discontinued operations | (1,555) | 3,122 | (10,596) | |||||
Gain on sale of discontinued operations | 725 | |||||||
Income (loss) from discontinued operations | $ (830) | $ 315 | $ 2,606 | $ 147 | $ 54 | $ (830) | $ 3,122 | $ (10,596) |
Sale of Manufacturing Operati_5
Sale of Manufacturing Operations - Summary of Assets and Liabilities Classified as Held for Sale (Detail) $ in Thousands | Dec. 31, 2017USD ($) | |
Current assets: | ||
Accounts receivable | $ 813 | |
Inventories | 6,949 | |
Prepaid expenses and other current assets | 634 | |
Total current assets | 8,396 | |
Land, property and equipment, net | 7,511 | |
Intangible assets, net | 1,233 | |
Total non-current assets | 8,744 | [1] |
Total assets of disposal group held for sale | 17,140 | |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 2,145 | |
Deferred revenues | 25,450 | |
Total liabilities of disposal group held for sale | $ 27,595 | |
[1] | The assets and liabilities of the Manufacturing Operations classified as held for sale are classified as current in the consolidated balance sheet at December 31, 2017, because it was probable that the sale would occur and proceeds would be collected within one year. |
Commitments - Additional Inform
Commitments - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)Property | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)Property | |
Commitments [Line Items] | |||
Number of properties under sale and leaseback agreements | Property | 3 | ||
Sale and leaseback transaction, interest expense | $ 5,700 | $ 6,100 | $ 6,400 |
Less amounts representing interest | $ 25,960 | ||
Sale leaseback transaction, description | Through the remaining terms of the leases in fiscal year 2027 | ||
Sale and leaseback transaction, total financing obligation | $ 52,709 | ||
Add amounts representing residual value | 4,950 | ||
Deposits related to leases | 700 | 700 | |
Rent expense | $ 1,200 | $ 1,500 | $ 1,200 |
Sublease expiration period | 2027-05 | ||
Beacon Discovery, Inc. | |||
Commitments [Line Items] | |||
Number of properties subleased | Property | 1 | ||
Sublease expiration period | 2027-05 | ||
Properties under sale and leaseback agreements | |||
Commitments [Line Items] | |||
Percentage of annual increase in monthly rental payments | 2.50% | ||
Properties under operating lease | CALIFORNIA | |||
Commitments [Line Items] | |||
Percentage of annual increase in monthly rental payments | 2.50% | ||
Operating lease agreement expiration date | 2027-05 | ||
Properties under operating lease | Zug, Switzerland | |||
Commitments [Line Items] | |||
Operating lease agreement expiration date | 2020-09 |
Commitments - Future Minimum Le
Commitments - Future Minimum Lease Payments (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Obligations | ||
2,019 | $ 7,391 | |
2,020 | 8,254 | |
2,021 | 8,461 | |
2,022 | 8,672 | |
2,023 | 8,889 | |
Thereafter | 32,052 | |
Total minimum lease payments | 73,719 | |
Less amounts representing interest | (25,960) | |
Add amounts representing residual value | 4,950 | |
Lease financing obligations | 52,709 | |
Current portion of lease financing obligations | (3,283) | $ (4,000) |
Lease financing obligations, less current portion | 49,426 | $ 57,748 |
Operating Leases | ||
2,019 | 1,050 | |
2,020 | 1,100 | |
2,021 | 976 | |
2,022 | 1,000 | |
2,023 | 1,025 | |
Thereafter | 3,698 | |
Total minimum lease payments | $ 8,849 |
Commitments - Expected Minimum
Commitments - Expected Minimum Rental Payments to be Received under Sublease (Detail) - Sublease Agreement $ in Thousands | Dec. 31, 2018USD ($) |
Operating Leased Assets [Line Items] | |
2,019 | $ 1,520 |
2,020 | 1,873 |
2,021 | 2,477 |
2,022 | 3,487 |
2,023 | 3,794 |
Thereafter | 13,735 |
Total | $ 26,886 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) | Mar. 14, 2018 | Mar. 31, 2018 | Jul. 31, 2017 | Apr. 30, 2017 | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | Apr. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2017 |
Stockholders Equity [Line Items] | ||||||||||||
Aggregate gross proceeds from sale of common stock | $ 389,031,000 | $ 248,805,000 | $ 370,000 | |||||||||
Common stock closing price ($ per share) | $ 38.95 | |||||||||||
Intrinsic value of stock options exercised | $ 7,100,000 | $ 2,800,000 | $ 100,000 | |||||||||
Proceeds from stock option exercises | 5,900,000 | |||||||||||
Tax impact from exercise of stock options | $ 0 | |||||||||||
Total common stock issued under employee stock purchase plan (shares) | 2,236 | 14,140 | ||||||||||
Performance restricted stock units | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Vesting period | 3 years | 3 years | 3 years | 3 years | ||||||||
Units granted (shares) | 74,500 | 69,500 | 78,000 | |||||||||
Multiplier of grant-date fair value for cap on number of PRSUs that may be granted | 600.00% | |||||||||||
Cap on percentage of funding if the absolute 3-year TSR is negative | 100.00% | |||||||||||
PRSU grant-date fair value | $ 3,400,000 | $ 5,000,000 | $ 5,900,000 | |||||||||
Shares issued | 32,322 | |||||||||||
Equity Compensation Plans | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Common stock shares reserved for future issuance | 12,491,648 | |||||||||||
Amended Long Term Incentive Plan Twenty Seventeen | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Number of shares authorized | 6,958,560 | |||||||||||
Stock options exercisable period | 7 years | |||||||||||
Amended Long Term Incentive Plan Twenty Seventeen | Other Than Stock Options And Stock Appreciation Rights | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Reduction in number of shares available for grant for every share issued, percentage | 190.00% | |||||||||||
Increase in number of shares available for grant for every share issued, percentage | 190.00% | |||||||||||
Amended Long Term Incentive Plan Twenty Seventeen | Stock options | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Vesting percentage | 25.00% | |||||||||||
Vesting period | 4 years | |||||||||||
Remaining vesting period | 3 years | |||||||||||
Vesting description | Stock options granted under the 2017 LTIP generally vest over four years with 25% of the shares subject to each option vesting on the first anniversary of the grant date and the remainder of the shares vesting monthly over the following three years in equal installments | |||||||||||
2009 ESPP | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Maximum Percentage of Annual Compensation contributable to ESPP | 15.00% | |||||||||||
Maximum number of shares allowed to purchase per PURCHASE period | 625 | |||||||||||
Maximum ESPP offering period | 24 months | |||||||||||
ESPP terminated date | Jun. 30, 2017 | |||||||||||
Maximum | Performance restricted stock units | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Number of shares to be awarded as a percentage of target amounts | 200.00% | |||||||||||
Maximum | Amended Long Term Incentive Plan Twenty Seventeen | Restricted Stock Units (RSU) | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Vesting period | 4 years | |||||||||||
Minimum | Performance restricted stock units | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Number of shares to be awarded as a percentage of target amounts | 0.00% | |||||||||||
Minimum | Amended Long Term Incentive Plan Twenty Seventeen | Restricted Stock Units (RSU) | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Vesting period | 1 year | |||||||||||
Minimum | Amended Long Term Incentive Plan Twenty Seventeen | Performance restricted stock units | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Vesting period | 12 months | |||||||||||
Minimum | Amended Long Term Incentive Plan Twenty Seventeen | Stock Options and Stock Appreciation Rights (SARs) | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Purchase price of common shares as a percentage of fair market value | 100.00% | |||||||||||
Minimum | 2009 ESPP | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Purchase price of common shares as a percentage of fair market value | 85.00% | |||||||||||
Common Stock | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Total common stock issued under employee stock purchase plan (shares) | 14,140 | |||||||||||
Underwritten Public Offering | Common Stock | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Sale of common stock shares | 9,775,000 | 7,187,500 | 6,900,000 | |||||||||
Aggregate gross proceeds from sale of common stock | $ 383,100,000 | $ 162,000,000 | $ 74,400,000 | |||||||||
ATM Offering | Equity Distribution Agreement | Citigroup Global Markets Inc. | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Aggregate gross proceeds from sale of common stock | $ 7,000,000 | |||||||||||
ATM Offering | Equity Distribution Agreement | Citigroup Global Markets Inc. | Maximum | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Aggregate value of common stock available | $ 50,000,000 | |||||||||||
ATM Offering | Common Stock | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Sale of common stock shares | 489,023 | |||||||||||
ATM Offering | Common Stock | Equity Distribution Agreement | Citigroup Global Markets Inc. | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Sale of common stock shares | 489,023 | |||||||||||
ATM Offering | Common Stock | Equity Distribution Agreement | Citigroup Global Markets Inc. | Weighted Average | ||||||||||||
Stockholders Equity [Line Items] | ||||||||||||
Average market price per share | $ 15.05 | $ 15.05 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Stock Option Activity (Detail) - Stock options $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Number of stock options | |
Outstanding at December 31, 2017 | shares | 3,755 |
Granted | shares | 3,514 |
Exercised | shares | (318) |
Forfeited/cancelled/expired | shares | (410) |
Outstanding at December 31, 2018 | shares | 6,541 |
Vested and expected to vest at December 31, 2018 | shares | 6,541 |
Vested and exercisable at December 31, 2018 | shares | 1,808 |
Weighted Average Exercise Price ($ per share) | |
Outstanding at December 31, 2017 | $ / shares | $ 20 |
Granted | $ / shares | 38 |
Exercised | $ / shares | 18.54 |
Forfeited/cancelled/expired | $ / shares | 34.53 |
Outstanding at December 31, 2018 | $ / shares | 28.83 |
Vested and expected to vest at December 31, 2018 | $ / shares | 28.83 |
Vested and exercisable at December 31, 2018 | $ / shares | $ 21.01 |
Weighted-Average Remaining Contractual Term (in years) | |
Outstanding at December 31, 2018 | 5 years 5 months 19 days |
Vested and expected to vest at December 31, 2018 | 5 years 5 months 19 days |
Vested and exercisable at December 31, 2018 | 4 years 3 months 14 days |
Aggregate Intrinsic Value | |
Outstanding at December 31, 2018 | $ | $ 75,149 |
Vested and expected to vest at December 31, 2018 | $ | 75,149 |
Vested and exercisable at December 31, 2018 | $ | $ 36,698 |
Stockholders' Equity - Weighted
Stockholders' Equity - Weighted-Average Assumptions and Estimated Fair Value of Stock Options (Detail) - Stock options - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.60% | 1.90% | 1.40% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 63.00% | 69.00% | 79.00% |
Expected life (years) | 4 years 6 months 29 days | 4 years 6 months 29 days | 4 years 9 months 21 days |
Weighted-average estimated fair value per share of stock options granted | $ 20.01 | $ 9.17 | $ 10.17 |
Stockholders' Equity - Share Ba
Stockholders' Equity - Share Based Compensation Expense (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 19,554 | $ 7,990 | $ 11,117 | |
Impact on net loss per share, basic and diluted | $ 0.42 | $ 0.24 | $ 0.46 | |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 8,385 | $ 1,945 | $ 5,596 | |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 11,158 | 5,925 | 4,447 | |
Restructuring charges | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 1,000 | 1,032 | ||
Discontinued operations | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 11 | $ 120 | $ 42 |
Stockholders' Equity - Total Un
Stockholders' Equity - Total Unrecognized Estimated Compensation Expense (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Unvested stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense (in thousands) | $ 65,069 |
Remaining Weighted-Average Recognition Period (in years) | 2 years 10 months 9 days |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense (in thousands) | $ 626 |
Remaining Weighted-Average Recognition Period (in years) | 8 months 15 days |
Collaborations and License Ag_2
Collaborations and License Agreements - Additional Information (Detail) | Dec. 28, 2016USD ($) | Dec. 31, 2018USD ($) | Apr. 30, 2018USD ($) | Jan. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jul. 31, 2016USD ($) | May 31, 2015USD ($) | Jul. 31, 2013USD ($) | Nov. 30, 2012USD ($) | Dec. 31, 2018USD ($) | Dec. 28, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Mar. 31, 2018CHF (SFr) | Jan. 01, 2018USD ($) |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized revenues upfront payment | $ 66,000,000 | ||||||||||||||||
Reduction in deferred revenue associated with agreement | $ (2,061,000) | $ (4,401,000) | (69,078,000) | ||||||||||||||
Contract asset associated with agreement | $ 4,100,000 | ||||||||||||||||
Revenues | $ 8,648,000 | 17,970,000 | 21,337,000 | 92,163,000 | |||||||||||||
Total arrangement consideration under Eisai Agreement | 115,600,000 | ||||||||||||||||
Payment received from Eisai | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | 10,000,000 | |||||||||||||
Recognized revenue of discontinued operations | 2,507,000 | 19,039,000 | 31,812,000 | ||||||||||||||
Carrying value of inventory as cost of product sales of discontinued operations | 1,858,000 | 7,472,000 | 9,297,000 | ||||||||||||||
Research and development | 115,029,000 | 70,988,000 | 63,782,000 | ||||||||||||||
Outpost Medicine | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | $ 3,000,000 | ||||||||||||||||
Recognized revenues | 2,800,000 | 200,000 | |||||||||||||||
Collaborative agreement upfront payments in the form of equity interest | 1,500,000 | ||||||||||||||||
Discontinued operations | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Revenues | 6,700,000 | ||||||||||||||||
Cost of product sales | 1,900,000 | ||||||||||||||||
Royalty Revenue | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Revenues | 1,770,000 | $ 6,568,000 | 1,705,000 | ||||||||||||||
Eisai First Amended Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement initiation date | 2012-05 | ||||||||||||||||
Eisai Second Amended Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement initiation date | 2013-11 | ||||||||||||||||
Reduction of research and development expense | $ 3,700,000 | ||||||||||||||||
Eisai Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Proceeds from sale of inventory | 10,000,000 | ||||||||||||||||
Additional manufacturing support payments received | SFr | SFr 8,700,000 | ||||||||||||||||
Estimated transaction price | $ 344,400,000 | ||||||||||||||||
Reduction in deferred revenue associated with agreement | 25,500,000 | ||||||||||||||||
Contract asset associated with agreement | $ 6,100,000 | 6,100,000 | 6,100,000 | ||||||||||||||
Estimated future royalty payments | 4,100,000 | ||||||||||||||||
Reversal balance of hand on inventory | 3,600,000 | ||||||||||||||||
Deferred revenues | $ 25,500,000 | 25,500,000 | |||||||||||||||
Eisai Agreement | Royalty Revenue | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Increase in contract asset resulting from adjustment to future estimated royalty payments | 3,300,000 | 3,300,000 | 3,300,000 | ||||||||||||||
Revenues | 6,600,000 | 1,700,000 | |||||||||||||||
Prior to Transaction Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | 115,000,000 | ||||||||||||||||
Prior to Commercial Distribution Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | 7,500,000 | ||||||||||||||||
Supply Agreement | Product Sales | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Revenues | 1,500,000 | 15,900,000 | |||||||||||||||
License Deliverable | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Estimated selling price of the deliverables for revenue recognition | 64,000,000 | ||||||||||||||||
Inventory Deliverable | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Estimated selling price of the deliverables for revenue recognition | 30,800,000 | ||||||||||||||||
Consideration allocated to deliverable revenue | 0 | ||||||||||||||||
Carrying value of inventory recognized in cost of product sales | 0 | ||||||||||||||||
Recognized revenue of discontinued operations | 6,400,000 | ||||||||||||||||
Carrying value of inventory as cost of product sales of discontinued operations | 900,000 | ||||||||||||||||
Manufacturing and Supply Commitment Deliverable | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Estimated selling price of the deliverables for revenue recognition | 20,800,000 | ||||||||||||||||
Consideration allocated to deliverable revenue | 0 | ||||||||||||||||
Recognized revenue of discontinued operations | 9,500,000 | ||||||||||||||||
Maximum | Outpost Medicine | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Additional milestone payments on achievement | $ 96,500,000 | ||||||||||||||||
Everest | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | 12,000,000 | ||||||||||||||||
Recognized milestone revenue | 2,000,000 | ||||||||||||||||
Everest | Maximum | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Additional milestone payments on achievement | $ 115,000,000 | 115,000,000 | |||||||||||||||
Eisai | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Additional milestone payments on achievement | 25,000,000 | 25,000,000 | $ 25,000,000 | ||||||||||||||
Eisai | Federal Commission for the Protection Against Sanitary Risk Mexico Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized milestone revenue | $ 1,000,000 | ||||||||||||||||
Eisai | Brazilian Health Surveillance Agency | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized milestone revenue | 1,000,000 | ||||||||||||||||
Eisai | US Food and Drug Administration New Drug Application Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized milestone revenue | $ 10,000,000 | ||||||||||||||||
Eisai | 9.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty rate on annual net sales | 9.50% | ||||||||||||||||
Eisai | 13.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty rate on annual net sales | 13.50% | ||||||||||||||||
Eisai | 18.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty rate on annual net sales | 18.50% | ||||||||||||||||
Eisai | Eisai Second Amended Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized milestone revenue | 12,000,000 | ||||||||||||||||
Eisai | Maximum | 9.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty portion of annual net sales amount | $ 175,000,000 | ||||||||||||||||
Eisai | Maximum | 13.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty portion of annual net sales amount | 500,000,000 | ||||||||||||||||
Eisai | Minimum | 13.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty portion of annual net sales amount | 175,000,000 | ||||||||||||||||
Eisai | Minimum | 18.5% Royalty Rate | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Royalty portion of annual net sales amount | 500,000,000 | ||||||||||||||||
Lorcaserin | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Research and development | 0 | 0 | 4,200,000 | ||||||||||||||
Lorcaserin | Discontinued operations | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Internal non-commercial manufacturing costs | 1,400,000 | 3,100,000 | |||||||||||||||
Lorcaserin | Lorcaserin Product | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Revenues | 250,000,000 | ||||||||||||||||
Ildong | BELVIQ | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | $ 5,000,000 | ||||||||||||||||
Purchase price range minimum | 35.00% | ||||||||||||||||
Purchase price range maximum | 45.00% | ||||||||||||||||
Annual net product sales threshold for maximum purchase price | $ 15,000,000 | ||||||||||||||||
Recognized revenues | 0 | 0 | 11,400,000 | ||||||||||||||
Ildong | BELVIQ | Discontinued operations | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Revenues | 2,000,000 | ||||||||||||||||
Cost of product sales | $ 700,000 | ||||||||||||||||
Recognized revenues | 7,200,000 | ||||||||||||||||
Ildong | Eisai Agreement | BELVIQ | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized revenues upfront payment | 3,500,000 | ||||||||||||||||
Ildong | Prior to Transaction Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Additional milestone payments on achievement | 102,100,000 | 102,100,000 | $ 102,100,000 | ||||||||||||||
Eisai | Eisai Second Amended Agreement | US Food and Drug Administration New Drug Application Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Portion of expenses | 90.00% | ||||||||||||||||
Eisai | Eisai Second Amended Agreement | Non-US Food and Drug Administration New Drug Application Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Portion of expenses | 50.00% | ||||||||||||||||
Arena Gmb H | Eisai Second Amended Agreement | US Food and Drug Administration New Drug Application Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Portion of expenses | 10.00% | ||||||||||||||||
Arena Gmb H | Eisai Second Amended Agreement | Non-US Food and Drug Administration New Drug Application Approval | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Portion of expenses | 50.00% | ||||||||||||||||
CY Biotech Company Limited | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | $ 2,000,000 | ||||||||||||||||
Recognized revenues | $ 0 | 0 | 1,800,000 | ||||||||||||||
CY Biotech Company Limited | Eisai Agreement | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Recognized revenues upfront payment | $ 1,700,000 | ||||||||||||||||
Boehringer Ingelheim | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | 7,500,000 | ||||||||||||||||
Additional milestone payments on achievement | 247,500,000 | 247,500,000 | 247,500,000 | ||||||||||||||
Recognized milestone revenue | 3,500,000 | ||||||||||||||||
Revenues | $ 4,400,000 | 5,100,000 | 5,100,000 | ||||||||||||||
Recognized revenues | $ 10,500,000 | ||||||||||||||||
Collaboration and license agreement extension description | We and Boehringer Ingelheim agreed to extend the original term of the Boehringer Ingelheim Agreement by twelve months through January 2019 and by additional six months through July 2019 | ||||||||||||||||
Collaboration and license agreement extension period | 12 months | ||||||||||||||||
Collaboration and license agreement additional extension period. | 6 months | ||||||||||||||||
Boehringer Ingelheim | Beacon Discovery, Inc. | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Payable on milestone achievements | 8,500,000 | 8,500,000 | $ 8,500,000 | ||||||||||||||
Axovant | |||||||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||||||
Collaborative agreement upfront payments | $ 4,000,000 | ||||||||||||||||
Additional milestone payments on achievement | $ 41,500,000 | $ 41,500,000 | 41,500,000 | ||||||||||||||
Recognized revenues | $ 2,200,000 | $ 2,200,000 | $ 2,100,000 |
Income Taxes - Summary of Loss
Income Taxes - Summary of Loss Before Provision (Benefit) for Income Taxes by Region (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
United States | $ (138,522) | $ (62,109) | $ (10,268) |
Foreign | (1,142) | (29,298) | (12,248) |
Total loss attributable to stockholders of Arena before income taxes | $ (139,664) | $ (91,407) | $ (22,516) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Line Items] | |||
Benefit for income taxes | $ (110,265,000) | $ 0 | $ 0 |
Statutory federal rate | 21.00% | 34.00% | 34.00% |
Decrease in valuation allowance | $ (79,400,000) | ||
Operating loss carryforwards, terms of limitation | Net operating losses generated in 2018 are subject to an 80% limitation | ||
Operating loss carryforwards, percentage of limitation | 80.00% | ||
Net operating loss and research and development tax credit limitation on use threshold percentage of ownership | 50.00% | ||
Period for net operating loss and research and development tax credit limitation on use threshold percentage of ownership | 3 years | ||
Unrecognized tax benefits, that would impact the effective tax rate | $ 7,500,000 | ||
Accrued interest or penalties | 0 | $ 0 | |
Recognize interest and/or penalties expense | 0 | $ 0 | $ 0 |
California | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards | 404,800,000 | ||
California | Research and Development Tax Credit | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | 24,200,000 | ||
Foreign | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards | 184,300,000 | ||
Federal | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards | 869,400,000 | ||
Federal | Research and Development Tax Credit | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | $ 33,800,000 | ||
Maximum | |||
Income Tax Disclosure [Line Items] | |||
Statutory federal rate | 35.00% | ||
Minimum | California | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards expiration date, year | 2,028 | ||
Minimum | Foreign | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards expiration date, year | 2,019 | ||
Minimum | Federal | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards expiration date, year | 2,023 | ||
Tax credit carryforwards expiration year | 2,026 | ||
Minimum | Federal | Orphan Drug Credit | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | $ 15,900,000 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision (Benefit) for Income Taxes at Statutory Federal Rate to Provision (Benefit) for Income Taxes (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Benefit for income taxes at statutory federal rate | $ (29,090,000) | $ (32,140,000) | $ (4,053,000) |
Change in valuation allowance due to tax reform | 96,333,000 | ||
Change in federal and foreign valuation allowance | (76,336,000) | (68,604,000) | (3,867,000) |
Permanent differences and other | 1,963,000 | (782,000) | 3,412,000 |
Share-based compensation expense | 889,000 | 7,071,000 | 4,001,000 |
Foreign losses at lower effective rates | 257,000 | 1,428,000 | 3,944,000 |
Research and development and Orphan Drug credits | (7,948,000) | (3,306,000) | (3,437,000) |
Benefit for income taxes | $ (110,265,000) | $ 0 | $ 0 |
Income Taxes - Components of Ne
Income Taxes - Components of Net Deferred Tax Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Federal and California NOL carryforwards | $ 210,853 | $ 179,323 |
Federal and California research and development credit carryforwards | 69,221 | 61,272 |
Foreign NOL carryforwards | 15,131 | 15,425 |
Share-based compensation expense | 6,124 | 4,884 |
Depreciation | 2,914 | 3,896 |
Deferred revenues | 3,554 | |
Other, net | 784 | 5,758 |
Total deferred tax assets | 305,027 | 274,112 |
Net deferred tax assets | 305,027 | 274,112 |
Valuation allowance | (194,694) | $ (274,112) |
Net deferred tax assets | $ 110,333 |
Income Taxes - Reconciliation_2
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits at the beginning of the year | $ 7,762 | $ 5,906 | $ 5,619 |
Additions from tax positions taken in the current year | 1,269 | 1,133 | 287 |
Additions from tax positions taken in prior years | 2 | 723 | |
Gross unrecognized tax benefits at end of the year | $ 9,033 | $ 7,762 | $ 5,906 |
Legal Proceedings - Additional
Legal Proceedings - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Nov. 30, 2017 | |
Loss Contingencies [Line Items] | ||
Accrued litigation settlement | $ 24,000 | |
Litigation settlement expense, net | 11,975 | |
Insurance recovery receivable | $ 12,025 | |
Litigation Amount Settlement By Insurer | ||
Loss Contingencies [Line Items] | ||
Accrued litigation settlement | $ 12,025 | |
Litigation Amount Settlement By Parent | ||
Loss Contingencies [Line Items] | ||
Accrued litigation settlement | $ 11,975 |
Restructuring Activities (Detai
Restructuring Activities (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2016USD ($)employee | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charge | $ 6,115 | |||
Non-cash share-based compensation expense | $ 19,554 | $ 7,990 | 11,117 | |
Restructuring charges | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Non-cash share-based compensation expense | $ 1,000 | $ 1,032 | ||
United States | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Positions to be eliminated | 73.00% | |||
Number of positions to be eliminated | employee | 100 | |||
Restructuring charge | $ 6,100 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 8,648 | $ 3,573 | $ 3,994 | $ 1,755 | $ 15,364 | $ 2,415 | $ 1,898 | $ 1,660 | |||
Operating costs and expenses | 53,292 | 39,577 | 37,160 | 32,724 | 28,964 | 36,626 | 24,850 | 22,864 | $ 162,753 | $ 113,304 | $ 97,426 |
Net income (loss): | |||||||||||
Income (loss) from continuing operations | 68,711 | (34,314) | (31,833) | (31,133) | (14,270) | (35,270) | (23,763) | (22,551) | (28,569) | (95,854) | (12,300) |
Income (loss) from discontinued operations | (830) | 315 | 2,606 | 147 | 54 | (830) | 3,122 | (10,596) | |||
Net loss | 68,711 | $ (34,314) | $ (31,833) | $ (31,963) | (13,955) | (32,664) | (23,616) | (22,497) | (29,399) | (92,732) | (22,896) |
Amounts attributable to stockholders of Arena | |||||||||||
Loss from continuing operations | (13,999) | (34,959) | (23,464) | (22,107) | |||||||
Income from discontinued operations | 315 | 2,606 | 147 | 54 | (830) | 3,122 | (10,596) | ||||
Net loss attributable to stockholders of Arena | $ 68,711 | $ (13,684) | $ (32,353) | $ (23,317) | $ (22,053) | $ (29,399) | $ (91,407) | $ (22,516) | |||
Net income (loss) per share, basic: | |||||||||||
Continuing operations | $ 1.39 | $ (0.70) | $ (0.65) | $ (0.78) | |||||||
Discontinued operations | (0.02) | ||||||||||
Net income (loss) per share, basic | 1.39 | (0.70) | (0.65) | (0.80) | |||||||
Net income (loss) per share, diluted: | |||||||||||
Continuing operations | 1.35 | (0.70) | (0.65) | (0.78) | |||||||
Discontinued operations | (0.02) | ||||||||||
Net income (loss) per share, diluted | $ 1.35 | $ (0.70) | $ (0.65) | $ (0.80) | |||||||
Net income (loss) attributable to stockholders of Arena per share, basic and diluted: | |||||||||||
Continuing operations | $ (0.36) | $ (0.93) | $ (0.77) | $ (0.90) | $ (0.61) | $ (2.87) | $ (0.49) | ||||
Discontinued operations | 0.01 | 0.07 | (0.02) | 0.10 | (0.44) | ||||||
Net income (loss) attributable to stockholders of Arena per share, basic and diluted | $ (0.35) | $ (0.86) | $ (0.77) | $ (0.90) | $ (0.63) | $ (2.77) | $ (0.93) |
Beacon Discovery, Inc. - Additi
Beacon Discovery, Inc. - Additional Information (Detail) | 3 Months Ended | 5 Months Ended | 7 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2018USD ($)ft² | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)ft² | Jul. 31, 2018 | Dec. 31, 2018USD ($)ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Variable Interest Entity [Line Items] | ||||||||||
Sublease expiration period | 2027-05 | |||||||||
Revenues | $ 8,648,000 | $ 17,970,000 | $ 21,337,000 | $ 92,163,000 | ||||||
Net income | 68,711,000 | $ (13,684,000) | $ (32,353,000) | $ (23,317,000) | $ (22,053,000) | (29,399,000) | (91,407,000) | (22,516,000) | ||
Net loss attributable to noncontrolling interest in consolidated variable interest entity | (1,325,000) | $ (380,000) | ||||||||
Prepaid Expenses and Other Current Assets | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Note receivable from Beacon, balance | $ 400,000 | $ 400,000 | $ 400,000 | |||||||
Beacon Discovery, Inc. | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Sublease expiration period | 2027-05 | |||||||||
Beacon Discovery, Inc. | Variable Interest Entity, Primary Beneficiary | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Promissory note interest rate | 7.00% | 7.00% | 7.00% | |||||||
Promissory note repayment due date | Aug. 31, 2022 | |||||||||
Sale of equity, issuance of debt or third party license revenue threshold amount for repayment of promissory note | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 | |||||||
Total assets Beacon's excluded from consolidated balance sheet | 10,000,000 | 1,000,000 | 10,000,000 | 10,000,000 | 1,000,000 | |||||
Total liabilities Beacon's excluded from consolidated balance sheet | 6,000,000 | 1,800,000 | 6,000,000 | 6,000,000 | 1,800,000 | |||||
Revenues | 11,100,000 | 2,700,000 | ||||||||
Net income | 3,600,000 | |||||||||
Net loss attributable to noncontrolling interest in consolidated variable interest entity | 1,300,000 | |||||||||
Revenues from third parties | 4,500,000 | |||||||||
Beacon Discovery, Inc. | Variable Interest Entity, Primary Beneficiary | Maximum | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Total stockholders' equity (deficit) Beacon's excluded from consolidated balance sheet | $ 4,000,000 | $ (800,000) | $ 4,000,000 | $ 4,000,000 | (800,000) | |||||
Revenues from third parties | $ 100,000 | |||||||||
Beacon Discovery, Inc. | Variable Interest Entity, Primary Beneficiary | Sublease Agreement | ||||||||||
Variable Interest Entity [Line Items] | ||||||||||
Area of space subleased | ft² | 15,000 | 15,000 | 15,000 | |||||||
Sublease expiration period | 2027-05 | 2021-08 |