Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 03, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | ARENA PHARMACEUTICALS INC | |
Trading Symbol | ARNA | |
Entity Central Index Key | 0001080709 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,570,066 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 727,404 | $ 161,037 |
Short-term investments, available-for-sale | 376,911 | 284,594 |
Accounts receivable | 3,083 | 5,086 |
Prepaid expenses and other current assets | 18,520 | 10,008 |
Total current assets | 1,125,918 | 460,725 |
Investments, available-for-sale | 165,354 | 82,412 |
Land, property and equipment, net | 23,445 | 23,114 |
Deferred tax assets | 110,333 | |
Other non-current assets | 15,336 | 10,319 |
Total assets | 1,330,053 | 686,903 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 20,148 | 16,181 |
Accrued clinical and preclinical study fees | 8,151 | 10,454 |
Current portion of lease financing obligations | 3,410 | 3,283 |
Total current liabilities | 31,709 | 29,918 |
Other long-term liabilities | 6,368 | 1,301 |
Lease financing obligations, less current portion | 48,539 | 49,426 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock | 5 | 5 |
Additional paid-in capital | 2,123,348 | 2,106,960 |
Accumulated other comprehensive income (loss) | 502 | (155) |
Accumulated deficit | (880,418) | (1,500,552) |
Total stockholders' equity | 1,243,437 | 606,258 |
Total liabilities and stockholders' equity | $ 1,330,053 | $ 686,903 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total revenues | $ 801,057 | $ 1,755 |
Operating Costs and Expenses: | ||
Research and development | 45,396 | 21,573 |
General and administrative | 16,578 | 11,151 |
Transaction costs | 14,573 | |
Total operating costs and expenses | 76,547 | 32,724 |
Income (loss) from operations | 724,510 | (30,969) |
Interest and Other Income (Expense): | ||
Interest income | 6,487 | 774 |
Interest expense | (1,241) | (1,472) |
Other income | 711 | 534 |
Total interest and other income (expense), net | 5,957 | (164) |
Income (loss) from continuing operations before income taxes | 730,467 | (31,133) |
Income tax provision | (110,333) | |
Income (loss) from continuing operations | 620,134 | (31,133) |
Loss from discontinued operations | (830) | |
Net income (loss) | $ 620,134 | $ (31,963) |
Net income (loss) per share, basic: | ||
Continuing operations | $ 12.53 | $ (0.78) |
Discontinued operations | (0.02) | |
Net income (loss) per share, basic | 12.53 | (0.80) |
Net income (loss) per share, diluted: | ||
Continuing operations | 12.10 | (0.78) |
Discontinued operations | (0.02) | |
Net income (loss) per share, diluted | $ 12.10 | $ (0.80) |
Shares used in calculating net income (loss) per share, basic: | 49,478 | 39,996 |
Shares used in calculating net income (loss) per share, diluted: | 51,255 | 39,996 |
Comprehensive Income (Loss): | ||
Net income (loss) | $ 620,134 | $ (31,963) |
Foreign currency translation gain (loss) | (19) | 17 |
Unrealized gain (loss) on available-for-sale investments | 676 | (144) |
Comprehensive income (loss) | 620,791 | (32,090) |
Royalty Revenue | ||
Revenues: | ||
Total revenues | 973 | 727 |
Collaboration and Other Revenue | ||
Revenues: | ||
Total revenues | 84 | $ 1,028 |
United Therapeutics | Collaboration and License Revenue | ||
Revenues: | ||
Total revenues | $ 800,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Underwriters | Common Stock | Common StockUnderwriters | Additional Paid-In Capital | Additional Paid-In CapitalUnderwriters | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning Balance at Dec. 31, 2017 | $ 207,144 | $ 4 | $ 1,698,543 | $ (1,216) | $ (1,490,187) | |||
Beginning Balance (in shares) at Dec. 31, 2017 | 39,280,687 | |||||||
Adoption of ASC Topic 606 | ASC 606 | 20,136 | 1,102 | 19,034 | |||||
Issuance of common stock to underwriters, net | $ 383,148 | $ 1 | $ 383,147 | |||||
Issuance of common stock to underwriters, net (in shares) | 9,775,000 | |||||||
Issuance of common stock upon exercise of options | 1,919 | 1,919 | ||||||
Issuance of common stock upon exercise of options (in shares) | 112,550 | |||||||
Issuance of common stock upon vesting of restricted stock unit awards | (166) | (166) | ||||||
Issuance of common stock upon vesting of restricted stock unit awards (in shares) | 28,448 | |||||||
Share-based compensation expense | 4,044 | 4,044 | ||||||
Unrealized gain (loss) on available-for-sale investments | (144) | (144) | ||||||
Translation gain (loss) | 17 | 17 | ||||||
Net income (loss) | (31,963) | (31,963) | ||||||
Ending Balance at Mar. 31, 2018 | 584,135 | $ 5 | 2,087,487 | (241) | (1,503,116) | |||
Ending Balance (in shares) at Mar. 31, 2018 | 49,196,685 | |||||||
Beginning Balance at Dec. 31, 2018 | 606,258 | $ 5 | 2,106,960 | (155) | (1,500,552) | |||
Beginning Balance (in shares) at Dec. 31, 2018 | 49,422,991 | |||||||
Issuance of common stock upon exercise of options | 3,364 | 3,364 | ||||||
Issuance of common stock upon exercise of options (in shares) | 125,655 | |||||||
Share-based compensation expense | 13,024 | 13,024 | ||||||
Unrealized gain (loss) on available-for-sale investments | 676 | 676 | ||||||
Translation gain (loss) | (19) | (19) | ||||||
Net income (loss) | 620,134 | 620,134 | ||||||
Ending Balance at Mar. 31, 2019 | $ 1,243,437 | $ 5 | $ 2,123,348 | $ 502 | $ (880,418) | |||
Ending Balance (in shares) at Mar. 31, 2019 | 49,548,646 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating Activities: | ||
Net income (loss) | $ 620,134 | $ (31,963) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Loss from discontinued operations | 830 | |
Depreciation and amortization | 764 | 949 |
Deferred income taxes | 110,333 | |
Share-based compensation | 13,024 | 4,033 |
Amortization of prepaid financing costs | 22 | 28 |
Amortization of original issue discounts, net of premiums, on available-for-sale investments | (1,147) | (172) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,003 | 661 |
Prepaid expenses and other assets | (8,169) | 613 |
Payables and accrued liabilities | 1,080 | (3,438) |
Deferred revenues | (446) | |
Deferred rent | (394) | (274) |
Net cash provided by (used in) operating activities - continuing operations | 737,650 | (29,179) |
Net cash used in operating activities - discontinued operations | (601) | |
Net cash provided by (used in) operating activities | 737,650 | (29,780) |
Investing Activities: | ||
Purchases of available-for-sale investments | (249,525) | (25,477) |
Proceeds from sale and maturity of available-for-sale investments | 76,088 | 25,005 |
Purchases of property and equipment | (1,095) | (325) |
Other non-current assets | (2) | |
Net cash used in investing activities - continuing operations | (174,532) | (799) |
Net cash provided by investing activities - discontinued operations | 2,990 | |
Net cash provided by (used in) investing activities | (174,532) | 2,191 |
Financing Activities: | ||
Principal payments on lease financing obligations | (760) | (960) |
Proceeds from issuance of common stock, net | 3,364 | 385,256 |
Net cash provided by financing activities | 2,604 | 384,296 |
Effect of exchange rate changes on cash | (18) | 597 |
Net increase in cash, cash equivalents and restricted cash | 565,704 | 357,304 |
Cash, cash equivalents and restricted cash at beginning of period | 161,900 | 159,700 |
Cash, cash equivalents and restricted cash at end of period | $ 727,604 | $ 517,004 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Arena Pharmaceuticals, Inc. should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission, or SEC, from which we derived our condensed consolidated balance sheet as of December 31, 2018. The accompanying condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. Pursuant to an asset purchase agreement with Siegfried Pharma AG and Siegfried AG, or collectively and individually, Siegfried, in March 2018 we completed a transaction to sell and assign to Siegfried, and Siegfried purchased and assumed 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. In connection with this transaction, all of Arena GmbH’s approximately 50 employees transferred to Siegfried. We have excluded from our continuing operations for the comparative period presented in this report revenues and expenses associated with the disposed Manufacturing Operations, which are reported as discontinued operations. For the three months ended March 31, 2018, the loss from discontinued operations was $0.8 million. Liquidity. As of March 31, 2019, we had cash, cash equivalents and available-for-sale investments of approximately $1.3 billion. We believe our cash, cash equivalents and available-for-sale investments will be sufficient to fund our operations for at least the next 12 months. 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, under new collaboration, licensing or other commercial agreements for one or more of our drug candidates, programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions. Changes in Accounting Policies - Leases. Effective January 1, 2019, we adopted Leases issued by the Accounting Standards Board, or FASB. . As a result, we have changed our accounting policy for leases as detailed below. We implemented ASC 842 using the modified retrospective transition approach by applying the new standard to leases existing at the date of initial application. We used the effective date as our date of initial application. Therefore, we did not update the financial information and did not provide the disclosures required under the new standard for dates and periods before January 1, 2019. We applied ASC 842 using a package of practical expedients, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us Upon adoption of ASC 842, we recorded an operating lease liability of $6.3 million with a corresponding right-of-use asset of $5.9 million based on the present value of the remaining minimum rental payments under the terms of our existing operating lease pertaining to one of our leased properties. Adoption of this standard did not have a material impact on our condensed consolidated statements of operations or cash flows. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for our office equipment leases and short-term office space leases. This means, for those leases that qualify, we do not recognize right-of-use assets or lease liabilities. See Note 10 for disclosures related to our leases. Recent Accounting Pronouncements . Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Revenue from Contracts with Customers Use of Estimates. The preparation of financial statements in accordance 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. Contingencies. We disclose information regarding each material claim where the likelihood of a loss contingency is probable or reasonably possible. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. Concentrations of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash, cash equivalents and available-for-sale investments. We limit our exposure to credit loss by holding our cash primarily in US dollars or, from time to time, placing our cash and investments in US government, agency or government-sponsored enterprise obligations and in corporate debt instruments that are rated investment grade. |
Cash, Cash Equivalents, and Res
Cash, Cash Equivalents, and Restricted Cash | 3 Months Ended |
Mar. 31, 2019 | |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | |
Cash, Cash Equivalents, and Restricted Cash | 2. Cash, cash equivalents and restricted cash The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in the accompanying condensed consolidated balance sheets to the total of the amount presented in the condensed consolidated statements of cash flows, in thousands: March 31, December 31, 2019 2018 Cash and cash equivalents $ 727,404 $ 161,037 Restricted cash included in other non-current assets 200 863 Total cash, cash equivalents and restricted cash presented in the condensed consolidated statement of cash flows $ 727,604 $ 161,900 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. |
Fair Value Disclosures
Fair Value Disclosures | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | 3. 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 Using Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2019: Assets: Money market funds(1) $ 656,849 $ 656,849 $ — $ — US government and government agency notes(2) 231,106 231,106 — — Corporate debt instruments(2) 317,158 — 317,158 — December 31, 2018: 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 — (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 condensed consolidated balance sheets. |
Investments, Available-for-Sale
Investments, Available-for-Sale | 3 Months Ended |
Mar. 31, 2019 | |
Investments Debt And Equity Securities [Abstract] | |
Investments, Available-for-Sale | 4. Investments, Available-for-Sale I nvestments, available-for-sale, consisted of the following Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2019: US government and government agency notes < 1 $ 179,579 $ 40 $ (4 ) $ 179,615 Corporate debt securities < 1 197,167 145 (16 ) 197,296 Short-term investments, available-for-sale $ 376,746 $ 185 $ (20 ) $ 376,911 US government and government agency notes 1 – 5 $ 51,461 $ 33 $ (3 ) $ 51,491 Corporate debt securities 1 – 5 113,628 237 (2 ) 113,863 Investments, available-for-sale $ 165,089 $ 270 $ (5 ) $ 165,354 December 31, 2018: US government and government agency notes < 1 $ 139,274 $ — $ (18 ) $ 139,256 Corporate debt securities < 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 |
Land, Property and Equipment
Land, Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Land, Property and Equipment | 5. Land, Property and Equipment Land, property and equipment consisted of the following, in thousands: March 31, December 31, 2019 2018 Cost $ 70,637 $ 69,542 Less accumulated depreciation and amortization (47,192 ) (46,428 ) Land, property and equipment, net $ 23,445 $ 23,114 |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Other Accrued Liabilities | 6. Accounts Payable and Other Accrued Liabilities Accounts payable and other accrued liabilities consisted of the following, in thousands: March 31, December 31, 2019 2018 Accounts payable $ 1,643 $ 6,192 Accrued expenses 12,070 — Accrued compensation 3,700 8,622 Other accrued liabilities 2,735 1,367 Total accounts payable and other accrued liabilities $ 20,148 $ 16,181 |
Collaborations and License Agre
Collaborations and License Agreements | 3 Months Ended |
Mar. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Collaborations and License Agreements | 7. Collaborations and License Agreements We have collaborations or license agreements with the following companies: United Therapeutics Corporation, or United Therapeutics, Everest Medicines Limited, Eisai Co., Ltd. and Eisai Inc., or collectively, Eisai, Boehringer Ingelheim International GmbH, or Boehringer Ingelheim, Outpost Medicine, LLC, and Axovant Sciences GmbH, or Axovant Previously, we had a toll manufacturing agreement with Siegfried. Refer to our Annual Report on Form 10-K for the year ended December 31, 2018, for more information on our significant collaboration and license agreements. In the following table, revenue is disaggregated by major customers, timing of revenue recognition and revenue classification, in thousands. Three Months Ended March 31, 2019 2018 Customers United Therapeutics $ 800,000 $ — Eisai 823 2,228 Boehringer Ingelheim 84 460 Axovant — 568 Siegfried — 942 Other 150 64 Total $ 801,057 $ 4,262 Timing of revenue recognition Revenue recognized at a point in time $ 800,150 $ 1,755 Revenue recognized over time 907 2,507 Total $ 801,057 $ 4,262 Classification Revenue from continuing operations $ 801,057 $ 1,755 Revenue reported under discontinued operations — 2,507 Total $ 801,057 $ 4,262 The following table provides detail of changes in our contract assets, in thousands: Contract Assets - Current Contract Assets - Non-Current Balances at December 31, 2018 $ 1,484 $ 4,471 Reductions of contract assets (18 ) (326 ) Balances at March 31, 2019 $ 1,466 $ 4,145 United Therapeutics Corporation. In November 2018, we entered into an exclusive license agreement, or the United Therapeutics Agreement, with 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. Under the United Therapeutics Agreement, United Therapeutics is responsible for all development, manufacturing and commercialization of the licensed products globally. In connection with this transaction we incurred transaction fees of approximately $17.0 million, of which $14.6 million was incurred in the three months ended March 31, 2019, and is presented as transaction costs in the condensed consolidated statement of operations. Under the United Therapeutics Agreement of $800.0 million. 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. The promised goods and services under the United Therapeutics United Therapeutics A United Therapeutics Eisai. In December 2016, we and Eisai amended and restated the terms of the previous 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 going forward. 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 for finished drug product plus monthly manufacturing support payments through March 2018 totaling CHF 8.7 million. We manufactured lorcaserin until March 31, 2018, when we sold our Manufacturing Operations. 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 condensed consolidated statements of operations. All other revenues earned under the Transaction Agreement, such as royalties, are classified within continuing operations in the condensed consolidated statements of operations. 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 We are eligible to receive an additional sales-based milestone of $25.0 million upon the achievement of global net sales of lorcaserin for a calendar year first exceeding $250.0 million. 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 included previously received upfront payments, milestone payments, proceeds from net products sales, reimbursement of development expenses, reimbursement of patent expenses, manufacturing support payments received under the Supply Agreement, proceeds from the sale of inventory of bulk lorcaserin and the precursor material. e recognized a contract asset related to estimated future royalty payments from intellectual property sold to Eisai under the Transaction Agreement. intellectual property sold to Eisai under the Transaction Agreement. For the three months ended March 31, 2019, and 2018, we recorded royalty revenue of $0.8 million and $0.7 million, respectively, related to the Transaction Agreement. For the three months ended March 31, 2018, we recognized as revenue $1.5 million, classified within discontinued operations, related to the Supply Agreement, primarily consisting of net product sales and other collaboration revenue with no such revenue recorded during the three months ended March 31, 2019. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes We calculate the interim income tax provision in accordance with Accounting Standard Codification Topic 270, Interim Reporting Accounting for Income Taxes, |
Share-based Compensation
Share-based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | 9. Share-based Compensation We recognized share-based compensation expense as follows, in thousands: Three months ended March 31, 2019 2018 Research and development $ 6,707 $ 1,650 General and administrative 6,317 2,383 Discontinued operations — 11 Total share-based compensation expense $ 13,024 $ 4,044 The following table summarizes our stock option activity during the three months ended March 31, 2019, in thousands (except per share data): Options Weighted- Average Exercise Price Outstanding at January 1, 2019 6,541 $ 28.83 Granted 2,219 41.36 Exercised (125 ) 26.77 Forfeited/cancelled/expired (112 ) 28.70 Outstanding at March 31, 2019 8,523 $ 32.13 During the three months ended March 31, 2019, a total of 297,000 target Performance-Based Restricted Stock Units, or PRSUs, were granted to the employees in a company-wide grant. The PRSUs vest, if at all, upon the closing price of our common stock, or the Closing Price, reaching certain price thresholds during the three-year performance period beginning January 4, 2019, and ending January 3, 2022, or the Performance Period, and the participant’s subsequent satisfaction of a continuing service requirement of generally 90 calendar days. If, on five consecutive trading days or ten non-consecutive trading days during the Performance Period, the Closing Price equals or exceeds $60.00, $67.50 or $75.00, and the participant thereafter satisfies a continuing service requirement, then the PRSUs are deemed vested at 50%, 100% or 200%, respectively, of the participant’s respective target PRSU amount. The shares may be issued following achievement of each price threshold, and the maximum number of common shares that may be issued pursuant to each PRSU grant equals 200% of the number of PRSUs granted. As these awards contain a market condition, we used a Monte Carlo simulation model to estimate the grant-date fair value, which totaled $18.1 million. The grant-date fair value is recognized as compensation expense over the requisite service period of approximately 1.2 years which was derived from the Monte Carlo simulation; 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. During the three months ended March 31, 2018, 32,322 granted in March 2015 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, 2015 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 10. Leases We have three properties in San Diego, California, under sale and leaseback agreements. The terms of these leases contain a purchase option and 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 adoption of ASC 842 did not result in a change to our current accounting policy for our sale and leaseback agreements. 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 $1.2 million, and $1.5 million for the three months ended March 31, 2019, and 2018, 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 until their expiration in May 2027. The aggregate residual value of the facilities at the end of the lease terms is $5.0 million. We lease an additional property in San Diego, California, under an operating lease, which expires in May 2027, contains a purchase option and stipulates annual increases in monthly rental payments of 2.5%. Upon adoption of ASC 842, we recorded an operating lease liability of $6.3 million with a corresponding right-of-use asset of $5.9 million based on the present value of the remaining minimum lease payments under the terms of our existing operating lease. As our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at effective date of adoption in determining the present value of remaining minimum lease payments. The weighted-average discount rate we used was 7.25%. As of March 31, 2019, the balance of the right-of-use asset associated with this lease was $5.8 million and is included in other non-current assets in the accompanying condensed consolidated balance sheet. As of March 31, 2019, the current portion of the corresponding lease liability of $0.5 million is included in accounts payable and other accrued liabilities and the non-current portion of the lease liability of $5.7 million is included in other long-term liabilities in the accompanying condensed consolidated balance sheet. The operating lease costs and cash paid for the amounts included in the measurement of lease liabilities are classified as operating activities in the accompanying condensed consolidated cash flow statement. We also lease shared office space in Boston, Massachusetts, under a short-term lease arrangement and office space in Zug, Switzerland, under an operating lease which expires in September 2020. In March 2019, we entered into an additional lease in Zug, Switzerland, for approximately 10,500 square feet of office space with the lease inception date of June 1, 2019. We recognized rent expense of $0.3 million and $0.4 million for the three months ended March 31, 2019, and 2018, respectively. At March 31, 2019, the f uture lease payments under our existing financing obligations and non-cancellable operating leases were as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases Remainder of 2019 $ 5,407 $ 812 2020 8,254 1,098 2021 8,461 976 2022 8,672 1,000 2023 8,889 1,025 2024 9,111 1,051 Thereafter 22,940 2,647 Total minimum lease payments 71,734 $ 8,609 Less amounts representing interest (24,735 ) Add amounts representing residual value 4,950 Lease financing obligations 51,949 Less current portion (3,410 ) $ 48,539 At December 31, 2018, the future minimum lease payments under our existing financing and operating lease obligations were 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 and 2017, we entered into agreements to sublease several of our California properties including an agreement to sublease one of our properties to Beacon Discovery, Inc., or Beacon, a variable interest entity. All our subleases expire in May 2027. The terms of the subleases stipulate annual increases in monthly rental payments. We recognized rent income from our subleases of $0.7 million and $0.6 million for the three months ended March 31, 2019, and 2018, respectively. At March 31, 2019, the expected minimum rental payments to be received under our subleases were as follows: Year ending December 31, Remainder of 2019 $ 1,175 2020 1,873 2021 2,477 2022 3,487 2023 3,794 2024 3,896 Thereafter 9,839 Total $ 26,541 |
Income (Loss) Per Share
Income (Loss) Per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Income (Loss) Per Share | 11. Income (Loss) Per Share We calculate basic and diluted income (loss) from continuing operations, loss from discontinued operations and net income (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 three months ended March 31, 2018, in addition to excluding potentially dilutive out-of-the money securities, we have excluded from our calculation of diluted income (loss) per share all potentially dilutive in-the-money (i) stock options, (ii) restricted stock unit awards, or RSUs, and (iii) PRSUs, and our diluted net income (loss) per share is the same as our basic net income (loss) per share. The following table presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted net income (loss) per share, in thousands: Three months ended March 31, 2019 2018 Stock options 5,471 5,360 RSUs and unvested restricted stock — 25 Total 5,471 5,385 |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Legal Proceedings | 12. Legal Proceedings 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 related 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 would 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 was accused of infringing U.S. Patent Nos. 6,953,787; 7,514,422; 7,977,329; 8,207,158 and 8,273,734. 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. 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 related 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 would be infringed by Teva’s manufacture, importation, use, sale or offer for sale of the product described in its ANDA. Teva was accused of infringing U.S. Patent Nos. 6,953,787; 7,514,422; 7,977,329; 8,207,158 and 8,273,734. On April 18, 2017, Teva filed an amended answer, defenses and counterclaims to the March 6, 2017 complaint. On May 1, 2017, the Teva and Lupin actions were consolidated for all purposes and was set to 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 would 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. 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. Trial in this consolidated action was scheduled for April 15, 2019. After the expert discovery phase of the case, Eisai entered into settlement agreements with Teva and Lupin, respectively, and we gave Teva and Lupin, respectively, certain covenants not to sue in view of the Eisai settlements. These respective litigations were accordingly dismissed without prejudice on March 5, 2019 (Teva) and April 4, 2019 (Lupin). The terms of the settlement agreements are confidential. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Arena Pharmaceuticals, Inc. should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission, or SEC, from which we derived our condensed consolidated balance sheet as of December 31, 2018. The accompanying condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. Pursuant to an asset purchase agreement with Siegfried Pharma AG and Siegfried AG, or collectively and individually, Siegfried, in March 2018 we completed a transaction to sell and assign to Siegfried, and Siegfried purchased and assumed 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. In connection with this transaction, all of Arena GmbH’s approximately 50 employees transferred to Siegfried. We have excluded from our continuing operations for the comparative period presented in this report revenues and expenses associated with the disposed Manufacturing Operations, which are reported as discontinued operations. For the three months ended March 31, 2018, the loss from discontinued operations was $0.8 million. |
Liquidity | Liquidity. As of March 31, 2019, we had cash, cash equivalents and available-for-sale investments of approximately $1.3 billion. We believe our cash, cash equivalents and available-for-sale investments will be sufficient to fund our operations for at least the next 12 months. 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, under new collaboration, licensing or other commercial agreements for one or more of our drug candidates, programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions. |
Changes in Accounting Policies - Leases | Changes in Accounting Policies - Leases. Effective January 1, 2019, we adopted Leases issued by the Accounting Standards Board, or FASB. . As a result, we have changed our accounting policy for leases as detailed below. We implemented ASC 842 using the modified retrospective transition approach by applying the new standard to leases existing at the date of initial application. We used the effective date as our date of initial application. Therefore, we did not update the financial information and did not provide the disclosures required under the new standard for dates and periods before January 1, 2019. We applied ASC 842 using a package of practical expedients, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter not being applicable to us Upon adoption of ASC 842, we recorded an operating lease liability of $6.3 million with a corresponding right-of-use asset of $5.9 million based on the present value of the remaining minimum rental payments under the terms of our existing operating lease pertaining to one of our leased properties. Adoption of this standard did not have a material impact on our condensed consolidated statements of operations or cash flows. The new standard also provides practical expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for our office equipment leases and short-term office space leases. This means, for those leases that qualify, we do not recognize right-of-use assets or lease liabilities. See Note 10 for disclosures related to our leases. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements . Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Revenue from Contracts with Customers |
Use of Estimates | Use of Estimates. The preparation of financial statements in accordance 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. |
Contingencies | Contingencies. We disclose information regarding each material claim where the likelihood of a loss contingency is probable or reasonably possible. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. |
Concentrations of Credit Risk | Concentrations of Credit Risk. Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash, cash equivalents and available-for-sale investments. We limit our exposure to credit loss by holding our cash primarily in US dollars or, from time to time, placing our cash and investments in US government, agency or government-sponsored enterprise obligations and in corporate debt instruments that are rated investment grade. |
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. |
Income Taxes | Income Taxes Interim Reporting Accounting for Income Taxes, |
Income (Loss) Per Share | We calculate basic and diluted income (loss) from continuing operations, loss from discontinued operations and net income (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 three months ended March 31, 2018, in addition to excluding potentially dilutive out-of-the money securities, we have excluded from our calculation of diluted income (loss) per share all potentially dilutive in-the-money (i) stock options, (ii) restricted stock unit awards, or RSUs, and (iii) PRSUs, and our diluted net income (loss) per share is the same as our basic net income (loss) per share. |
Cash, Cash Equivalents, and R_2
Cash, Cash Equivalents, and Restricted Cash (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | |
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 the accompanying condensed consolidated balance sheets to the total of the amount presented in the condensed consolidated statements of cash flows, in thousands: March 31, December 31, 2019 2018 Cash and cash equivalents $ 727,404 $ 161,037 Restricted cash included in other non-current assets 200 863 Total cash, cash equivalents and restricted cash presented in the condensed consolidated statement of cash flows $ 727,604 $ 161,900 |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 Using Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) March 31, 2019: Assets: Money market funds(1) $ 656,849 $ 656,849 $ — $ — US government and government agency notes(2) 231,106 231,106 — — Corporate debt instruments(2) 317,158 — 317,158 — December 31, 2018: 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 — (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 condensed consolidated balance sheets. |
Investments, Available-for-Sa_2
Investments, Available-for-Sale (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Investments, Available-for-Sale | I nvestments, available-for-sale, consisted of the following Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value March 31, 2019: US government and government agency notes < 1 $ 179,579 $ 40 $ (4 ) $ 179,615 Corporate debt securities < 1 197,167 145 (16 ) 197,296 Short-term investments, available-for-sale $ 376,746 $ 185 $ (20 ) $ 376,911 US government and government agency notes 1 – 5 $ 51,461 $ 33 $ (3 ) $ 51,491 Corporate debt securities 1 – 5 113,628 237 (2 ) 113,863 Investments, available-for-sale $ 165,089 $ 270 $ (5 ) $ 165,354 December 31, 2018: US government and government agency notes < 1 $ 139,274 $ — $ (18 ) $ 139,256 Corporate debt securities < 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 |
Land, Property and Equipment (T
Land, Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Land, Property and Equipment | Land, property and equipment consisted of the following, in thousands: March 31, December 31, 2019 2018 Cost $ 70,637 $ 69,542 Less accumulated depreciation and amortization (47,192 ) (46,428 ) Land, property and equipment, net $ 23,445 $ 23,114 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Other Accrued Liabilities | Accounts payable and other accrued liabilities consisted of the following, in thousands: March 31, December 31, 2019 2018 Accounts payable $ 1,643 $ 6,192 Accrued expenses 12,070 — Accrued compensation 3,700 8,622 Other accrued liabilities 2,735 1,367 Total accounts payable and other accrued liabilities $ 20,148 $ 16,181 |
Collaborations and License Ag_2
Collaborations and License Agreements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
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. Three Months Ended March 31, 2019 2018 Customers United Therapeutics $ 800,000 $ — Eisai 823 2,228 Boehringer Ingelheim 84 460 Axovant — 568 Siegfried — 942 Other 150 64 Total $ 801,057 $ 4,262 Timing of revenue recognition Revenue recognized at a point in time $ 800,150 $ 1,755 Revenue recognized over time 907 2,507 Total $ 801,057 $ 4,262 Classification Revenue from continuing operations $ 801,057 $ 1,755 Revenue reported under discontinued operations — 2,507 Total $ 801,057 $ 4,262 |
Summary of Changes in Contract Assets | The following table provides detail of changes in our contract assets, in thousands: Contract Assets - Current Contract Assets - Non-Current Balances at December 31, 2018 $ 1,484 $ 4,471 Reductions of contract assets (18 ) (326 ) Balances at March 31, 2019 $ 1,466 $ 4,145 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share Based Compensation Expense | We recognized share-based compensation expense as follows, in thousands: Three months ended March 31, 2019 2018 Research and development $ 6,707 $ 1,650 General and administrative 6,317 2,383 Discontinued operations — 11 Total share-based compensation expense $ 13,024 $ 4,044 |
Summary of Stock Option Activity | The following table summarizes our stock option activity during the three months ended March 31, 2019, in thousands (except per share data): Options Weighted- Average Exercise Price Outstanding at January 1, 2019 6,541 $ 28.83 Granted 2,219 41.36 Exercised (125 ) 26.77 Forfeited/cancelled/expired (112 ) 28.70 Outstanding at March 31, 2019 8,523 $ 32.13 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Future Minimum Lease Payments | At March 31, 2019, the f uture lease payments under our existing financing obligations and non-cancellable operating leases were as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases Remainder of 2019 $ 5,407 $ 812 2020 8,254 1,098 2021 8,461 976 2022 8,672 1,000 2023 8,889 1,025 2024 9,111 1,051 Thereafter 22,940 2,647 Total minimum lease payments 71,734 $ 8,609 Less amounts representing interest (24,735 ) Add amounts representing residual value 4,950 Lease financing obligations 51,949 Less current portion (3,410 ) $ 48,539 At December 31, 2018, the future minimum lease payments under our existing financing and operating lease obligations were 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 | |
Expected Minimum Rental Payments to be Received under Sublease | At March 31, 2019, the expected minimum rental payments to be received under our subleases were as follows Year ending December 31, Remainder of 2019 $ 1,175 2020 1,873 2021 2,477 2022 3,487 2023 3,794 2024 3,896 Thereafter 9,839 Total $ 26,541 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Potentially Dilutive Securities Excluded from Calculation of Diluted Net Income (Loss) Per Share | The following table presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted net income (loss) per share, in thousands: Three months ended March 31, 2019 2018 Stock options 5,471 5,360 RSUs and unvested restricted stock — 25 Total 5,471 5,385 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2019USD ($)employee | Jan. 01, 2019USD ($) | |
Subsidiary Sale Of Stock [Line Items] | |||
Loss from discontinued operations | $ (830) | ||
Cash and cash equivalents and available-for-sale investments | $ 1,300,000 | ||
ASC 842 | |||
Subsidiary Sale Of Stock [Line Items] | |||
Operating lease, liability | $ 6,300 | ||
Operating lease, right-of-use asset | $ 5,900 | ||
Siegfried | |||
Subsidiary Sale Of Stock [Line Items] | |||
Number of employees transferred | employee | 50 | ||
Arena Gmb H | |||
Subsidiary Sale Of Stock [Line Items] | |||
Loss from discontinued operations | $ (800) |
Cash, Cash Equivalents, and R_3
Cash, Cash Equivalents, and Restricted Cash - Reconciliation of Components of Cash, Cash Equivalents, and Restricted Cash (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 727,404 | $ 161,037 |
Restricted cash included in other non-current assets | $ 200 | $ 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 condensed consolidated statement of cash flows | $ 727,604 | $ 161,900 |
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 | Mar. 31, 2019 | Dec. 31, 2018 |
Assets: | ||
Money market funds | $ 656,849 | $ 62,438 |
US government and government agency notes | 231,106 | 171,278 |
Corporate debt instruments | 317,158 | 240,481 |
Quoted Prices in Active Markets (Level 1) | ||
Assets: | ||
Money market funds | 656,849 | 62,438 |
US government and government agency notes | 231,106 | 171,278 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Corporate debt instruments | $ 317,158 | $ 240,481 |
Investments, Available-for-Sa_3
Investments, Available-for-Sale - Schedule of Investments, Available-for-Sale (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Short-term investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 376,746 | $ 284,742 |
Gross Unrealized Gains | 185 | |
Gross Unrealized Losses | (20) | (148) |
Estimated Fair Value | 376,911 | 284,594 |
Short-term investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 179,579 | 139,274 |
Gross Unrealized Gains | 40 | |
Gross Unrealized Losses | (4) | (18) |
Estimated Fair Value | 179,615 | 139,256 |
Short-term investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 197,167 | 145,468 |
Gross Unrealized Gains | 145 | |
Gross Unrealized Losses | (16) | (130) |
Estimated Fair Value | 197,296 | 145,338 |
Investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 165,089 | 82,510 |
Gross Unrealized Gains | 270 | 6 |
Gross Unrealized Losses | (5) | (104) |
Estimated Fair Value | 165,354 | 82,412 |
Investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 51,461 | 16,998 |
Gross Unrealized Gains | 33 | 6 |
Gross Unrealized Losses | (3) | |
Estimated Fair Value | $ 51,491 | $ 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 | 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 | 5 years |
Investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 113,628 | $ 65,512 |
Gross Unrealized Gains | 237 | |
Gross Unrealized Losses | (2) | (104) |
Estimated Fair Value | $ 113,863 | $ 65,408 |
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 |
Land, Property and Equipment -
Land, Property and Equipment - Land, Property and Equipment (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property Plant And Equipment [Abstract] | ||
Cost | $ 70,637 | $ 69,542 |
Less accumulated depreciation and amortization | (47,192) | (46,428) |
Land, property and equipment, net | $ 23,445 | $ 23,114 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Liabilities - Accounts Payable and Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 1,643 | $ 6,192 |
Accrued expenses | 12,070 | |
Accrued compensation | 3,700 | 8,622 |
Other accrued liabilities | 2,735 | 1,367 |
Total accounts payable and other accrued liabilities | $ 20,148 | $ 16,181 |
Collaborations and License Ag_3
Collaborations and License Agreements - Summary of Revenue Disaggregated by Major Customers, Timing of Revenue Recognition and Revenue Classification (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation Of Revenue [Line Items] | ||
Revenue | $ 801,057 | $ 4,262 |
Revenue from continuing operations | 801,057 | 1,755 |
Revenue reported under discontinued operations | 2,507 | |
Revenue recognized at a point in time | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 800,150 | 1,755 |
Revenue recognized over time | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 907 | 2,507 |
United Therapeutics | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 800,000 | |
Eisai | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 823 | 2,228 |
Boehringer Ingelheim | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 84 | 460 |
Axovant | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 568 | |
Siegfried | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | 942 | |
Other | ||
Disaggregation Of Revenue [Line Items] | ||
Revenue | $ 150 | $ 64 |
Collaborations and License Ag_4
Collaborations and License Agreements - Summary of Changes in Contract Assets (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Change In Contract With Customer Asset [Abstract] | |
Contract Assets - Current, Beginning balance | $ 1,484 |
Contract Assets - Current, Reductions of contract assets | (18) |
Contract Assets - Current, Ending balance | 1,466 |
Contract Assets - Non-Current, Beginning balance | 4,471 |
Contract Assets - Non-Current, Reductions of contract assets | (326) |
Contract Assets - Non-Current, Ending balance | $ 4,145 |
Collaborations and License Ag_5
Collaborations and License Agreements - Additional Information (Detail) | Jan. 24, 2019USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2018CHF (SFr) |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Transaction costs | $ 14,573,000 | |||
License agreement costs incurred related to transaction fees | 14,573,000 | |||
Revenues | 801,057,000 | $ 1,755,000 | ||
Lorcaserin Product | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Revenues | 250,000,000 | |||
Royalty Revenue | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Revenues | 973,000 | 727,000 | ||
Eisai | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Additional milestone payments on achievement | $ 25,000,000 | |||
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% | |||
Maximum | Eisai | 9.5% Royalty Rate | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Royalty portion of annual net sales amount | $ 175,000,000 | |||
Maximum | Eisai | 13.5% Royalty Rate | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Royalty portion of annual net sales amount | 500,000,000 | |||
Minimum | Eisai | 13.5% Royalty Rate | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Royalty portion of annual net sales amount | 175,000,000 | |||
Minimum | Eisai | 18.5% Royalty Rate | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Royalty portion of annual net sales amount | 500,000,000 | |||
Eisai Agreement | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Additional manufacturing support payments received | SFr | SFr 8,700,000 | |||
Eisai Agreement | Royalty Revenue | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Revenues | 800,000 | 700,000 | ||
Supply Agreement | Product Sales | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Revenues | $ 0 | $ 1,500,000 | ||
United Therapeutics | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Collaborative arrangement right description | In November 2018, we entered into an exclusive license agreement, or the United Therapeutics Agreement, with 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. | |||
Collaborative agreement completion date | Jan. 24, 2019 | |||
Transaction costs | $ 17,000,000 | $ 14,600,000 | ||
License agreement costs incurred related to transaction fees | $ 17,000,000 | 14,600,000 | ||
Collaborative agreement upfront payments | 800,000,000 | |||
United Therapeutics | Maximum | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Additional milestone payments on achievement | 400,000,000 | |||
United Therapeutics | Non U.S. Market | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Additional milestone payments on achievement | 150,000,000 | |||
United Therapeutics | U.S. Market | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||
Additional milestone payments on achievement | $ 250,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
Income tax expense | $ 110,333 |
Share-based Compensation - Shar
Share-based Compensation - Share Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 13,024 | $ 4,044 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | 6,707 | 1,650 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 6,317 | 2,383 |
Discontinued operations | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 11 |
Share-based Compensation - Summ
Share-based Compensation - Summary of Stock Option Activity (Detail) - Stock options shares in Thousands | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of stock options | |
Outstanding at January 1, 2019 | shares | 6,541 |
Granted | shares | 2,219 |
Exercised | shares | (125) |
Forfeited/cancelled/expired | shares | (112) |
Outstanding at March 31, 2019 | shares | 8,523 |
Weighted Average Exercise Price ($ per share) | |
Outstanding at January 1, 2019 | $ / shares | $ 28.83 |
Granted | $ / shares | 41.36 |
Exercised | $ / shares | 26.77 |
Forfeited/cancelled/expired | $ / shares | 28.70 |
Outstanding at March 31, 2019 | $ / shares | $ 32.13 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - Performance restricted stock units - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Units granted (shares) | 297,000 | ||
Vesting period | 3 years | 3 years | |
Threshold consecutive trading days | 5 days | ||
Threshold non-consecutive trading days | 10 days | ||
PRSU grant-date fair value | $ 18.1 | ||
Compensation expense of requisite service period | 1 year 2 months 12 days | ||
Shares issued | 32,322 | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares to be awarded as a percentage of target amounts | 200.00% | ||
Tranche One | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock closing price ($ per share) | $ 60 | ||
Common stock closing price, percentage | 50.00% | ||
Tranche Two | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock closing price ($ per share) | $ 67.50 | ||
Common stock closing price, percentage | 100.00% | ||
Tranche Three | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock closing price ($ per share) | $ 75 | ||
Common stock closing price, percentage | 200.00% |
Leases - Additional Information
Leases - Additional Information (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2019USD ($)ft²Property | Mar. 31, 2018USD ($) | Dec. 31, 2017Property | Dec. 31, 2016Property | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
Operating Leased Assets [Line Items] | ||||||
Number of properties under sale and leaseback agreements | Property | 3 | |||||
Sale and leaseback transaction, interest expense | $ 1,200 | $ 1,500 | ||||
Less amounts representing interest | $ 24,735 | $ 25,960 | ||||
Sale leaseback transaction, description | Through the remaining terms of the leases until their expiration in May 2027 | |||||
Add amounts representing residual value | $ 4,950 | $ 4,950 | ||||
Rent expense | 300 | 400 | ||||
Rent income from subleases | $ 700 | $ 600 | ||||
Beacon Discovery, Inc. | ||||||
Operating Leased Assets [Line Items] | ||||||
Number of properties subleased | Property | 1 | 1 | ||||
Sublease expiration period | 2027-05 | 2027-05 | ||||
ASC 842 | ||||||
Operating Leased Assets [Line Items] | ||||||
Operating lease, liability | $ 6,300 | |||||
Operating lease, right-of-use asset | $ 5,900 | |||||
Weighted average discount rate | 7.25% | |||||
Properties under sale and leaseback agreements | ||||||
Operating Leased Assets [Line Items] | ||||||
Percentage of annual increase in monthly rental payments | 2.50% | |||||
Properties under operating lease | San Diego, California | ||||||
Operating Leased Assets [Line Items] | ||||||
Percentage of annual increase in monthly rental payments | 2.50% | |||||
Operating lease agreement expiration date | 2027-05 | |||||
Operating lease, right-of-use asset | $ 5,800 | |||||
Operating lease, right-of-use asset, statement of financial position [extensible list] | us-gaap:OtherAssetsNoncurrent | |||||
Operating lease, liability, current | $ 500 | |||||
Operating lease, liability, current, statement of financial position [extensible list] | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | |||||
Operating lease, liability, noncurrent | $ 5,700 | |||||
Operating lease, liability, noncurrent, statement of financial position [extensible list] | us-gaap:OtherLiabilitiesNoncurrent | |||||
Properties under operating lease | Zug, Switzerland | ||||||
Operating Leased Assets [Line Items] | ||||||
Operating lease agreement expiration date | 2020-09 | |||||
Area of office space | ft² | 10,500 | |||||
Additional office space, lease inception date | Jun. 1, 2019 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Detail) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Financing Obligations | ||
Remainder of 2019 | $ 5,407 | |
2020 | 8,254 | |
2021 | 8,461 | |
2022 | 8,672 | |
2023 | 8,889 | |
2024 | 9,111 | |
Thereafter | 22,940 | |
Total minimum lease payments | 71,734 | |
Less amounts representing interest | (24,735) | $ (25,960) |
Add amounts representing residual value | 4,950 | 4,950 |
Lease financing obligations | 51,949 | 52,709 |
Current portion of lease financing obligations | (3,410) | (3,283) |
Lease financing obligations, less current portion | 48,539 | 49,426 |
Operating Leases | ||
Remainder of 2019 | 812 | |
2020 | 1,098 | |
2021 | 976 | |
2022 | 1,000 | |
2023 | 1,025 | |
2024 | 1,051 | |
Thereafter | 2,647 | |
Total minimum lease payments | $ 8,609 | |
Financing Obligations | ||
2019 | 7,391 | |
2020 | 8,254 | |
2021 | 8,461 | |
2022 | 8,672 | |
2023 | 8,889 | |
Thereafter | 32,052 | |
Total minimum lease payments | 73,719 | |
Operating Leases | ||
2019 | 1,050 | |
2020 | 1,100 | |
2021 | 976 | |
2022 | 1,000 | |
2023 | 1,025 | |
Thereafter | 3,698 | |
Total minimum lease payments | $ 8,849 |
Leases - Expected Minimum Renta
Leases - Expected Minimum Rental Payments to be Received under Sublease (Detail) - Sublease Agreement $ in Thousands | Mar. 31, 2019USD ($) |
Operating Leased Assets [Line Items] | |
Remainder of 2019 | $ 1,175 |
2020 | 1,873 |
2021 | 2,477 |
2022 | 3,487 |
2023 | 3,794 |
2024 | 3,896 |
Thereafter | 9,839 |
Total | $ 26,541 |
Income (Loss) Per Share - Poten
Income (Loss) Per Share - Potentially Dilutive Securities Excluded from Calculation of Diluted Net Income (Loss) Per Share (Detail) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 5,471 | 5,385 |
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) | 5,471 | 5,360 |
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) | 25 |