Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 21, 2020 | Jun. 28, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | ARENA PHARMACEUTICALS, INC. | ||
Entity Central Index Key | 0001080709 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity File Number | 000-31161 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Trading Symbol | ARNA | ||
Entity Common Stock, Shares Outstanding | 50,249,149 | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 2.9 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Address, Postal Zip Code | 92121 | ||
Entity Tax Identification Number | 23-2908305 | ||
Local Phone Number | 453.7200 | ||
City Area Code | 858 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 6154 Nancy Ridge Drive | ||
Entity Address, City or Town | San Diego | ||
Entity Address, State or Province | CA | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Documents Incorporated by Reference | Certain information required by Part III of this Annual Report on Form 10-K is incorporated by reference from the Registrant’s Definitive Proxy Statement for the Annual Meeting of Stockholders to be held in June 2020, which will be filed with the Securities and Exchange Commission on or before April 29, 2020. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 243,274 | $ 161,037 |
Short-term investments, available-for-sale | 496,291 | 284,594 |
Accounts receivable | 1,654 | 5,086 |
Prepaid expenses and other current assets | 18,715 | 10,008 |
Total current assets | 759,934 | 460,725 |
Investments, available-for-sale | 370,938 | 82,412 |
Land, property and equipment, net | 25,128 | 23,114 |
Deferred tax assets | 110,333 | |
Other non-current assets | 18,123 | 10,319 |
Total assets | 1,174,123 | 686,903 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 25,499 | 16,181 |
Accrued clinical and preclinical study fees | 15,654 | 10,454 |
Current portion of lease financing obligations | 3,814 | 3,283 |
Total current liabilities | 44,967 | 29,918 |
Lease financing obligations, less current portion | 45,613 | 49,426 |
Other long-term liabilities | 12,078 | 1,301 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock | ||
Common stock | 5 | 5 |
Additional paid-in capital | 2,173,154 | 2,106,960 |
Accumulated other comprehensive income (loss) | 1,303 | (155) |
Accumulated deficit | (1,102,997) | (1,500,552) |
Total stockholders' equity | 1,071,465 | 606,258 |
Total liabilities and equity | $ 1,174,123 | $ 686,903 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
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 | 50,170,953 | 49,422,991 |
Common stock, shares outstanding | 50,170,953 | 49,422,991 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) shares in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | |||
Total revenues | $ 806,431,000 | $ 17,970,000 | $ 21,337,000 |
Operating costs and expenses | |||
Research and development | 231,496,000 | 115,029,000 | 70,988,000 |
General and administrative | 77,616,000 | 45,257,000 | 30,341,000 |
Transaction costs | 14,573,000 | 2,467,000 | |
Litigation settlement expense, net | 11,975,000 | ||
Total operating costs and expenses | 323,685,000 | 162,753,000 | 113,304,000 |
Income (loss) from operations | 482,746,000 | (144,783,000) | (91,967,000) |
Interest and other income (expense) | |||
Interest income | 26,872,000 | 8,772,000 | 492,000 |
Interest expense | (4,791,000) | (5,695,000) | (6,119,000) |
Other income | 3,061,000 | 2,872,000 | 1,740,000 |
Total interest and other income (expense), net | 25,142,000 | 5,949,000 | (3,887,000) |
Income (loss) from continuing operations before income taxes | 507,888,000 | (138,834,000) | (95,854,000) |
Income tax (provision) benefit | (110,333,000) | 110,265,000 | 0 |
Income (loss) from continuing operations | 397,555,000 | (28,569,000) | (95,854,000) |
Income (loss) from discontinued operations | (830,000) | 3,122,000 | |
Net income (loss) | 397,555,000 | (29,399,000) | (92,732,000) |
Less net loss attributable to noncontrolling interest in consolidated variable interest entity | 1,325,000 | ||
Net income (loss) attributable to stockholders of Arena | 397,555,000 | (29,399,000) | (91,407,000) |
Amounts attributable to stockholders of Arena: | |||
Income (loss) from continuing operations | 397,555,000 | (28,569,000) | (94,529,000) |
Income (loss) from discontinued operations | (830,000) | 3,122,000 | |
Net income (loss) attributable to stockholders of Arena | $ 397,555,000 | $ (29,399,000) | $ (91,407,000) |
Net income (loss) attributable to stockholders of Arena per share, basic: | |||
Continuing operations | $ 7.99 | $ (0.61) | $ (2.87) |
Discontinued operations | (0.02) | 0.10 | |
Net income (loss) attributable to stockholders of Arena per share, basic | 7.99 | (0.63) | (2.77) |
Net income (loss) attributable to stockholders of Arena per share, diluted: | |||
Continuing operations | 7.69 | (0.61) | (2.87) |
Discontinued operations | (0.02) | 0.10 | |
Net income (loss) attributable to stockholders of Arena per share, diluted | $ 7.69 | $ (0.63) | $ (2.77) |
Shares used in calculating net income (loss) attributable to stockholders of Arena per share, basic | 49,779 | 47,041 | 32,990 |
Shares used in calculating net income (loss) attributable to stockholders of Arena per share, diluted | 51,698 | 47,041 | 32,990 |
Comprehensive Income (Loss): | |||
Net income (loss) | $ 397,555,000 | $ (29,399,000) | $ (92,732,000) |
Foreign currency translation adjustment | (11,000) | 72,000 | 2,016,000 |
Unrealized gain (loss) on available-for-sale investments | 1,469,000 | (113,000) | (133,000) |
Comprehensive income (loss) | 399,013,000 | (29,440,000) | (90,849,000) |
Less comprehensive loss attributable to noncontrolling interest in consolidated variable interest entity | 1,325,000 | ||
Comprehensive income (loss) attributable to stockholders of Arena | 399,013,000 | (29,440,000) | (89,524,000) |
Collaboration and Other Revenue | |||
Revenues | |||
Total revenues | 7,284,000 | 11,402,000 | 19,632,000 |
Royalty Revenue | |||
Revenues | |||
Total revenues | (853,000) | $ 6,568,000 | $ 1,705,000 |
United Therapeutics | Collaboration and License Revenue | |||
Revenues | |||
Total revenues | $ 800,000,000 |
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, 2016 | $ 40,395 | $ 2 | $ 1,441,737 | $ (3,099) | $ (1,398,736) | $ 39,904 | $ 491 | ||||||||
Beginning 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 and upon vesting of restricted stock 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 gain (loss) on available-for-sale investments | (133) | (133) | (133) | ||||||||||||
Translation gain (loss) | 2,016 | 2,016 | 2,016 | ||||||||||||
Net income (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 | ||||||||||||||
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 gain (loss) on available-for-sale investments | (113) | (113) | (113) | ||||||||||||
Translation gain (loss) | 72 | 72 | 72 | ||||||||||||
Net income (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 | |||||||||||||
Issuance of common stock upon exercise of options | $ 15,184 | 15,184 | 15,184 | ||||||||||||
Issuance of common stock upon exercise of options (in shares) | 625,757 | ||||||||||||||
Issuance of common stock upon vesting of restricted stock unit awards | (2,037) | (2,037) | (2,037) | ||||||||||||
Issuance of common stock upon vesting of restricted stock unit awards (in shares) | 122,205 | ||||||||||||||
Share-based compensation expense | 53,047 | 53,047 | 53,047 | ||||||||||||
Unrealized gain (loss) on available-for-sale investments | 1,469 | 1,469 | 1,469 | ||||||||||||
Translation gain (loss) | (11) | (11) | (11) | ||||||||||||
Net income (loss) | 397,555 | 397,555 | 397,555 | ||||||||||||
Ending Balance at Dec. 31, 2019 | $ 1,071,465 | $ 5 | $ 2,173,154 | $ 1,303 | $ (1,102,997) | $ 1,071,465 | |||||||||
Ending Balance (in shares) at Dec. 31, 2019 | 50,170,953 | 50,170,953 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | |||
Net income (loss) | $ 397,555 | $ (29,399) | $ (92,732) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
(Income) loss from discontinued operations | 830 | (3,122) | |
Depreciation and amortization | 3,233 | 3,759 | 4,278 |
Deferred income taxes | 110,333 | (110,333) | |
Non-cash collaboration revenue | (1,500) | ||
Non-cash royalty revenue | 3,744 | (3,315) | |
Share-based compensation | 53,047 | 19,543 | 7,855 |
Litigation settlement expense, net | 11,975 | ||
Amortization of prepaid financing costs | 90 | 110 | 136 |
Amortization of original issue discounts, net of premiums, on available- for-sale investments | (5,628) | (664) | |
Loss (gain) on disposal of property and equipment | 112 | (791) | (379) |
Changes in operating assets and liabilities: | |||
Accounts receivable | 3,432 | (2,760) | 10,787 |
Prepaid expenses and other assets | (8,133) | (2,929) | 585 |
Payables and accrued liabilities | 12,347 | 10,871 | 1,803 |
Accrued litigation settlement | (11,975) | ||
Deferred revenues | (1,438) | (2,061) | (4,401) |
Other long-term liabilities | (1,265) | (577) | |
Net cash provided by (used in) operating activities - continuing operations | 568,694 | (131,879) | (63,792) |
Net cash used in operating activities - discontinued operations | (333) | (2,850) | |
Net cash provided by (used in) operating activities | 568,694 | (132,212) | (66,642) |
Investing activities: | |||
Purchases of available-for-sale investments | (1,469,220) | (364,539) | (112,615) |
Proceeds from sale and maturity of available-for-sale investments | 976,093 | 110,564 | |
Deconsolidation of variable interest entity | (406) | ||
Purchases of property and equipment | (4,819) | (692) | (113) |
Proceeds from sale of property and equipment | 789 | ||
Other non-current assets | (11) | (5) | |
Net cash used in investing activities - continuing operations | (497,946) | (254,678) | (112,350) |
Net cash provided by (used in) investing activities - discontinued operations | 997 | 3,405 | (40) |
Net cash used in investing activities | (496,949) | (251,273) | (112,390) |
Financing activities: | |||
Principal payments on lease financing obligations | (3,282) | (4,000) | (3,518) |
Proceeds from issuance of common stock | 13,147 | 389,031 | 248,805 |
Net cash provided by financing activities | 9,865 | 385,031 | 245,287 |
Effect of exchange rate changes on cash | (10) | 654 | 1,870 |
Net increase in cash, cash equivalents and restricted cash | 81,600 | 2,200 | 68,125 |
Cash, cash equivalents and restricted cash at beginning of year | 161,900 | 159,700 | 91,575 |
Cash, cash equivalents and restricted cash at end of year | 243,500 | 161,900 | 159,700 |
Supplemental disclosure of cash flow information: | |||
Interest paid | $ 4,787 | 5,696 | $ 5,967 |
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, 2019 | |
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 include: etrasimod, which is being evaluated in a Phase 3 program for ulcerative colitis, a Phase 2b/3 program for Crohn’s disease, and a Phase 2b program in atopic dermatitis. We also plan to evaluate etrasimod in a Phase 2b program for eosinophilic esophagitis, and a Phase 2 program in alopecia areata. Olorinab is being evaluated for a broad range of visceral pain conditions associated with gastrointestinal diseases, currently in a Phase 2b trial for treatment of abdominal pain associated with irritable bowel syndrome. APD418 is being evaluated in a Phase 1 trial for acute heart failure. Additionally, we have collaboration or license agreements with various companies. 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. 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. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. 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 for the years ended December 31, 2018, and 2017. 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 12). 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. Liquidity As of December 31, 2019, we had cash, cash equivalents and available-for-sale investments of approximately $1.1 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 from the date these consolidated financial statements are issued. 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 . 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 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 with a corresponding right-of-use asset of $5.9 million. Adoption of this standard did not have a material impact on our 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 6 for disclosures related to our leases. Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Revenue from Contracts with Customers In December 2019, the FASB issued ASU No. 2019-12 which modifies ASC 740, Income Taxes 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. 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, 2019 2018 Cash and cash equivalents $ 243,274 $ 161,037 Restricted cash included in other non-current assets 226 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 243,500 $ 161,900 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. 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, 2019, more than 99% of our annual revenues was from United Therapeutics. 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. 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, 2019, 2018, and 2017, 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. Foreign Currency The functional currency of our wholly owned subsidiaries in Switzerland, APD GmbH and, until March 31, 2018, 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 subsidi aries. 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 historical volatility for a period equal to the expected term. 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 types of promised goods or services 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. 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 Year ended December 31, 2018 As reported Adjustments Balances without adoption of ASC 606 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 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 In the past, we generated 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 were 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 5). 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 research, development or 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. Contract Assets 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. We estimate 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 changes to this estimate are recorded as an adjustment to revenue in the period in which the change in estimate is made. 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, 2019 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 contingen t 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 r esulting 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 su bstantive 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 perform ance 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 o r deliverables. Other contingent-based payments received were recognized when earned. 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 Income (Loss) Comprehensive income or 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 income or loss in the period in which they are recognized. For the years ended December 31, 2019, 2018 and 2017, comprehensive income (loss) consisted of net income (loss), foreign currency translation gains and losses, and unrealized gains and losses related to available-for-sale investments. Income (Loss) Per Share We calculate basic and diluted income (loss) from continuing operations, income (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 report a loss from continuing operations for the years ended December 31, 2018, and 2017, 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) Performance-Based Restricted Stock Units, or PRSUs, (iv) Total Stockholder Return performance restricted stock unit awards, or TSR PRSUs, and (v) 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, 2019 2018 2017 Stock options 3,962 5,835 3,664 RSUs and unvested restricted stock — 20 3 Total 3,962 5,855 3,667 Because the market condition for the outstanding PRSUs was not satisfied at December 31, 2019, such securities are excluded from the table above. Because the market condition for the TSR PRSUs was not satisfied at December 31, 2017, such securities are excluded from the table above. Income Taxes We use the asset and liability method of accounting for income taxes. Deferred tax assets a |
Fair Value Disclosures
Fair Value Disclosures | 12 Months Ended |
Dec. 31, 2019 | |
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 December 31, 2019 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 147,752 $ 147,752 $ — $ — US government and government agency notes(2) 398,419 398,419 — — Corporate debt instruments(2) 483,788 — 483,788 — Fair Value Measurements 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 — (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, 2019 | |
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, 2019 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 201,046 $ 292 $ (5 ) $ 201,333 Corporate debt securities Less than 1 294,481 495 (18 ) 294,958 Short-term investments, available-for-sale $ 495,527 $ 787 $ (23 ) $ 496,291 US government and government agency notes 1 - 5 $ 197,157 $ 85 $ (155 ) $ 197,087 Corporate debt securities 1 - 5 173,322 603 (74 ) 173,851 Investments, available-for-sale $ 370,479 $ 688 $ (229 ) $ 370,938 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 |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 2018 Land $ 4,950 $ 4,950 Building and capital improvements 45,246 45,246 Leasehold improvements 19,277 14,915 Machinery and equipment 169 173 Computers and software 2,749 3,083 Furniture and office equipment 1,531 1,175 73,922 69,542 Less accumulated depreciation and amortization (48,794 ) (46,428 ) Land, property and equipment, net $ 25,128 $ 23,114 As of December 31, 2019, majority of our long-lived assets were located in the United States. Accounts payable and other accrued liabilities consisted of the following, in thousands: December 31, 2019 2018 Accounts payable $ 6,043 $ 6,192 Accrued compensation 14,329 8,622 Other accrued liabilities 5,127 1,367 Total accounts payable and other accrued liabilities $ 25,499 $ 16,181 |
Sale of Manufacturing Operation
Sale of Manufacturing Operations | 12 Months Ended |
Dec. 31, 2019 | |
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 and the remaining portion was received in March 2019. 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, and 2017, in thousands: Years ended December 31, Revenues 2018 2017 Net product sales $ 1,129 $ 9,189 Other collaboration revenue 372 6,671 Toll manufacturing 1,006 3,179 Total revenues 2,507 19,039 Operating costs and expenses Cost of product sales 1,858 7,472 Cost of toll manufacturing 1,411 4,756 Research and development — 643 General and administrative 329 1,672 Other (income) expense, net 464 1,374 Total costs and expenses 4,062 15,917 Income (loss) from operations of discontinued operations (1,555 ) 3,122 Gain on sale of discontinued operations 725 — Income (loss) from discontinued operations $ (830 ) $ 3,122 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | 6. Leases San Diego, California 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 lease 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 related to 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. For the years ended December 31, 2019, 2018, and 2017, we recorded interest expense of $4.8 million, $5.7 million, and $6.1 million respectively, related to these leases. We expect interest expense related to our facilities to total $21.2 million from December 31, 2019, through the remaining terms of the leases in fiscal year 2027. At December 31, 2019, the total financing obligation associated with these sale and leaseback agreements was $49.4 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 San Diego, California under an operating lease, which expires in May 2027, contains a purchase option and stipulates annual increases in monthly lease payments of 2.5%. Upon adoption of ASC 842, we recorded an operating lease liability of $6.3 million based on the present value of the remaining minimum lease payments under the terms of our existing operating lease with a corresponding right-of-use asset of $5.9 million. As this lease did not provide an implicit rate, we used our estimated 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%. Boston, Massachusetts In the third quarter of 2019, we entered into a new lease agreement for approximately 12,755 square feet of office space in Boston, Massachusetts with the lease inception date of September 1, 2019. This lease is classified as an operating lease and expires in December 2026. The lease stipulates annual increases in monthly lease payments of 2.0%. At the lease inception date, we recorded an operating lease liability of $ 5.2 million based on the present value of the remaining minimum lease p ayments under the terms of this lease with a corresponding right-of-use asset of $ 5.2 million. As this lease did not provide an implicit rate, we used our estimated incremental borrowing rate based on the information available at effective date of adopti on in determining the present value of remaining minimum lease payments. The weighted-average discount rate we used was also 7.25 %. Zug, Switzerland In the second quarter of 2019, we entered into a lease in Zug, Switzerland, for approximately 10,500 square feet of office space with the lease inception date of June 1, 2019. This lease expires in May 2024. At the lease inception, we recorded an operating lease liability of $1.4 million based on the present value of the remaining minimum lease payments under the terms of this operating lease with a corresponding right-of-use asset of $1.5 million. As this lease did not provide an implicit rate, we used our estimated incremental borrowing rate based on the information available as of the lease inception in determining the present value of remaining minimum lease payments. The weighted-average discount rate we used was 7.25%. In the third quarter of 2019, we entered into an addendum to this lease for approximately 4,050 square feet of additional office space in the same location with the same landlord and the lease inception date of January 1, 2020. As of December 31, 2019, the balance of the right-of-use assets associated with the leases described above was $11.8 million and is included in other non-current assets in the accompanying consolidated balance sheet. As of December 31, 2019, the current portion of the corresponding lease liabilities of $1.3 million is included in accounts payable and other accrued liabilities and the non-current portion of the lease liabilities of $11.4 million is included in other long-term liabilities in the accompanying 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 consolidated cash flow statement. We recognize rent expense on a straight-line basis over the term of each lease. Rent expense of $1.9 million, $1.2 million and $1.5 million was recognized for the years ended December 31, 2019, 2018, and 2017, respectively. The weighted-average remaining lease term for all operating leases as of December 31, 2019 was 6.8 years At December 31, 2019, the future lease payments under our existing financing and non-cancellable operating leases were as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases 2020 $ 7,576 $ 2,236 2021 8,461 2,497 2022 8,672 2,540 2023 8,889 2,584 2024 9,111 2,280 Thereafter 22,941 4,667 Total minimum lease payments 65,650 $ 16,804 Less amounts representing interest (21,173 ) Add amounts representing residual value 4,950 Lease financing obligations 49,427 Less current portion (3,814 ) $ 45,613 Under the prior lease guidance, 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 Subleases In 2016 and 2017, we entered into agreements to sublease several of our California properties. All our subleases expire in May 2027. The terms of the subleases stipulate annual increases in monthly rental payments. For the years ended December 31, 2019, 2018 and 2017, we recognized rent income from our subleases of $3.0 million, $2.5 million and $1.7 million, respectively 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, 2020 $ 1,873 2021 2,477 2022 3,487 2023 3,794 2024 3,896 Thereafter 9,839 Total $ 25,366 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
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 could sell common stock through 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. A total of 3,024,775 shares of our common stock were reserved for future issuance at December 31, 2019, pursuant to our Equity Compensation Plans. 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, 2019, 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, 2018 6,541 $ 28.83 Granted 3,070 $ 44.53 Exercised (626 ) $ 24.27 Forfeited/cancelled/expired (450 ) $ 38.37 Outstanding at December 31, 2019 8,535 $ 34.31 5.08 $ 104,380 Vested and expected to vest at December 31, 2019 8,535 $ 34.31 5.08 $ 104,380 Vested and exercisable at December 31, 2019 3,194 $ 26.37 4.18 $ 63,866 The aggregate intrinsic value in the above table is calculated as the difference between the closing price of our common stock at December 31, 2019, of $45.42 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, 2019, 2018, and 2017, was $17.2 million, $7.1 million, and $2.8 million, respectively. During the year ended December 31, 2019, cash of $15.2 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 January 2019, a total of 297,000 target Performance-Based Restricted Stock Units, or PRSUs, were granted to employees in a company-wide grant. The PRSUs vest upon the closing price of our common stock, or the Closing Price, reaching certain price thresholds during the three-year In March 2015, we granted our executive officers TSR PRSU awards. The TSR PRSUs could be earned and converted into outstanding shares of our common stock based on the total stock return, or TSR, of our common stock relative to the TSR over a three-year 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. In June 2017 In June 2019, our stockholders approved our 2019 Employee Stock Purchase Plan, or 2019 ESPP. Under the 2019 ESPP substantially all employees can elect to have up to 15% of their annual compensation withheld to purchase up to 2,000 shares of our common stock per purchase period, subject to certain limitations. The shares of our common stock can be purchased over an offering period with a maximum duration of 12 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 six-month purchase period. Under applicable accounting guidance, the 2019 ESPP is considered a compensatory plan. During the years ended December 31, 2017, a total of 2,236 shares, respectively, were purchased by our employees under the 2009 ESPP. There were no purchases under the 2019 ESPP in 2019. The amount of compensation expense associated with the 2009 ESPP and 2019 ESPP for the years ended December 31, 2019, 2018, and 2017 was immaterial. 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, 2019 2018 2017 Risk-free interest rate 2.3 % 2.6 % 1.9 % Dividend yield — % — % — % Expected volatility 64 % 63 % 69 % Expected life (years) 4.47 4.58 4.58 Weighted-average estimated fair value per share of stock options granted $ 23.47 $ 20.01 $ 9.17 We recognized share-based compensation expense as follows for the years presented, in thousands, except per share data: Years ended December 31, 2019 2018 2017 Research and development $ 27,361 $ 8,385 $ 1,945 General and administrative 25,686 11,158 5,925 Discontinued operations — 11 120 Total share-based compensation expense $ 53,047 $ 19,554 $ 7,990 Impact on net loss per share, basic $ 1.07 $ 0.42 $ 0.24 Impact on net loss per share, diluted $ 1.03 $ 0.42 $ 0.24 The table below sets forth our total unrecognized estimated compensation expense at December 31, 2019, 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 $ 95,703 2.62 PRSUs 1,750 0.21 RSUs 613 0.57 |
Collaborations and License Agre
Collaborations and License Agreements | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Collaborations and License Agreements | 8. 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, and Boehringer Ingelheim International GmbH, or Boehringer Ingelheim. In the following table, revenue is disaggregated by major customers, timing of revenue recognition and revenue classification, in thousands: Year ended December 31, Customers 2019 2018 United Therapeutics $ 800,000 $ — Everest 5,000 2,000 Eisai (1,077 ) 8,070 Other 2,508 10,407 Total $ 806,431 $ 20,477 Timing of revenue recognition Revenue recognized at a point in time $ 803,580 $ 14,092 Revenue recognized over time 2,851 6,385 Total $ 806,431 $ 20,477 Classification Revenue from continuing operations $ 806,431 $ 17,970 Revenue reported under discontinued operations — 2,507 Total $ 806,431 $ 20,477 United Therapeutics Corporation In November 2018, we entered into an exclusive license agreement with United Therapeutics. Under this agreement, we granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. This transaction was completed in January 2019. 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 2019 and $ 2.4 million was incurred in 2018, and are presented as transaction costs in the accompanying consolidated statement of operations. We received an upfront payment of $800.0 million under the agreement in the first quarter of 2019. 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 this a 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. 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. In October 2019, Everest announced that the first subject has been dosed in a Phase 3 trial evaluating etrasimod in development for the treatment of UC in Greater China and South Korea. Everest paid us a $5.0 million milestone payment due from this achievement, which we recognized as revenue in the fourth quarter of 2019. We are also eligible to receive up to an aggregate of $110.0 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 etrasimod products in the Territories 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. As of December 31, 2019, all remaining future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained. For the years ended December 31, 2019, 2018, and 2017, we recognized revenues of $5.0 million, $2.0 million and $12.0 million, respectively from the Everest Agreement 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 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 tiered royalty payments from Eisai starting at 9.5% on the global net sales of lorcaserin. 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 . In total, prior to the Transaction Agreement, we received a total of $102.1 million in milestone payments from Eisai, and other . 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 futu re 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 Sup ply Agreement. During 2018, we adjusted our estimate of future royalty payments from intellectual property sold to Eisai under the Transaction Agreement based on the 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. As of December 31, 2018, the contract asset balance was $ 6.0 million. Subsequent to year end, Eisai agreed to voluntarily withdraw BELVIQ products from the U.S. market based on a change in the FDA’s risk-benefit assessment of BELVIQ, and as requested by the FDA. As a result, we revised our estimate of future royalties and recorded a $ 3.7 million reduction to our contract asset as of Decem ber 31, 2019 . 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, 2019, 2018 and 2017, we recorded royalty revenues of $(1.1) million, $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 other distributors; (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, consisting of the License Deliverable the Inventory Deliverable the Manufacturing and Supply Commitment Deliverable, For the year ended December 31, 2017, we recognized $6.4 million as revenue of discontinued operations related to this deliverable and $0.9 million of the carrying value of this inventory as cost The Manufacturing and Supply Commitment Deliverable was provided over 2017 and 2018 as product was shipped to Eisai until March 31, 2018 Under the Eisai Agreement, Eisai is solely responsible for all costs and expenses in connection with further development of lorcaserin. 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 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 agreement grants Boehringer Ingelheim exclusive worldwide rights to develop, manufacture and commercialize products resulting from the collaboration. In December 2018 and October 2019, we earned a milestone payment of $3.5 million and $1.5 million, respectively upon Boehringer Ingelheim’s initiation of preclinical development of a first and an additional compound We are also eligible to receive up to an aggregate of $246.0 million (of which the first $7.0 million is also payable to Beacon – see Note 12) in additional 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 singl e combined performance obligation consisting of a research license, a development and commercialization license and research services. Our research services performance obligation under the original term of the Boehringer Ingelheim Agreement was completely satisfied as of January 2018, and accordingly the estimated total transaction price of the Boehringer Ingelheim Agreement under the original contractual term was fully recognized as revenue over the period from January 2016 through January 2018. We recogn ize 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. As of December 31, 2019, all future po tential milestone payments were excluded from the estimated total transaction price as they are considered constrained. For the years ended December 31, 2019, 2018, and 2017, we recognized revenues of $1.7 million, $4.4 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. In September 2019, we earned a milestone payment of $0.5 million upon . 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, 2019, all future potential milestone payments were excluded from the estimated total transaction price as they are considered constrained. For the years ended December 31, 2019, 2018 and 2017, we recognized revenues of $0.5 million, $2.8 million and $0.2 million, respectively from the Outpost Agreement. Subsequent to year end, the Outpost Agreement was terminated. Axovant Sciences GmbH In 2015, we entered into a development, marketing and supply agreement with Roivant Sciences Ltd., which subsequently assigned the exclusive rights to develop and commercialize nelotanserin to its subsidiary, Axovant. Under this agreement, Axovant had exclusive worldwide rights to develop and commercialize nelotanserin, subject to regulatory approval. We also provided certain services and manufactured and sold nelotanserin to Axovant. We refer to this agreement as the Axovant Agreement. The promised goods and services under the Axovant Agreement were 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 recognized 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 were considered constrained. For the years ended December 31, 2018, and 2017, and we recognized revenues of $2.2 million, and $2.2 million, respectively, from the Axovant Agreement |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The following table summarizes our income (loss) attributable to stockholders of Arena before provision (benefit) for income taxes by region for the years presented, in thousands: Years ended December 31, 2019 2018 2017 United States $ 298,315 $ (138,522 ) $ (62,109 ) Foreign 209,573 (1,142 ) (29,298 ) Total income (loss) attributable to stockholders of Arena before income taxes $ 507,888 $ (139,664 ) $ (91,407 ) For the year ended December 31, 2019, we have recorded an expense for income taxes for the usage of the deferred tax assets that were set up in 2018 related to the taxable gain pursuant to the United Therapeutics transaction. We recorded a benefit for income taxes for the year ended December 31, 2018, due to the estimated taxable gain pursuant to the United Therapeutics transaction. We did not record a benefit for income taxes for the year ended December 31, 2017, because we had a full valuation allowance. Our effective income tax rate differs from the statutory federal rate of 21% for 2019 and 2018, and 34% for 2017 due to the following, in thousands: Years ended December 31, 2019 2018 2017 Benefit for income taxes at statutory federal rate $ 106,657 $ (29,090 ) $ (32,140 ) Change in valuation allowance due to tax reform — — 96,333 Change in federal and foreign valuation allowance 34,712 (76,336 ) (68,604 ) Permanent differences and other 601 1,963 (782 ) Deferred adjustment related to foreign net operating losses 15,133 — — Capital loss on foreign subsidiary liquidation (43,685 ) — — Share-based compensation expense 1,624 889 7,071 Foreign losses at lower effective rates 21 257 1,428 Research and development and Orphan Drug credits (4,730 ) (7,948 ) (3,306 ) Benefit for income taxes $ 110,333 $ (110,265 ) $ — The components of our net deferred tax assets are as follows, in thousands: December 31, 2019 2018 Deferred tax assets: Federal and California NOL carryforwards $ 140,762 $ 210,853 Federal and California research and development credit carryforwards 73,956 69,221 Foreign NOL carryforwards — 15,131 Share-based compensation expense 11,010 6,124 Depreciation 3,183 2,914 Lease liability 2,359 — Other, net 354 784 Total deferred tax assets 231,624 305,027 Deferred tax liabilities: Right-of-use assets (2,218 ) — Total deferred tax liabilities (2,218 ) — Net deferred tax assets 229,406 305,027 Valuation allowance (229,406 ) (194,694 ) 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 created taxable income, resulting in the realization of a portion of our deferred tax assets. A portion of the valuation allowance in 2018 was released for the anticipated taxable income generating event. We utilized net operating losses to offset 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 increased by $ 34.7 million from December 31, 2018, to December 31, 2019. At December 31, 2019, we had federal NOL carryforwards of $539.3 million that will begin to expire in 2029 unless previously utilized. At the same date, we had California NOL carryforwards of $393.9 million, which begin expiring in 2028. Net operating losses generated after December 31, 2017 carry forward indefinitely. At December 31, 2019, we had $151.4 million of net operating losses with no expiration. Net operating losses generated in 2018 are subject to an 80% limitation. At December 31, 2019, we also had federal and California research and development tax credit carryforwards, net of reserves, of $38.7 million and $25.1 million, respectively. At December 31, 2019, we had a Federal Orphan Drug Credit carryforward, net of reserves, of $15.0 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 2019 and did not identify any ownership changes that limit our utilization of tax attribute carryforwards since 2010. 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 2019 of more than 50% within a three-year 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, 2019 2018 2017 Gross unrecognized tax benefits at the beginning of the year $ 9,033 $ 7,762 $ 5,906 Additions from tax positions taken in the current year 1,017 1,269 1,133 Additions from tax positions taken in prior years — 2 723 Reductions from tax positions taken in prior years (96 ) — — Tax settlements — — — Gross unrecognized tax benefits at end of the year $ 9,954 $ 9,033 $ 7,762 Of our total unrecognized tax benefits at December 31, 2019, $8.6 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, 2019, or 2018, and did not recognize any interest and/or penalties in our consolidated statements of operations and comprehensive income (loss) for the years ended December 31, 2019, 2018, and 2017. 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, 2019 | |
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 dism issal 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 $ 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 oper ations 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 t he 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. We are not currently subject to any material legal proceedings |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (Unaudited) | 11. Quarterly Financial Data (Unaudited) The following tables present selected quarterly financial data for the years presented, in thousands, except per share data: 2019 Quarter ended December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 3,002 $ 1,350 $ 1,022 $ 801,057 Operating costs and expenses 96,875 80,685 69,578 76,547 Net income (loss) (88,311 ) (72,865 ) (61,403 ) 620,134 Net income (loss) per share, basic (1.76 ) (1.46 ) (1.24 ) 12.53 Net income (loss) per share, diluted (1.76 ) (1.46 ) (1.24 ) 12.10 2018 Quarter 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 Income (loss) from continuing operations 68,711 (34,314 ) (31,833 ) (31,133 ) Loss from discontinued operations — — — (830 ) Net income (loss) 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 ) |
Beacon Discovery, Inc.
Beacon Discovery, Inc. | 12 Months Ended |
Dec. 31, 2019 | |
Variable Interest Entity Disclosure [Abstract] | |
Beacon Discovery, Inc. | 12. Beacon Discovery, Inc. In September 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; a nd (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 performed our research obligations under our 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 30,000 square feet of laboratory, office and meeting room space to Beacon until May 2027. As Beacon’s equity investment at risk in September 2016 was not sufficient to permit Beacon to finance its activities without subordinated financial support, Beacon was considered a variable interest entity in which we held 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, 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. Beacon’s net and comprehensive loss of $1.3 million for the year ended December 31, 2017 is 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. In January 2020, we entered into a new multi-year strategic Collaboration and License Agreement with Beacon, aimed at building novel medicines across a range of GPCR targets believed to play a role in immune and inflammatory diseases. Under the terms of this agreement Beacon is responsible for early drug discovery activities and we will be responsible for any potential future development and, ultimately, commercialization activities. We are required to pay to Beacon research initiation fees, make quarterly research funding payments for the duration of Beacon’s research activities as well as research, development and regulatory milestone payments depending on the future research and development progress. We are also obligated to pay Beacon tiered royalties on net sales of low single digits levels. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events See Note 12 regarding the collaboration and license agreement with Beacon, which was executed in January 2020 . |
The Company and Summary of Si_2
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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. Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation. 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 for the years ended December 31, 2018, and 2017. 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 12). 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. |
Liquidity | Liquidity As of December 31, 2019, we had cash, cash equivalents and available-for-sale investments of approximately $1.1 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 from the date these consolidated financial statements are issued. 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 . |
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 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 with a corresponding right-of-use asset of $5.9 million. Adoption of this standard did not have a material impact on our 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 6 for disclosures related to our leases. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808)—Clarifying the Interaction between Topic 808 and Topic 606 Revenue from Contracts with Customers In December 2019, the FASB issued ASU No. 2019-12 which modifies ASC 740, Income Taxes |
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. 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, 2019 2018 Cash and cash equivalents $ 243,274 $ 161,037 Restricted cash included in other non-current assets 226 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 243,500 $ 161,900 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. |
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, 2019, more than 99% of our annual revenues was from United Therapeutics. 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. 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, 2019, 2018, and 2017, 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. |
Foreign Currency | Foreign Currency The functional currency of our wholly owned subsidiaries in Switzerland, APD GmbH and, until March 31, 2018, 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 subsidi aries. 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 historical volatility for a period equal to the expected term. 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 Income (Loss) | Comprehensive Income (Loss) Comprehensive income or 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 income or loss in the period in which they are recognized. For the years ended December 31, 2019, 2018 and 2017, comprehensive income (loss) consisted of net income (loss), foreign currency translation gains and losses, and unrealized gains and losses related to available-for-sale investments. |
Income (Loss) Per Share | Income (Loss) Per Share We calculate basic and diluted income (loss) from continuing operations, income (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 report a loss from continuing operations for the years ended December 31, 2018, and 2017, 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) Performance-Based Restricted Stock Units, or PRSUs, (iv) Total Stockholder Return performance restricted stock unit awards, or TSR PRSUs, and (v) 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, 2019 2018 2017 Stock options 3,962 5,835 3,664 RSUs and unvested restricted stock — 20 3 Total 3,962 5,855 3,667 Because the market condition for the outstanding PRSUs was not satisfied at December 31, 2019, such securities are excluded from the table above. Because the market condition for the TSR PRSUs was not satisfied at December 31, 2017, 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 types of promised goods or services 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. 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 Year ended December 31, 2018 As reported Adjustments Balances without adoption of ASC 606 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 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 In the past, we generated 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 were 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 5). 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 research, development or 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. Contract Assets 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. We estimate 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 changes to this estimate are recorded as an adjustment to revenue in the period in which the change in estimate is made. 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, 2019 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 contingen t 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 r esulting 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 su bstantive 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 perform ance 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 o r 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, 2019 | |
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, 2019 2018 Cash and cash equivalents $ 243,274 $ 161,037 Restricted cash included in other non-current assets 226 863 Total cash, cash equivalents and restricted cash presented in the consolidated statement of cash flows $ 243,500 $ 161,900 |
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, 2019 2018 2017 Stock options 3,962 5,835 3,664 RSUs and unvested restricted stock — 20 3 Total 3,962 5,855 3,667 |
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 Year ended December 31, 2018 As reported Adjustments Balances without adoption of ASC 606 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 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 |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 12 Months Ended |
Dec. 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 December 31, 2019 Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Money market funds(1) $ 147,752 $ 147,752 $ — $ — US government and government agency notes(2) 398,419 398,419 — — Corporate debt instruments(2) 483,788 — 483,788 — Fair Value Measurements 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 — (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, 2019 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Investments, Available-for-Sale | Investments, available-for-sale, consisted of the following, in thousands: December 31, 2019 Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes Less than 1 $ 201,046 $ 292 $ (5 ) $ 201,333 Corporate debt securities Less than 1 294,481 495 (18 ) 294,958 Short-term investments, available-for-sale $ 495,527 $ 787 $ (23 ) $ 496,291 US government and government agency notes 1 - 5 $ 197,157 $ 85 $ (155 ) $ 197,087 Corporate debt securities 1 - 5 173,322 603 (74 ) 173,851 Investments, available-for-sale $ 370,479 $ 688 $ (229 ) $ 370,938 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 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Land, Property and Equipment, Net | Land, property and equipment, net consisted of the following, in thousands: December 31, 2019 2018 Land $ 4,950 $ 4,950 Building and capital improvements 45,246 45,246 Leasehold improvements 19,277 14,915 Machinery and equipment 169 173 Computers and software 2,749 3,083 Furniture and office equipment 1,531 1,175 73,922 69,542 Less accumulated depreciation and amortization (48,794 ) (46,428 ) Land, property and equipment, net $ 25,128 $ 23,114 |
Accounts Payable and Other Accrued Liabilities | Accounts payable and other accrued liabilities consisted of the following, in thousands: December 31, 2019 2018 Accounts payable $ 6,043 $ 6,192 Accrued compensation 14,329 8,622 Other accrued liabilities 5,127 1,367 Total accounts payable and other accrued liabilities $ 25,499 $ 16,181 |
Sale of Manufacturing Operati_2
Sale of Manufacturing Operations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, and 2017, in thousands: Years ended December 31, Revenues 2018 2017 Net product sales $ 1,129 $ 9,189 Other collaboration revenue 372 6,671 Toll manufacturing 1,006 3,179 Total revenues 2,507 19,039 Operating costs and expenses Cost of product sales 1,858 7,472 Cost of toll manufacturing 1,411 4,756 Research and development — 643 General and administrative 329 1,672 Other (income) expense, net 464 1,374 Total costs and expenses 4,062 15,917 Income (loss) from operations of discontinued operations (1,555 ) 3,122 Gain on sale of discontinued operations 725 — Income (loss) from discontinued operations $ (830 ) $ 3,122 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Future Minimum Lease Payments | At December 31, 2019, the future lease payments under our existing financing and non-cancellable operating leases were as follows, in thousands: Year ending December 31, Financing Obligations Operating Leases 2020 $ 7,576 $ 2,236 2021 8,461 2,497 2022 8,672 2,540 2023 8,889 2,584 2024 9,111 2,280 Thereafter 22,941 4,667 Total minimum lease payments 65,650 $ 16,804 Less amounts representing interest (21,173 ) Add amounts representing residual value 4,950 Lease financing obligations 49,427 Less current portion (3,814 ) $ 45,613 Under the prior lease guidance, 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 | Expected minimum rental payments to be received under the sublease are as follows: Year ending December 31, 2020 $ 1,873 2021 2,477 2022 3,487 2023 3,794 2024 3,896 Thereafter 9,839 Total $ 25,366 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019, 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, 2018 6,541 $ 28.83 Granted 3,070 $ 44.53 Exercised (626 ) $ 24.27 Forfeited/cancelled/expired (450 ) $ 38.37 Outstanding at December 31, 2019 8,535 $ 34.31 5.08 $ 104,380 Vested and expected to vest at December 31, 2019 8,535 $ 34.31 5.08 $ 104,380 Vested and exercisable at December 31, 2019 3,194 $ 26.37 4.18 $ 63,866 |
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, 2019 2018 2017 Risk-free interest rate 2.3 % 2.6 % 1.9 % Dividend yield — % — % — % Expected volatility 64 % 63 % 69 % Expected life (years) 4.47 4.58 4.58 Weighted-average estimated fair value per share of stock options granted $ 23.47 $ 20.01 $ 9.17 |
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, 2019 2018 2017 Research and development $ 27,361 $ 8,385 $ 1,945 General and administrative 25,686 11,158 5,925 Discontinued operations — 11 120 Total share-based compensation expense $ 53,047 $ 19,554 $ 7,990 Impact on net loss per share, basic $ 1.07 $ 0.42 $ 0.24 Impact on net loss per share, diluted $ 1.03 $ 0.42 $ 0.24 |
Total Unrecognized Estimated Compensation Expense | The table below sets forth our total unrecognized estimated compensation expense at December 31, 2019, 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 $ 95,703 2.62 PRSUs 1,750 0.21 RSUs 613 0.57 |
Collaborations and License Ag_2
Collaborations and License Agreements (Tables) | 12 Months Ended |
Dec. 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: Year ended December 31, Customers 2019 2018 United Therapeutics $ 800,000 $ — Everest 5,000 2,000 Eisai (1,077 ) 8,070 Other 2,508 10,407 Total $ 806,431 $ 20,477 Timing of revenue recognition Revenue recognized at a point in time $ 803,580 $ 14,092 Revenue recognized over time 2,851 6,385 Total $ 806,431 $ 20,477 Classification Revenue from continuing operations $ 806,431 $ 17,970 Revenue reported under discontinued operations — 2,507 Total $ 806,431 $ 20,477 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Summary of Income (Loss) Before Provision (Benefit) for Income Taxes by Region | The following table summarizes our income (loss) attributable to stockholders of Arena before provision (benefit) for income taxes by region for the years presented, in thousands: Years ended December 31, 2019 2018 2017 United States $ 298,315 $ (138,522 ) $ (62,109 ) Foreign 209,573 (1,142 ) (29,298 ) Total income (loss) attributable to stockholders of Arena before income taxes $ 507,888 $ (139,664 ) $ (91,407 ) |
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 2019 and 2018, and 34% for 2017 due to the following, in thousands: Years ended December 31, 2019 2018 2017 Benefit for income taxes at statutory federal rate $ 106,657 $ (29,090 ) $ (32,140 ) Change in valuation allowance due to tax reform — — 96,333 Change in federal and foreign valuation allowance 34,712 (76,336 ) (68,604 ) Permanent differences and other 601 1,963 (782 ) Deferred adjustment related to foreign net operating losses 15,133 — — Capital loss on foreign subsidiary liquidation (43,685 ) — — Share-based compensation expense 1,624 889 7,071 Foreign losses at lower effective rates 21 257 1,428 Research and development and Orphan Drug credits (4,730 ) (7,948 ) (3,306 ) Benefit for income taxes $ 110,333 $ (110,265 ) $ — |
Components of Net Deferred Tax Assets | The components of our net deferred tax assets are as follows, in thousands: December 31, 2019 2018 Deferred tax assets: Federal and California NOL carryforwards $ 140,762 $ 210,853 Federal and California research and development credit carryforwards 73,956 69,221 Foreign NOL carryforwards — 15,131 Share-based compensation expense 11,010 6,124 Depreciation 3,183 2,914 Lease liability 2,359 — Other, net 354 784 Total deferred tax assets 231,624 305,027 Deferred tax liabilities: Right-of-use assets (2,218 ) — Total deferred tax liabilities (2,218 ) — Net deferred tax assets 229,406 305,027 Valuation allowance (229,406 ) (194,694 ) 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, 2019 2018 2017 Gross unrecognized tax benefits at the beginning of the year $ 9,033 $ 7,762 $ 5,906 Additions from tax positions taken in the current year 1,017 1,269 1,133 Additions from tax positions taken in prior years — 2 723 Reductions from tax positions taken in prior years (96 ) — — Tax settlements — — — Gross unrecognized tax benefits at end of the year $ 9,954 $ 9,033 $ 7,762 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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: 2019 Quarter ended December 31 Quarter ended September 30 Quarter ended June 30 Quarter ended March 31 Revenues $ 3,002 $ 1,350 $ 1,022 $ 801,057 Operating costs and expenses 96,875 80,685 69,578 76,547 Net income (loss) (88,311 ) (72,865 ) (61,403 ) 620,134 Net income (loss) per share, basic (1.76 ) (1.46 ) (1.24 ) 12.53 Net income (loss) per share, diluted (1.76 ) (1.46 ) (1.24 ) 12.10 2018 Quarter 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 Income (loss) from continuing operations 68,711 (34,314 ) (31,833 ) (31,133 ) Loss from discontinued operations — — — (830 ) Net income (loss) 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 ) |
The Company and Summary of Si_4
The Company and Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | |
Schedule Of Significant Accounting Policies [Line Items] | |||||
Number of business segments | Segment | 1 | ||||
Cash and cash equivalents and available-for-sale investments | $ 1,100,000 | ||||
Accumulated deficit | $ 1,102,997 | $ 1,500,552 | |||
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 | ||||
Building | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Property and equipment, estimated useful life | 20 years | ||||
Minimum | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Property and equipment, estimated useful life | 3 years | ||||
Maximum | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Property and equipment, estimated useful life | 15 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% | |||
Sales Revenue, Net | United Therapeutics | Minimum | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Concentrations of risk percentage | 99.00% | ||||
ASC 842 | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Operating lease, liability | $ 6,300 | ||||
Operating lease, right-of-use asset | $ 5,900 | ||||
ASC 606 | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Impairment loss | $ 13,100 | ||||
ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||||
Schedule Of Significant Accounting Policies [Line Items] | |||||
Accumulated deficit | $ 5,965 | $ 19,000 |
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, 2019 | Dec. 31, 2018 |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 243,274 | $ 161,037 |
Restricted cash included in other non-current assets | $ 226 | $ 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 | $ 243,500 | $ 161,900 |
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, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2018 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | $ 806,431 | $ 17,970 | $ 21,337 | |||||||||
Loss from operations | 482,746 | (144,783) | (91,967) | |||||||||
Loss from continuing operations | $ 68,711 | $ (34,314) | $ (31,833) | $ (31,133) | 397,555 | (28,569) | (95,854) | |||||
Income (loss) from discontinued operations | (830) | 3,122 | ||||||||||
Net income (loss) | $ (88,311) | $ (72,865) | $ (61,403) | $ 620,134 | 68,711 | $ (34,314) | $ (31,833) | $ (31,963) | 397,555 | (29,399) | (92,732) | |
Net income (loss) attributable to stockholders of Arena | 397,555 | (29,399) | (91,407) | |||||||||
Prepaid expenses and other current assets | 18,715 | 10,008 | 18,715 | 10,008 | ||||||||
Total current assets | 759,934 | 460,725 | 759,934 | 460,725 | ||||||||
Other non-current assets | 18,123 | 10,319 | 18,123 | 10,319 | ||||||||
Total assets | 1,174,123 | 686,903 | 1,174,123 | 686,903 | ||||||||
Total current liabilities | 44,967 | 29,918 | 44,967 | 29,918 | ||||||||
Accumulated deficit | (1,102,997) | (1,500,552) | (1,102,997) | (1,500,552) | ||||||||
Total stockholders' equity | 1,071,465 | 606,258 | 1,071,465 | 606,258 | ||||||||
Total liabilities and stockholders' equity | $ 1,174,123 | 686,903 | 1,174,123 | 686,903 | ||||||||
ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | (1,742) | |||||||||||
Loss from operations | (1,742) | |||||||||||
Loss from continuing operations | (594) | |||||||||||
Income (loss) from discontinued operations | 13,660 | |||||||||||
Net income (loss) | 13,066 | |||||||||||
Net income (loss) attributable to stockholders of Arena | 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) | ||||||||||
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 | Balances without adoption of ASC 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 16,228 | |||||||||||
Loss from operations | (146,525) | |||||||||||
Loss from continuing operations | (29,163) | |||||||||||
Income (loss) from discontinued operations | 12,830 | |||||||||||
Net income (loss) | (16,333) | |||||||||||
Net income (loss) attributable to stockholders of Arena | (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 | ||||||||||
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 | ||||||||||
Collaboration and Other Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 7,284 | 11,402 | 19,632 | |||||||||
Collaboration and Other Revenue | ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 105 | |||||||||||
Collaboration and Other Revenue | ASC 606 | Balances without adoption of ASC 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | 11,507 | |||||||||||
Royalty Revenue | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | $ (853) | 6,568 | $ 1,705 | |||||||||
Royalty Revenue | ASC 606 | Difference between Revenue Guidance in Effect before and after Topic 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | (1,847) | |||||||||||
Royalty Revenue | ASC 606 | Balances without adoption of ASC 606 | ||||||||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||||||||
Total revenues | $ 4,721 |
The Company and Summary of Si_7
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 3,962 | 5,855 | 3,667 |
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) | 3,962 | 5,835 | 3,664 |
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 |
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, 2019 | Dec. 31, 2018 |
Assets: | ||
Money market funds | $ 147,752 | $ 62,438 |
US government and government agency notes | 398,419 | 171,278 |
Corporate debt instruments | 483,788 | 240,481 |
Quoted Prices in Active Markets (Level 1) | ||
Assets: | ||
Money market funds | 147,752 | 62,438 |
US government and government agency notes | 398,419 | 171,278 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Corporate debt instruments | $ 483,788 | $ 240,481 |
Investments, Available-for-Sa_3
Investments, Available-for-Sale - Schedule of Investments, Available-for-Sale (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Short-term investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 495,527 | $ 284,742 |
Gross Unrealized Gains | 787 | |
Gross Unrealized Losses | (23) | (148) |
Estimated Fair Value | 496,291 | 284,594 |
Short-term investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 201,046 | 139,274 |
Gross Unrealized Gains | 292 | |
Gross Unrealized Losses | (5) | (18) |
Estimated Fair Value | 201,333 | 139,256 |
Short-term investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 294,481 | 145,468 |
Gross Unrealized Gains | 495 | |
Gross Unrealized Losses | (18) | (130) |
Estimated Fair Value | 294,958 | 145,338 |
Investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 370,479 | 82,510 |
Gross Unrealized Gains | 688 | 6 |
Gross Unrealized Losses | (229) | (104) |
Estimated Fair Value | 370,938 | 82,412 |
Investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 197,157 | 16,998 |
Gross Unrealized Gains | 85 | 6 |
Gross Unrealized Losses | (155) | |
Estimated Fair Value | $ 197,087 | $ 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 | $ 173,322 | $ 65,512 |
Gross Unrealized Gains | 603 | |
Gross Unrealized Losses | (74) | (104) |
Estimated Fair Value | $ 173,851 | $ 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 |
Balance Sheet Details - Land, P
Balance Sheet Details - Land, Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | $ 73,922 | $ 69,542 |
Less accumulated depreciation and amortization | (48,794) | (46,428) |
Land, property and equipment, net | 25,128 | 23,114 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 4,950 | 4,950 |
Building and capital improvements | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 45,246 | 45,246 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 19,277 | 14,915 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 169 | 173 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | 2,749 | 3,083 |
Furniture and office equipment | ||
Property, Plant and Equipment [Line Items] | ||
Land, property and equipment, gross | $ 1,531 | $ 1,175 |
Balance Sheet Details - Account
Balance Sheet Details - Accounts Payable and Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 6,043 | $ 6,192 |
Accrued compensation | 14,329 | 8,622 |
Other accrued liabilities | 5,127 | 1,367 |
Total accounts payable and other accrued liabilities | $ 25,499 | $ 16,181 |
Sale of Manufacturing Operati_3
Sale of Manufacturing Operations - Additional Information (Detail) SFr in Millions | 1 Months Ended | |
Mar. 31, 2018CHF (SFr) | Dec. 31, 2019employee | |
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, 2018 | Dec. 31, 2017 | |
Revenues | |||
Net product sales | $ 1,129 | $ 9,189 | |
Other collaboration revenue | 372 | 6,671 | |
Toll manufacturing | 1,006 | 3,179 | |
Total revenues | 2,507 | 19,039 | |
Operating costs and expenses | |||
Cost of product sales | 1,858 | 7,472 | |
Cost of toll manufacturing | 1,411 | 4,756 | |
Research and development | 643 | ||
General and administrative | 329 | 1,672 | |
Other (income) expense, net | 464 | 1,374 | |
Total costs and expenses | 4,062 | 15,917 | |
Income (loss) from operations of discontinued operations | (1,555) | 3,122 | |
Gain on sale of discontinued operations | 725 | ||
Income (loss) from discontinued operations | $ (830) | $ (830) | $ 3,122 |
Leases - Additional Information
Leases - Additional Information (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Sep. 30, 2019USD ($)ft² | Jun. 30, 2019USD ($)ft² | Dec. 31, 2019USD ($)Property | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016 | Jan. 01, 2019USD ($) | |
Operating Leased Assets [Line Items] | |||||||
Number of properties under sale and leaseback agreements | Property | 3 | ||||||
Sale and leaseback transaction, interest expense | $ 4,800 | $ 5,700 | $ 6,100 | ||||
Less amounts representing interest | $ 21,173 | 25,960 | |||||
Sale leaseback transaction, description | Through the remaining terms of the leases in fiscal year 2027 | ||||||
Sale and leaseback transaction, total financing obligation | $ 49,427 | 52,709 | |||||
Add amounts representing residual value | 4,950 | 4,950 | |||||
Rent expense | 1,900 | 1,200 | $ 1,500 | ||||
Sublease expiration period | 2027-05 | 2027-05 | |||||
Rent income from subleases | $ 3,000 | $ 2,500 | $ 1,700 | ||||
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 lease payments | 2.50% | ||||||
Properties under operating lease | |||||||
Operating Leased Assets [Line Items] | |||||||
Operating lease, right-of-use asset | $ 11,800 | ||||||
Operating lease, right-of-use asset, statement of financial position [extensible list] | us-gaap:OtherAssetsNoncurrent | ||||||
Operating lease, right-of-use liabilties | $ 1,300 | ||||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | ||||||
Operating lease liabilities, non current | $ 11,400 | ||||||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | ||||||
Operating Lease, Weighted Average Remaining Lease Term | 6 years 9 months 18 days | ||||||
Properties under operating lease | San Diego, California | |||||||
Operating Leased Assets [Line Items] | |||||||
Percentage of annual increase in monthly lease payments | 2.50% | ||||||
Operating lease agreement expiration date | 2027-05 | ||||||
Properties under operating lease | Boston, Massachusetts | |||||||
Operating Leased Assets [Line Items] | |||||||
Percentage of annual increase in monthly lease payments | 2.00% | ||||||
Operating lease agreement expiration date | 2026-12 | ||||||
Operating lease, liability | $ 5,200 | ||||||
Operating lease, right-of-use asset | $ 5,200 | ||||||
Weighted average discount rate | 7.25% | ||||||
Operating lease inception date | Sep. 1, 2019 | ||||||
Area of office space | ft² | 12,755 | ||||||
Properties under operating lease | Zug, Switzerland | |||||||
Operating Leased Assets [Line Items] | |||||||
Operating lease agreement expiration date | 2024-05 | ||||||
Operating lease, liability | $ 1,400 | ||||||
Operating lease, right-of-use asset | $ 1,500 | ||||||
Weighted average discount rate | 7.25% | ||||||
Area of office space | ft² | 4,050 | 10,500 | |||||
Additional office space, lease inception date | Jan. 1, 2020 | Jun. 1, 2019 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Financing Obligations | ||
2020 | $ 7,576 | |
2021 | 8,461 | |
2022 | 8,672 | |
2023 | 8,889 | |
2024 | 9,111 | |
Thereafter | 22,941 | |
Total minimum lease payments | 65,650 | |
Less amounts representing interest | (21,173) | $ (25,960) |
Add amounts representing residual value | 4,950 | 4,950 |
Lease financing obligations | 49,427 | 52,709 |
Current portion of lease financing obligations | (3,814) | (3,283) |
Lease financing obligations, less current portion | 45,613 | 49,426 |
Sale and leaseback transaction, total financing obligation | 49,427 | 52,709 |
Operating Leases | ||
2020 | 2,236 | |
2021 | 2,497 | |
2022 | 2,540 | |
2023 | 2,584 | |
2024 | 2,280 | |
Thereafter | 4,667 | |
Total minimum lease payments | $ 16,804 | |
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 | Dec. 31, 2019USD ($) |
Operating Leased Assets [Line Items] | |
2020 | $ 1,873 |
2021 | 2,477 |
2022 | 3,487 |
2023 | 3,794 |
2024 | 3,896 |
Thereafter | 9,839 |
Total | $ 25,366 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Jan. 31, 2019 | Mar. 31, 2018 | Jul. 31, 2017 | Apr. 30, 2017 | Mar. 31, 2014 | Sep. 30, 2019 | Apr. 30, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders Equity [Line Items] | ||||||||||
Aggregate gross proceeds from sale of common stock | $ 13,147,000 | $ 389,031,000 | $ 248,805,000 | |||||||
Common stock closing price ($ per share) | $ 45.42 | |||||||||
Intrinsic value of stock options exercised | $ 17,200,000 | $ 7,100,000 | $ 2,800,000 | |||||||
Proceeds from stock option exercises | 15,200,000 | |||||||||
Tax impact from exercise of stock options | $ 0 | |||||||||
Equity Compensation Plans | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Common stock shares reserved for future issuance | 3,024,775 | |||||||||
Performance restricted stock units | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Vesting period | 3 years | 3 years | 3 years | |||||||
Units granted (shares) | 297,000 | |||||||||
Threshold consecutive trading days | 5 days | |||||||||
Threshold non-consecutive trading days | 10 days | |||||||||
PRSU grant-date fair value | $ 18,100,000 | |||||||||
Compensation expense of requisite service period | 1 year 2 months 12 days | |||||||||
Price per share market condition vesting threshold | $ 60 | |||||||||
Shares issued to employees upon satisfaction of continuing service requirement | 140,900 | |||||||||
Shares issued | 32,322 | |||||||||
Performance restricted stock units | Tranche One | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Common stock closing price ($ per share) | $ 60 | |||||||||
Common stock closing price, percentage | 50.00% | |||||||||
Performance restricted stock units | Tranche Two | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Common stock closing price ($ per share) | $ 67.50 | |||||||||
Common stock closing price, percentage | 100.00% | |||||||||
Performance restricted stock units | Tranche Three | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Common stock closing price ($ per share) | $ 75 | |||||||||
Common stock closing price, percentage | 200.00% | |||||||||
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 | |||||||||
Total common stock issued under employee stock purchase plan (shares) | 2,236 | |||||||||
2019 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 | 2,000 | |||||||||
Maximum ESPP offering period | 12 months | |||||||||
Total common stock issued under employee stock purchase plan (shares) | 0 | |||||||||
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% | |||||||||
Minimum | 2019 ESPP | ||||||||||
Stockholders Equity [Line Items] | ||||||||||
Purchase price of common shares as a percentage of fair market value | 85.00% | |||||||||
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 | |||||||||
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 | 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, 2019USD ($)$ / sharesshares | |
Number of stock options | |
Outstanding at December 31, 2018 | shares | 6,541 |
Granted | shares | 3,070 |
Exercised | shares | (626) |
Forfeited/cancelled/expired | shares | (450) |
Outstanding at December 31, 2019 | shares | 8,535 |
Vested and expected to vest at December 31, 2019 | shares | 8,535 |
Vested and exercisable at December 31, 2019 | shares | 3,194 |
Weighted Average Exercise Price ($ per share) | |
Outstanding at December 31, 2018 | $ / shares | $ 28.83 |
Granted | $ / shares | 44.53 |
Exercised | $ / shares | 24.27 |
Forfeited/cancelled/expired | $ / shares | 38.37 |
Outstanding at December 31, 2019 | $ / shares | 34.31 |
Vested and expected to vest at December 31, 2019 | $ / shares | 34.31 |
Vested and exercisable at December 31, 2019 | $ / shares | $ 26.37 |
Weighted-Average Remaining Contractual Term (in years) | |
Outstanding at December 31, 2019 | 5 years 29 days |
Vested and expected to vest at December 31, 2019 | 5 years 29 days |
Vested and exercisable at December 31, 2019 | 4 years 2 months 4 days |
Aggregate Intrinsic Value | |
Outstanding at December 31, 2019 | $ | $ 104,380 |
Vested and expected to vest at December 31, 2019 | $ | 104,380 |
Vested and exercisable at December 31, 2019 | $ | $ 63,866 |
Stockholders' Equity - Weighted
Stockholders' Equity - Weighted-Average Assumptions and Estimated Fair Value of Stock Options (Detail) - Stock options - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.30% | 2.60% | 1.90% |
Expected volatility | 64.00% | 63.00% | 69.00% |
Expected life (years) | 4 years 5 months 19 days | 4 years 6 months 29 days | 4 years 6 months 29 days |
Weighted-average estimated fair value per share of stock options granted | $ 23.47 | $ 20.01 | $ 9.17 |
Stockholders' Equity - Share Ba
Stockholders' Equity - Share Based Compensation Expense (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 53,047 | $ 19,554 | $ 7,990 |
Impact on net loss per share, basic | $ 1.07 | $ 0.42 | $ 0.24 |
Impact on net loss per share, diluted | $ 1.03 | $ 0.42 | $ 0.24 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 27,361 | $ 8,385 | $ 1,945 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 25,686 | 11,158 | 5,925 |
Discontinued operations | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based compensation expense | $ 11 | $ 120 |
Stockholders' Equity - Total Un
Stockholders' Equity - Total Unrecognized Estimated Compensation Expense (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Unvested stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense (in thousands) | $ 95,703 |
Remaining Weighted-Average Recognition Period (in years) | 2 years 7 months 13 days |
PRSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense (in thousands) | $ 1,750 |
Remaining Weighted-Average Recognition Period (in years) | 2 months 15 days |
RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense (in thousands) | $ 613 |
Remaining Weighted-Average Recognition Period (in years) | 6 months 25 days |
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 | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation Of Revenue [Line Items] | |||
Revenue | $ 806,431 | $ 20,477 | |
Revenue from continuing operations | 806,431 | 17,970 | $ 21,337 |
Revenue reported under discontinued operations | 2,507 | $ 19,039 | |
Revenue recognized at a point in time | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | 803,580 | 14,092 | |
Revenue recognized over time | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | 2,851 | 6,385 | |
United Therapeutics | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | 800,000 | ||
Everest | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | 5,000 | 2,000 | |
Eisai | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | (1,077) | 8,070 | |
Other | |||
Disaggregation Of Revenue [Line Items] | |||
Revenue | $ 2,508 | $ 10,407 |
Collaborations and License Ag_4
Collaborations and License Agreements - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 12 Months Ended | 16 Months Ended | |||||||||
Oct. 31, 2019USD ($) | Jan. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Apr. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2018CHF (SFr) | Sep. 30, 2019USD ($) | Dec. 28, 2016USD ($) | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
License agreement costs incurred related to transaction fees | $ 14,573,000 | $ 2,467,000 | |||||||||||
Recognized revenues | 5,000,000 | 2,000,000 | $ 12,000,000 | ||||||||||
Reduction in deferred revenue associated with agreement | (1,438,000) | (2,061,000) | (4,401,000) | ||||||||||
Contract Assets | $ 6,000,000 | $ 6,000,000 | 6,000,000 | ||||||||||
Revenues | 806,431,000 | 17,970,000 | 21,337,000 | ||||||||||
Total arrangement consideration under Eisai Agreement | 115,600,000 | ||||||||||||
Payment received from Eisai | $ 10,000,000 | ||||||||||||
Recognized revenue of discontinued operations | 2,507,000 | 19,039,000 | |||||||||||
Carrying value of inventory as cost of product sales of discontinued operations | 1,858,000 | 7,472,000 | |||||||||||
Royalty Revenue | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Decrease in contract asset resulting from adjustment to future estimated royalty payments | 3,700,000 | ||||||||||||
Revenues | (853,000) | 6,568,000 | 1,705,000 | ||||||||||
Everest | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Collaborative agreement upfront payments | $ 12,000,000 | ||||||||||||
Paid on Milestone Achievements | $ 5,000,000 | ||||||||||||
Eisai | Lorcaserin Product | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Royalty rate on annual net sales | 9.50% | ||||||||||||
Boehringer Ingelheim | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Additional milestone payments on achievement | $ 246,000,000 | ||||||||||||
Recognized milestone revenue | $ 1,500,000 | 3,500,000 | |||||||||||
Revenues | 1,700,000 | 4,400,000 | 5,100,000 | ||||||||||
Boehringer Ingelheim | Beacon Discovery, Inc. | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Paid on Milestone Achievements | 7,000,000 | ||||||||||||
Axovant | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Recognized revenues | $ 0 | 2,200,000 | 2,200,000 | ||||||||||
Chinese National Medical Products Administration | Everest | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Recognized milestone revenue | 2,000,000 | ||||||||||||
Maximum | Everest | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Additional milestone payments on achievement | $ 110,000,000 | 110,000,000 | |||||||||||
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 | ||||||||||||
Eisai Agreement | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Collaboration Agreement Estimated Transaction Price | $ 344,400,000 | ||||||||||||
Additional manufacturing support payments received | SFr | SFr 8,700,000 | ||||||||||||
Reduction in deferred revenue associated with agreement | 25,500,000 | ||||||||||||
Contract asset associated with agreement | 6,100,000 | ||||||||||||
Estimated future royalty payments | 4,100,000 | ||||||||||||
Reversal balance of hand on inventory | 3,600,000 | ||||||||||||
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 | (1,100,000) | 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 Transaction Agreement | Ildong | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Additional milestone payments on achievement | 102,100,000 | ||||||||||||
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 | |||||||||||
Inventory Deliverable | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
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] | |||||||||||||
Recognized revenue of discontinued operations | 9,500,000 | ||||||||||||
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 with United Therapeutics. Under this agreement, we granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. This transaction was completed in January 2019. | ||||||||||||
Collaborative agreement completion period | 2019-01 | ||||||||||||
License agreement costs incurred related to transaction fees | $ 17,000,000 | $ 14,600,000 | 2,400,000 | ||||||||||
Collaborative agreement upfront payments | $ 800,000,000 | ||||||||||||
Collaboration Agreement Estimated Transaction Price | 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 | ||||||||||||
Outpost Medicine | |||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||||||||||
Collaborative agreement upfront payments | $ 3,000,000 | ||||||||||||
Paid on Milestone Achievements | $ 500,000 | ||||||||||||
Recognized revenues | $ 500,000 | $ 2,800,000 | $ 200,000 | ||||||||||
Collaborative agreement upfront payments in the form of equity interest | $ 1,500,000 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income (Loss) Before Provision (Benefit) for Income Taxes by Region (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 298,315 | $ (138,522) | $ (62,109) |
Foreign | 209,573 | (1,142) | (29,298) |
Total income (loss) attributable to stockholders of Arena before income taxes | $ 507,888 | $ (139,664) | $ (91,407) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Line Items] | |||
Benefit for income taxes | $ 110,333,000 | $ (110,265,000) | $ 0 |
Statutory federal rate | 21.00% | 21.00% | 34.00% |
Increase in valuation allowance | $ 34,700,000 | ||
NOL carryforwards | $ 151,400,000 | ||
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 | $ 8,600,000 | ||
Accrued interest or penalties | 0 | $ 0 | |
Recognize interest and/or penalties expense | 0 | $ 0 | $ 0 |
California | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards | $ 393,900,000 | ||
California | Minimum | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards expiration date, year | 2028 | ||
California | Research and Development Tax Credit | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | $ 25,100,000 | ||
Federal | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards | $ 539,300,000 | ||
Federal | Minimum | |||
Income Tax Disclosure [Line Items] | |||
NOL carryforwards expiration date, year | 2029 | ||
Tax credit carryforwards expiration year | 2026 | ||
Federal | Research and Development Tax Credit | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | $ 38,700,000 | ||
Federal | Orphan Drug Credit | Minimum | |||
Income Tax Disclosure [Line Items] | |||
Tax credit carryforwards amount | $ 15,000,000 |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Benefit for income taxes at statutory federal rate | $ 106,657,000 | $ (29,090,000) | $ (32,140,000) |
Change in valuation allowance due to tax reform | 96,333,000 | ||
Change in federal and foreign valuation allowance | 34,712,000 | (76,336,000) | (68,604,000) |
Permanent differences and other | 601,000 | 1,963,000 | (782,000) |
Deferred adjustment related to foreign net operating losses | 15,133,000 | ||
Capital loss on foreign subsidiary liquidation | (43,685,000) | ||
Share-based compensation expense | 1,624,000 | 889,000 | 7,071,000 |
Foreign losses at lower effective rates | 21,000 | 257,000 | 1,428,000 |
Research and development and Orphan Drug credits | (4,730,000) | (7,948,000) | (3,306,000) |
Benefit for income taxes | $ 110,333,000 | $ (110,265,000) | $ 0 |
Income Taxes - Components of Ne
Income Taxes - Components of Net Deferred Tax Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Federal and California NOL carryforwards | $ 140,762 | $ 210,853 |
Federal and California research and development credit carryforwards | 73,956 | 69,221 |
Foreign NOL carryforwards | 15,131 | |
Share-based compensation expense | 11,010 | 6,124 |
Depreciation | 3,183 | 2,914 |
Lease liability | 2,359 | |
Other, net | 354 | 784 |
Total deferred tax assets | 231,624 | 305,027 |
Right-of-use assets | (2,218) | |
Total deferred tax liabilities | (2,218) | |
Net deferred tax assets | 229,406 | 305,027 |
Valuation allowance | $ (229,406) | (194,694) |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits at the beginning of the year | $ 9,033 | $ 7,762 | $ 5,906 |
Additions from tax positions taken in the current year | 1,017 | 1,269 | 1,133 |
Additions from tax positions taken in prior years | 2 | 723 | |
Reductions from tax positions taken in prior years | (96) | ||
Gross unrecognized tax benefits at end of the year | $ 9,954 | $ 9,033 | $ 7,762 |
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 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 3,002 | $ 1,350 | $ 1,022 | $ 801,057 | $ 8,648 | $ 3,573 | $ 3,994 | $ 1,755 | |||
Operating costs and expenses | 96,875 | 80,685 | 69,578 | 76,547 | 53,292 | 39,577 | 37,160 | 32,724 | $ 323,685 | $ 162,753 | $ 113,304 |
Net income (loss) | $ (88,311) | $ (72,865) | $ (61,403) | $ 620,134 | $ 68,711 | $ (34,314) | $ (31,833) | $ (31,963) | $ 397,555 | $ (29,399) | $ (92,732) |
Net income (loss) per share, basic | $ (1.76) | $ (1.46) | $ (1.24) | $ 12.53 | $ 1.39 | $ (0.70) | $ (0.65) | $ (0.80) | $ 7.99 | $ (0.63) | $ (2.77) |
Net income (loss) per share, diluted | $ (1.76) | $ (1.46) | $ (1.24) | $ 12.10 | $ 1.35 | $ (0.70) | $ (0.65) | $ (0.80) | $ 7.69 | $ (0.63) | $ (2.77) |
Net income (loss): | |||||||||||
Income (loss) from continuing operations | $ 68,711 | $ (34,314) | $ (31,833) | $ (31,133) | $ 397,555 | $ (28,569) | $ (95,854) | ||||
Loss from discontinued operations | (830) | (830) | 3,122 | ||||||||
Net income (loss) | $ (88,311) | $ (72,865) | $ (61,403) | $ 620,134 | $ 68,711 | $ (34,314) | $ (31,833) | $ (31,963) | $ 397,555 | $ (29,399) | $ (92,732) |
Net income (loss) per share, basic | |||||||||||
Continuing operations | $ 1.39 | $ (0.70) | $ (0.65) | $ (0.78) | $ 7.99 | $ (0.61) | $ (2.87) | ||||
Discontinued operations | (0.02) | (0.02) | 0.10 | ||||||||
Net income (loss) attributable to stockholders of Arena per share, basic | $ (1.76) | $ (1.46) | $ (1.24) | $ 12.53 | 1.39 | (0.70) | (0.65) | (0.80) | 7.99 | (0.63) | (2.77) |
Net income (loss) per share, diluted | |||||||||||
Continuing operations | 1.35 | (0.70) | (0.65) | (0.78) | |||||||
Discontinued operations | (0.02) | ||||||||||
Net income (loss) attributable to stockholders of Arena per share, diluted | $ (1.76) | $ (1.46) | $ (1.24) | $ 12.10 | $ 1.35 | $ (0.70) | $ (0.65) | $ (0.80) | $ 7.69 | $ (0.63) | $ (2.77) |
Beacon Discovery, Inc. - Additi
Beacon Discovery, Inc. - Additional Information (Detail) $ in Thousands | 5 Months Ended | 12 Months Ended | |
Dec. 31, 2019ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016 | |
Variable Interest Entity [Line Items] | |||
Sublease expiration period | 2027-05 | 2027-05 | |
Net loss attributable to noncontrolling interest in consolidated variable interest entity | $ (1,325) | ||
Beacon Discovery, Inc. | Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Net loss attributable to noncontrolling interest in consolidated variable interest entity | $ 1,300 | ||
Beacon Discovery, Inc. | Variable Interest Entity, Primary Beneficiary | Sublease Agreement | |||
Variable Interest Entity [Line Items] | |||
Area of space subleased | ft² | 30,000 | ||
Sublease expiration period | 2027-05 |