Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 31, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | ARENA PHARMACEUTICALS, INC. | |
Trading Symbol | ARNA | |
Entity Central Index Key | 0001080709 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity File Number | 000-31161 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 23-2908305 | |
Entity Address, Address Line One | 6154 Nancy Ridge Drive | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | 858 | |
Local Phone Number | 453.7200 | |
Entity Common Stock, Shares Outstanding | 57,646,937 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 550,176 | $ 243,274 |
Short-term investments, available-for-sale | 620,458 | 496,291 |
Prepaid expenses and other current assets | 33,296 | 20,369 |
Total current assets | 1,203,930 | 759,934 |
Investments, available-for-sale | 94,838 | 370,938 |
Land, property and equipment, net | 23,769 | 25,128 |
Other non-current assets | 17,213 | 18,123 |
Total assets | 1,339,750 | 1,174,123 |
Current liabilities: | ||
Accounts payable and other accrued liabilities | 18,339 | 25,499 |
Accrued clinical and preclinical study fees | 19,432 | 15,654 |
Current portion of lease financing obligations | 4,100 | 3,814 |
Total current liabilities | 41,871 | 44,967 |
Other long-term liabilities | 11,744 | 12,078 |
Lease financing obligations, less current portion | 43,498 | 45,613 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock | 6 | 5 |
Additional paid-in capital | 2,528,112 | 2,173,154 |
Accumulated other comprehensive income | 2,651 | 1,303 |
Accumulated deficit | (1,288,132) | (1,102,997) |
Total stockholders' equity | 1,242,637 | 1,071,465 |
Total liabilities and stockholders' equity | $ 1,339,750 | $ 1,174,123 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 1,022 | $ 262 | $ 802,079 | |
Operating Costs and Expenses: | ||||
Research and development | $ 64,946 | 51,211 | 143,479 | 96,607 |
General and administrative | 22,877 | 18,367 | 49,319 | 34,945 |
Transaction costs | 14,573 | |||
Total operating costs and expenses | 87,823 | 69,578 | 192,798 | 146,125 |
Income (loss) from operations | (87,823) | (68,556) | (192,536) | 655,954 |
Interest and Other Income (Expense): | ||||
Interest income | 3,065 | 7,595 | 8,011 | 14,082 |
Interest expense | (1,144) | (1,222) | (2,307) | (2,463) |
Other income | 974 | 780 | 1,697 | 1,491 |
Total interest and other income (expense), net | 2,895 | 7,153 | 7,401 | 13,110 |
Income (loss) before income taxes | (84,928) | (61,403) | (185,135) | 669,064 |
Income tax provision | (110,333) | |||
Net income (loss) | $ (84,928) | $ (61,403) | $ (185,135) | $ 558,731 |
Net income (loss) per share, basic: | $ (1.61) | $ (1.24) | $ (3.59) | $ 11.27 |
Net income (loss) per share, diluted: | $ (1.61) | $ (1.24) | $ (3.59) | $ 10.86 |
Shares used in calculating net income (loss) per share, basic: | 52,771 | 49,653 | 51,500 | 49,566 |
Shares used in calculating net income (loss) per share, diluted: | 52,771 | 49,653 | 51,500 | 51,459 |
Comprehensive Income (Loss): | ||||
Net income (loss) | $ (84,928) | $ (61,403) | $ (185,135) | $ 558,731 |
Foreign currency translation gain (loss) | 31 | 7 | 17 | (12) |
Unrealized gain on available-for-sale investments | 2,495 | 798 | 1,331 | 1,474 |
Comprehensive income (loss) | $ (82,402) | (60,598) | (183,787) | 560,193 |
Royalty Revenue | ||||
Revenues: | ||||
Total revenues | 941 | $ 262 | 1,914 | |
Collaboration and Other Revenue | ||||
Revenues: | ||||
Total revenues | $ 81 | 165 | ||
United Therapeutics | Collaboration and License Revenue | ||||
Revenues: | ||||
Total revenues | $ 800,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Underwriters | Common Stock | Common StockUnderwriters | Additional Paid-In Capital | Additional Paid-In CapitalUnderwriters | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning Balance at Dec. 31, 2018 | $ 606,258 | $ 5 | $ 2,106,960 | $ (155) | $ (1,500,552) | |||
Beginning Balance (in shares) at Dec. 31, 2018 | 49,422,991 | |||||||
Issuance of common stock upon exercise of options | 3,364 | 3,364 | ||||||
Issuance of common stock upon exercise of options (in shares) | 125,655 | |||||||
Share-based compensation expense | 13,024 | 13,024 | ||||||
Unrealized gain (loss) on available-for-sale investments | 676 | 676 | ||||||
Translation gain (loss) | (19) | (19) | ||||||
Net income (loss) | 620,134 | 620,134 | ||||||
Ending Balance at Mar. 31, 2019 | 1,243,437 | $ 5 | 2,123,348 | 502 | (880,418) | |||
Ending Balance (in shares) at Mar. 31, 2019 | 49,548,646 | |||||||
Beginning Balance at Dec. 31, 2018 | 606,258 | $ 5 | 2,106,960 | (155) | (1,500,552) | |||
Beginning Balance (in shares) at Dec. 31, 2018 | 49,422,991 | |||||||
Translation gain (loss) | (12) | |||||||
Net income (loss) | 558,731 | |||||||
Ending Balance at Jun. 30, 2019 | 1,200,989 | $ 5 | 2,141,498 | 1,307 | (941,821) | |||
Ending Balance (in shares) at Jun. 30, 2019 | 49,802,573 | |||||||
Beginning Balance at Mar. 31, 2019 | 1,243,437 | $ 5 | 2,123,348 | 502 | (880,418) | |||
Beginning Balance (in shares) at Mar. 31, 2019 | 49,548,646 | |||||||
Issuance of common stock upon exercise of options | 4,722 | 4,722 | ||||||
Issuance of common stock upon exercise of options (in shares) | 229,565 | |||||||
Issuance of common stock upon vesting of restricted stock unit awards (in shares) | 24,362 | |||||||
Share-based compensation expense | 13,428 | 13,428 | ||||||
Unrealized gain (loss) on available-for-sale investments | 798 | 798 | ||||||
Translation gain (loss) | 7 | 7 | ||||||
Net income (loss) | (61,403) | (61,403) | ||||||
Ending Balance at Jun. 30, 2019 | 1,200,989 | $ 5 | 2,141,498 | 1,307 | (941,821) | |||
Ending Balance (in shares) at Jun. 30, 2019 | 49,802,573 | |||||||
Beginning Balance at Dec. 31, 2019 | 1,071,465 | $ 5 | 2,173,154 | 1,303 | (1,102,997) | |||
Beginning Balance (in shares) at Dec. 31, 2019 | 50,170,953 | |||||||
Issuance of common stock upon exercise of options | 3,191 | 3,191 | ||||||
Issuance of common stock upon exercise of options (in shares) | 125,761 | |||||||
Share-based compensation expense | 15,214 | 15,214 | ||||||
Unrealized gain (loss) on available-for-sale investments | (1,164) | (1,164) | ||||||
Translation gain (loss) | (14) | (14) | ||||||
Net income (loss) | (100,207) | (100,207) | ||||||
Ending Balance at Mar. 31, 2020 | 988,485 | $ 5 | 2,191,559 | 125 | (1,203,204) | |||
Ending Balance (in shares) at Mar. 31, 2020 | 50,296,714 | |||||||
Beginning Balance at Dec. 31, 2019 | 1,071,465 | $ 5 | 2,173,154 | 1,303 | (1,102,997) | |||
Beginning Balance (in shares) at Dec. 31, 2019 | 50,170,953 | |||||||
Translation gain (loss) | 17 | |||||||
Net income (loss) | (185,135) | |||||||
Ending Balance at Jun. 30, 2020 | 1,242,637 | $ 6 | 2,528,112 | 2,651 | (1,288,132) | |||
Ending Balance (in shares) at Jun. 30, 2020 | 57,574,878 | |||||||
Beginning Balance at Mar. 31, 2020 | 988,485 | $ 5 | 2,191,559 | 125 | (1,203,204) | |||
Beginning Balance (in shares) at Mar. 31, 2020 | 50,296,714 | |||||||
Issuance of common stock | $ 301,754 | $ 1 | $ 301,753 | |||||
Issuance of common stock (in shares) | 6,325,000 | |||||||
Issuance of common stock upon exercise of options | 21,089 | 21,089 | ||||||
Issuance of common stock upon exercise of options (in shares) | 903,641 | |||||||
Issuance of common stock under employee stock purchase plan and upon vesting of restricted stock unit awards | 1,475 | 1,475 | ||||||
Issuance of common stock under employee stock purchase plan and upon vesting of restricted stock unit awards (in shares) | 49,523 | |||||||
Share-based compensation expense | 12,236 | 12,236 | ||||||
Unrealized gain (loss) on available-for-sale investments | 2,495 | 2,495 | ||||||
Translation gain (loss) | 31 | 31 | ||||||
Net income (loss) | (84,928) | (84,928) | ||||||
Ending Balance at Jun. 30, 2020 | $ 1,242,637 | $ 6 | $ 2,528,112 | $ 2,651 | $ (1,288,132) | |||
Ending Balance (in shares) at Jun. 30, 2020 | 57,574,878 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Activities: | ||
Net income (loss) | $ (185,135) | $ 558,731 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,921 | 1,555 |
Deferred income taxes | 110,333 | |
Share-based compensation | 27,450 | 26,452 |
Amortization of prepaid financing costs | 45 | 45 |
Amortization of original issue discounts, net of premiums, on available-for-sale investments | (301) | (3,428) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,759 | 3,262 |
Prepaid expenses and other assets | (12,660) | (12,441) |
Payables and accrued liabilities | (4,230) | (1,182) |
Deferred rent | (647) | (789) |
Net cash provided by (used in) operating activities | (171,798) | 682,538 |
Investing Activities: | ||
Purchases of available-for-sale investments | (462,724) | (909,731) |
Proceeds from sale and maturity of available-for-sale investments | 616,289 | 259,784 |
Purchases of property and equipment | (562) | (1,934) |
Net cash provided by (used in) investing activities - continuing operations | 153,003 | (651,881) |
Net cash provided by investing activities - discontinued operations | 997 | |
Net cash provided by (used in) investing activities | 153,003 | (650,884) |
Financing Activities: | ||
Principal payments on lease financing obligations | (1,829) | (1,570) |
Proceeds from issuance of common stock, net | 327,509 | 8,086 |
Net cash provided by financing activities | 325,680 | 6,516 |
Effect of exchange rate changes on cash | 17 | (11) |
Net increase in cash, cash equivalents and restricted cash | 306,902 | 38,159 |
Cash, cash equivalents and restricted cash at beginning of period | 243,500 | 161,900 |
Cash, cash equivalents and restricted cash at end of period | $ 550,402 | $ 200,059 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Arena Pharmaceuticals, Inc. should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission, or SEC, from which we derived our condensed consolidated balance sheet as of December 31, 2019. The accompanying condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year, particularly in light of the pandemic of coronavirus disease 2019, or COVID-19, and its impact on domestic and global economies. To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and or experience a reduction in demand for many products from direct or ultimate customers. Accordingly, businesses have adjusted, reduced or suspended operating activities. Beginning the week of March 16, 2020, substantially all of our workforce began working from home, either all or substantially all of the time. Liquidity. As of June 30, 2020, we had cash, cash equivalents and available-for-sale investments of approximately $1.3 billion. We believe our cash, cash equivalents and available-for-sale investments will be sufficient to fund our operations for at least the next 12 months. We will require substantial cash to achieve our objectives of discovering, developing and commercializing drugs, as this process typically takes many years and potentially hundreds of millions of dollars for an individual drug. We may not have adequate available cash, or assets that could be readily turned into cash, to meet these objectives in the long term. We will need to obtain significant funds under our existing collaborations, under new collaborations, licensing or other commercial agreements for one or more of our drug candidates, programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with our clinical research organizations and Use of Estimates. The preparation of financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. The amounts reported could differ under different estimates and assumptions. Reclassifications. Certain prior period amounts have been reclassified to conform to the current period presentation. Contingencies. We disclose information regarding each material claim where the likelihood of a loss contingency is probable or reasonably possible. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. New Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board, or FASB, issued new accounting guidance codified in Accounting Standard Codification 326, Financial Instruments - Credit Losses Concentrations of Credit Risk. Our financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash, cash equivalents and available-for-sale investments. We limit our exposure to credit losses 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. |
Cash, Cash Equivalents and Rest
Cash, Cash Equivalents and Restricted Cash | 6 Months Ended |
Jun. 30, 2020 | |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | 2. Cash, cash equivalents and restricted cash The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in the accompanying condensed consolidated balance sheets to the total of the amount presented in the condensed consolidated statements of cash flows, in thousands: June 30, December 31, 2020 2019 Cash and cash equivalents $ 550,176 $ 243,274 Restricted cash included in other non-current assets 226 226 Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows $ 550,402 $ 243,500 The restricted cash relates to our property leases. The restriction will lapse when the related leases expire. |
Fair Value Disclosures
Fair Value Disclosures | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | 3. Fair Value Disclosures We measure our financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial assets and liabilities: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments. Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly. Level 3 - Significant unobservable inputs based on our assumptions. The following tables present our valuation hierarchy for our financial assets and liabilities that are measured at fair value on a recurring basis, in thousands: Fair Value Measurements Using Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2020: Assets: Money market funds(1) $ 474,015 $ 474,015 $ — $ — US government and government agency notes(2) 432,723 432,723 — — Corporate debt instruments(2) 282,574 — 282,574 — . December 31, 2019: Assets: Money market funds(1) $ 147,752 $ 147,752 $ — $ — US government and government agency notes(3) 398,419 398,419 — — Corporate debt instruments(3) 483,788 — 483,788 — (1) Included in cash and cash equivalents in the accompanying (2) Included in available-for-sale investments in the accompanying consolidated balance sheets. (3) Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheets. |
Investments, Available-for-Sale
Investments, Available-for-Sale | 6 Months Ended |
Jun. 30, 2020 | |
Investments Debt And Equity Securities [Abstract] | |
Investments, Available-for-Sale | 4. Investments, Available-for-Sale I nvestments, available-for-sale, consisted of the following June 30, 2020: Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes < 1 $ 360,053 $ 762 $ (35 ) $ 360,780 Corporate debt securities < 1 258,121 1,573 (16 ) 259,678 Short-term investments, available-for-sale $ 618,174 $ 2,335 $ (51 ) $ 620,458 US government and government agency notes 1 – 5 $ 71,863 $ 79 $ — $ 71,942 Corporate debt securities 1 – 5 22,705 191 — 22,896 Investments, available-for-sale $ 94,568 $ 270 $ — $ 94,838 December 31, 2019: Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes < 1 $ 201,046 $ 292 $ (5 ) $ 201,333 Corporate debt securities < 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 |
Land, Property and Equipment
Land, Property and Equipment | 6 Months Ended |
Jun. 30, 2020 | |
Property Plant And Equipment [Abstract] | |
Land, Property and Equipment | 5. Land, Property and Equipment Land, property and equipment consisted of the following, in thousands: June 30, December 31, 2020 2019 Cost $ 74,483 $ 73,922 Less accumulated depreciation and amortization (50,714 ) (48,794 ) Land, property and equipment, net $ 23,769 $ 25,128 |
Accounts Payable and Other Accr
Accounts Payable and Other Accrued Liabilities | 6 Months Ended |
Jun. 30, 2020 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Other Accrued Liabilities | 6. Accounts Payable and Other Accrued Liabilities Accounts payable and other accrued liabilities consisted of the following, in thousands: June 30, December 31, 2020 2019 Accounts payable $ 2,155 $ 6,043 Accrued compensation 11,249 14,329 Other accrued liabilities 4,935 5,127 Total accounts payable and other accrued liabilities $ 18,339 $ 25,499 |
Collaborations and License Agre
Collaborations and License Agreements | 6 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Collaborations and License Agreements | 7. Collaborations and License Agreements Refer to our Annual Report on Form 10-K for the year ended December 31, 2019, for more information on our significant collaboration and license agreements. In the first quarter of 2019, we received an upfront payment of $800.0 million under 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. United Therapeutics is responsible for all development, manufacturing and commercialization of the licensed products globally. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2020 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity In June 2020, we completed the sale of an aggregate of 6,325,000 shares of our common stock in an underwritten public offering. Net proceeds from the offering were approximately $301.8 million after deducting underwriting discounts and commissions and offering expenses payable by us. |
Share-based Compensation
Share-based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-based Compensation | 9. Share-based Compensation We recognized share-based compensation expense as follows, in thousands: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Research and development $ 6,262 $ 7,000 $ 12,853 $ 13,707 General and administrative 5,974 6,428 14,597 12,745 Total share-based compensation expense $ 12,236 $ 13,428 $ 27,450 $ 26,452 The following table summarizes our stock option activity during the six months ended June 30, 2020, in thousands (except per share data): Options Weighted- Average Exercise Price Outstanding at January 1, 2020 8,535 $ 34.31 Granted 2,411 46.22 Exercised (1,030 ) 23.59 Forfeited/cancelled/expired (492 ) 42.86 Outstanding at June 30, 2020 9,424 $ 38.08 In March 2020, a total of 138,104 Restricted Stock Units, or RSUs, were granted to employees in a company-wide grant. The RSUs vest over four years from the grant date. The grant-date fair value of $6.4 million is recognized as compensation expense over the vesting period. |
Income (Loss) Per Share
Income (Loss) Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Income (Loss) Per Share | 10. Income (Loss) Per Share We calculate basic and diluted income (loss) per share using the weighted-average number of shares of common stock outstanding during the period. Since we have a net loss for the three and six months ended June 30, 2020, in addition to excluding potentially dilutive out-of-the money securities, we have excluded from our calculation of diluted income (loss) per share all potentially dilutive in-the-money (i) stock options, (ii) RSUs, and (iii) Performance-Based Restricted Stock Unit awards, or PRSUs, and our diluted net loss per share is the same as our basic net loss per share for those periods. The following table presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted net income (loss) per share because they were anti-dilutive, in thousands: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Stock options 7,279 5,698 7,119 3,833 RSUs and PRSUs 256 203 232 2 Total 7,535 5,901 7,351 3,835 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Arena Pharmaceuticals, Inc. should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission, or SEC, from which we derived our condensed consolidated balance sheet as of December 31, 2019. The accompanying condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year, particularly in light of the pandemic of coronavirus disease 2019, or COVID-19, and its impact on domestic and global economies. To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and or experience a reduction in demand for many products from direct or ultimate customers. Accordingly, businesses have adjusted, reduced or suspended operating activities. Beginning the week of March 16, 2020, substantially all of our workforce began working from home, either all or substantially all of the time. |
Liquidity | Liquidity. As of June 30, 2020, we had cash, cash equivalents and available-for-sale investments of approximately $1.3 billion. We believe our cash, cash equivalents and available-for-sale investments will be sufficient to fund our operations for at least the next 12 months. We will require substantial cash to achieve our objectives of discovering, developing and commercializing drugs, as this process typically takes many years and potentially hundreds of millions of dollars for an individual drug. We may not have adequate available cash, or assets that could be readily turned into cash, to meet these objectives in the long term. We will need to obtain significant funds under our existing collaborations, under new collaborations, licensing or other commercial agreements for one or more of our drug candidates, programs or patent portfolios, or from other potential sources of liquidity, which may include the sale of equity, issuance of debt or other transactions. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with our clinical research organizations and |
Use of Estimates | Use of Estimates. The preparation of financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures. The amounts reported could differ under different estimates and assumptions. |
Reclassification | Reclassifications. Certain prior period amounts have been reclassified to conform to the current period presentation. |
Contingencies | Contingencies. We disclose information regarding each material claim where the likelihood of a loss contingency is probable or reasonably possible. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. |
New Accounting Pronouncements | New Accounting Pronouncements. In June 2016, the Financial Accounting Standards Board, or FASB, issued new accounting guidance codified in Accounting Standard Codification 326, Financial Instruments - Credit Losses |
Concentrations of Credit Risk | Concentrations of Credit Risk. Our financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash, cash equivalents and available-for-sale investments. We limit our exposure to credit losses 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. |
Fair Value Measurements | We measure our financial assets and liabilities at fair value, which is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the following three-level valuation hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value our financial assets and liabilities: Level 1 - Observable inputs such as unadjusted quoted prices in active markets for identical instruments. Level 2 - Quoted prices for similar instruments in active markets or inputs that are observable for the asset or liability, either directly or indirectly. Level 3 - Significant unobservable inputs based on our assumptions. |
Income (Loss) Per Share | We calculate basic and diluted income (loss) per share using the weighted-average number of shares of common stock outstanding during the period. Since we have a net loss for the three and six months ended June 30, 2020, in addition to excluding potentially dilutive out-of-the money securities, we have excluded from our calculation of diluted income (loss) per share all potentially dilutive in-the-money (i) stock options, (ii) RSUs, and (iii) Performance-Based Restricted Stock Unit awards, or PRSUs, and our diluted net loss per share is the same as our basic net loss per share for those periods. |
Cash, Cash Equivalents and Re_2
Cash, Cash Equivalents and Restricted Cash (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | |
Reconciliation of Components of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in the accompanying condensed consolidated balance sheets to the total of the amount presented in the condensed consolidated statements of cash flows, in thousands: June 30, December 31, 2020 2019 Cash and cash equivalents $ 550,176 $ 243,274 Restricted cash included in other non-current assets 226 226 Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows $ 550,402 $ 243,500 |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present our valuation hierarchy for our financial assets and liabilities that are measured at fair value on a recurring basis, in thousands: Fair Value Measurements Using Balance Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) June 30, 2020: Assets: Money market funds(1) $ 474,015 $ 474,015 $ — $ — US government and government agency notes(2) 432,723 432,723 — — Corporate debt instruments(2) 282,574 — 282,574 — . December 31, 2019: Assets: Money market funds(1) $ 147,752 $ 147,752 $ — $ — US government and government agency notes(3) 398,419 398,419 — — Corporate debt instruments(3) 483,788 — 483,788 — (1) Included in cash and cash equivalents in the accompanying (2) Included in available-for-sale investments in the accompanying consolidated balance sheets. (3) Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheets. |
Investments, Available-for-Sa_2
Investments, Available-for-Sale (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Investments, Available-for-Sale | I nvestments, available-for-sale, consisted of the following June 30, 2020: Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes < 1 $ 360,053 $ 762 $ (35 ) $ 360,780 Corporate debt securities < 1 258,121 1,573 (16 ) 259,678 Short-term investments, available-for-sale $ 618,174 $ 2,335 $ (51 ) $ 620,458 US government and government agency notes 1 – 5 $ 71,863 $ 79 $ — $ 71,942 Corporate debt securities 1 – 5 22,705 191 — 22,896 Investments, available-for-sale $ 94,568 $ 270 $ — $ 94,838 December 31, 2019: Maturity in years Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value US government and government agency notes < 1 $ 201,046 $ 292 $ (5 ) $ 201,333 Corporate debt securities < 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 |
Land, Property and Equipment (T
Land, Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Property Plant And Equipment [Abstract] | |
Land, Property and Equipment | Land, property and equipment consisted of the following, in thousands: June 30, December 31, 2020 2019 Cost $ 74,483 $ 73,922 Less accumulated depreciation and amortization (50,714 ) (48,794 ) Land, property and equipment, net $ 23,769 $ 25,128 |
Accounts Payable and Other Ac_2
Accounts Payable and Other Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Other Accrued Liabilities | Accounts payable and other accrued liabilities consisted of the following, in thousands: June 30, December 31, 2020 2019 Accounts payable $ 2,155 $ 6,043 Accrued compensation 11,249 14,329 Other accrued liabilities 4,935 5,127 Total accounts payable and other accrued liabilities $ 18,339 $ 25,499 |
Share-based Compensation (Table
Share-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share Based Compensation Expense | We recognized share-based compensation expense as follows, in thousands: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Research and development $ 6,262 $ 7,000 $ 12,853 $ 13,707 General and administrative 5,974 6,428 14,597 12,745 Total share-based compensation expense $ 12,236 $ 13,428 $ 27,450 $ 26,452 |
Summary of Stock Option Activity | The following table summarizes our stock option activity during the six months ended June 30, 2020, in thousands (except per share data): Options Weighted- Average Exercise Price Outstanding at January 1, 2020 8,535 $ 34.31 Granted 2,411 46.22 Exercised (1,030 ) 23.59 Forfeited/cancelled/expired (492 ) 42.86 Outstanding at June 30, 2020 9,424 $ 38.08 |
Income (Loss) Per Share (Tables
Income (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Potentially Dilutive Securities Excluded from Calculation of Diluted Net Income (Loss) Per Share | The following table presents the weighted-average number of potentially dilutive securities that were excluded from our calculation of diluted net income (loss) per share because they were anti-dilutive, in thousands: Three months ended Six months ended June 30, June 30, 2020 2019 2020 2019 Stock options 7,279 5,698 7,119 3,833 RSUs and PRSUs 256 203 232 2 Total 7,535 5,901 7,351 3,835 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Detail) $ in Billions | Jun. 30, 2020USD ($) |
Accounting Policies [Abstract] | |
Cash and cash equivalents and available-for-sale investments | $ 1.3 |
Cash, Cash Equivalents and Re_3
Cash, Cash Equivalents and Restricted Cash - Reconciliation of Components of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Cash Cash Equivalents Restricted Cash And Restricted Cash Equivalents [Abstract] | ||
Cash and cash equivalents | $ 550,176 | $ 243,274 |
Restricted cash included in other non-current assets | $ 226 | $ 226 |
Restricted Cash, Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Total cash, cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows | $ 550,402 | $ 243,500 |
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 | Jun. 30, 2020 | Dec. 31, 2019 | |||
Assets: | |||||
Money market funds | [1] | $ 474,015 | $ 147,752 | ||
US government and government agency notes | 432,723 | [2] | 398,419 | [3] | |
Corporate debt instruments | 282,574 | [2] | 483,788 | [3] | |
Quoted Prices in Active Markets (Level 1) | |||||
Assets: | |||||
Money market funds | [1] | 474,015 | 147,752 | ||
US government and government agency notes | 432,723 | [2] | 398,419 | [3] | |
Significant Other Observable Inputs (Level 2) | |||||
Assets: | |||||
Corporate debt instruments | $ 282,574 | [2] | $ 483,788 | [3] | |
[1] | Included in cash and cash equivalents in the accompanying | ||||
[2] | Included in available-for-sale investments in the accompanying consolidated balance sheets. | ||||
[3] | (3) Included in either cash and cash equivalents or available-for-sale investments in the accompanying consolidated balance sheets. |
Investments, Available-for-Sa_3
Investments, Available-for-Sale - Schedule of Investments, Available-for-Sale (Detail) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2019 | |
Short-term investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | $ 618,174 | $ 495,527 |
Gross Unrealized Gains | 2,335 | 787 |
Gross Unrealized Losses | (51) | (23) |
Estimated Fair Value | 620,458 | 496,291 |
Short-term investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 360,053 | 201,046 |
Gross Unrealized Gains | 762 | 292 |
Gross Unrealized Losses | (35) | (5) |
Estimated Fair Value | 360,780 | 201,333 |
Short-term investments, available-for-sale | Corporate debt securities | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 258,121 | 294,481 |
Gross Unrealized Gains | 1,573 | 495 |
Gross Unrealized Losses | (16) | (18) |
Estimated Fair Value | 259,678 | 294,958 |
Investments, available-for-sale | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 94,568 | 370,479 |
Gross Unrealized Gains | 270 | 688 |
Gross Unrealized Losses | (229) | |
Estimated Fair Value | 94,838 | 370,938 |
Investments, available-for-sale | US government and government agency notes | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Amortized Cost | 71,863 | 197,157 |
Gross Unrealized Gains | 79 | 85 |
Gross Unrealized Losses | (155) | |
Estimated Fair Value | $ 71,942 | $ 197,087 |
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 | $ 22,705 | $ 173,322 |
Gross Unrealized Gains | 191 | 603 |
Gross Unrealized Losses | (74) | |
Estimated Fair Value | $ 22,896 | $ 173,851 |
Investments, available-for-sale | Corporate debt securities | Minimum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 1 year | 1 year |
Investments, available-for-sale | Corporate debt securities | Maximum | ||
Schedule Of Available For Sale Securities [Line Items] | ||
Maturity in years | 5 years | 5 years |
Land, Property and Equipment -
Land, Property and Equipment - Land, Property and Equipment (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Property Plant And Equipment [Abstract] | ||
Cost | $ 74,483 | $ 73,922 |
Less accumulated depreciation and amortization | (50,714) | (48,794) |
Land, property and equipment, net | $ 23,769 | $ 25,128 |
Accounts Payable and Other Ac_3
Accounts Payable and Other Accrued Liabilities - Accounts Payable and Other Accrued Liabilities (Detail) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 2,155 | $ 6,043 |
Accrued compensation | 11,249 | 14,329 |
Other accrued liabilities | 4,935 | 5,127 |
Total accounts payable and other accrued liabilities | $ 18,339 | $ 25,499 |
Collaborations and License Ag_2
Collaborations and License Agreements - Additional Information (Detail) - United Therapeutics - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Mar. 31, 2019 | Jun. 30, 2020 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Collaborative agreement upfront payments | $ 800 | |
Collaborative arrangement right description | Under this agreement, we granted United Therapeutics an exclusive, worldwide, royalty-bearing license to develop, manufacture and commercialize ralinepag in any formulation. |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stockholders Equity [Line Items] | |||
Net proceeds from sale of aggregate shares of common stock | $ 327,509 | $ 8,086 | |
Underwritten Public Offering | |||
Stockholders Equity [Line Items] | |||
Sale of aggregate shares of common stock | 6,325,000 | ||
Net proceeds from sale of aggregate shares of common stock | $ 301,800 |
Share-based Compensation - Shar
Share-based Compensation - Share Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 12,236 | $ 13,428 | $ 27,450 | $ 26,452 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 6,262 | 7,000 | 12,853 | 13,707 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 5,974 | $ 6,428 | $ 14,597 | $ 12,745 |
Share-based Compensation - Summ
Share-based Compensation - Summary of Stock Option Activity (Detail) - Stock options shares in Thousands | 6 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of stock options | |
Outstanding at January 1, 2020 | shares | 8,535 |
Granted | shares | 2,411 |
Exercised | shares | (1,030) |
Forfeited/cancelled/expired | shares | (492) |
Outstanding at June 30, 2020 | shares | 9,424 |
Weighted Average Exercise Price ($ per share) | |
Outstanding at January 1, 2020 | $ / shares | $ 34.31 |
Granted | $ / shares | 46.22 |
Exercised | $ / shares | 23.59 |
Forfeited/cancelled/expired | $ / shares | 42.86 |
Outstanding at June 30, 2020 | $ / shares | $ 38.08 |
Share-based Compensation - Addi
Share-based Compensation - Additional Information (Detail) - Restricted Stock Units (RSUs) [Member] $ in Millions | 1 Months Ended |
Mar. 31, 2020USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Units granted | shares | 138,104 |
Vesting period | 4 years |
RSU grant-date fair value | $ | $ 6.4 |
Income (Loss) Per Share - Poten
Income (Loss) Per Share - Potentially Dilutive Securities Excluded from Calculation of Diluted Net Income (Loss) Per Share (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 7,535 | 5,901 | 7,351 | 3,835 |
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) | 7,279 | 5,698 | 7,119 | 3,833 |
RSUs and PRSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total antidilutive securities excluded from calculation of diluted net loss per share (shares) | 256 | 203 | 232 | 2 |