DURECT (DRRX) 10-Q 3 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 26, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Trading Symbol	DRRX
Entity Registrant Name	DURECT CORP
Entity Central Index Key	1,082,038
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		120,525,185

Condensed Balance Sheets

Condensed Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 5,389	$ 2,680
Short-term investments	26,805	30,016
Accounts receivable (net of allowances of $141 at September 30, 2015 and $211 at December 31, 2014)	2,269	2,122
Inventories	3,972	3,642
Prepaid expenses and other current assets	1,391	1,034
Total current assets	39,826	39,494
Property and equipment (net of accumulated depreciation of $20,924 and $20,607 at September 30, 2015 and December 31, 2014, respectively)	1,602	1,749
Goodwill	6,399	6,399
Long-term investments		1,804
Long-term restricted investments	250	350
Other long-term assets	236	288
Total assets	48,313	50,084
Current liabilities:
Accounts payable	798	1,021
Accrued liabilities	4,690	5,051
Contract research liabilities	630	358
Deferred revenue, current portion	616	538
Total current liabilities	6,734	6,968
Deferred revenue, non-current portion	2,338	2,742
Long-term debt, net	19,650	19,824
Other long-term liabilities	$ 2,378	$ 2,035
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock	$ 12	$ 11
Additional paid-in capital	416,920	401,322
Accumulated other comprehensive income	4	87
Accumulated deficit	(399,723)	(382,905)
Stockholders' equity	17,213	18,515
Total liabilities and stockholders' equity	$ 48,313	$ 50,084

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Allowances for accounts receivable	$ 141	$ 211
Accumulated depreciation on property and equipment	$ 20,924	$ 20,607

Condensed Statements of Compreh

Condensed Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Collaborative research and development and other revenue	$ 2,052	$ 1,752	$ 5,568	$ 6,999
Product revenue, net	2,691	2,506	8,389	8,133
Total revenues	4,743	4,258	13,957	15,132
Operating expenses:
Cost of product revenues	884	2,337	2,912	4,491
Research and development	6,654	5,463	17,659	17,020
Selling, general and administrative	3,177	3,051	8,721	9,264
Total operating expenses	10,715	10,851	29,292	30,775
Loss from operations	(5,972)	(6,593)	(15,335)	(15,643)
Other income (expense):
Interest and other income (expenses), net	43	60	194	66
Interest expense	(558)	(559)	(1,677)	(593)
Net other income(expense)	(515)	(499)	(1,483)	(527)
Net loss	(6,487)	(7,092)	(16,818)	(16,170)
Net change in unrealized gain (loss) on available-for-sale securities, net of reclassification adjustments and taxes	6	79	(83)	81
Total comprehensive loss	$ (6,481)	$ (7,013)	$ (16,901)	$ (16,089)
Net loss per share
Basic	$ (0.05)	$ (0.06)	$ (0.14)	$ (0.15)
Diluted	$ (0.05)	$ (0.06)	$ (0.14)	$ (0.15)
Weighted-average shares used in computing net loss per share
Basic	120,483	111,882	117,718	110,978
Diluted	120,483	111,882	117,718	110,978

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net loss	$ (16,818)	$ (16,170)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	342	462
Stock-based compensation	1,966	2,298
Inventory write-down	180	1,214
Amortization of debt issuance costs	66	19
Realized gain from sale of marketable equity security, net of tax	(117)
Changes in assets and liabilities:
Accounts receivable	(147)	(96)
Inventories	(510)	(1,528)
Prepaid expenses and other assets	(305)	1,111
Accounts payable	(223)	356
Accrued and other liabilities	1,003	988
Contract research liabilities	272	(57)
Deferred revenue	(326)	(191)
Total adjustments	2,201	4,576
Net cash used in operating activities	(14,617)	(11,594)
Cash flows from investing activities
Purchases of property and equipment	(194)	(169)
Purchases of available-for-sale securities	(24,739)	(29,637)
Proceeds from maturities of available-for-sale securities	29,710	12,277
Proceeds from sales of short-term investment	178
Net cash provided by (used in) investing activities	4,955	(17,529)
Cash flows from financing activities
Payments on equipment financing obligations	(15)	(11)
Payment of additional issuance cost for long-term debt	(240)
Net proceeds from issuance of long-term debt		19,786
Net proceeds from issuances of common stock	12,626	4,933
Net cash provided by financing activities	12,371	24,708
Net increase (decrease) in cash and cash equivalents	2,709	(4,415)
Cash and cash equivalents, beginning of the period	2,680	7,836
Cash and cash equivalents, end of the period	$ 5,389	$ 3,421

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Note 1. Summary of Significant Accounting Policies Nature of Operations DURECT Corporation (the Company) was incorporated in the state of Delaware on February 6, 1998. The Company is a biopharmaceutical company focused on the development of pharmaceuticals based on its proprietary drug delivery technology platforms, new chemical entities derived from its Epigenomic Regulator Program, and its expertise in drug development. The Company has several products under development by itself and with third party collaborators. The Company also manufactures and sells osmotic pumps used in laboratory research, and designs, develops and manufactures a wide range of standard and custom biodegradable polymers and excipients for pharmaceutical and medical device clients for use as raw materials in their products. In addition, the Company conducts research and development of pharmaceutical products in collaboration with third party pharmaceutical and biotechnology companies. Basis of Presentation The accompanying unaudited financial statements include the accounts of the Company. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and therefore do not include all the information and footnotes necessary for a complete presentation of the Company’s results of operations, financial position and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). The unaudited financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position at September 30, 2015, the operating results and comprehensive loss for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The balance sheet as of December 31, 2014 has been derived from audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial statements and notes should be read in conjunction with the Company’s audited financial statements and notes thereto, included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC. The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Inventories Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventories, in part, include certain excipients that are sold to customers and included in products in development. These inventories are capitalized based on management’s judgment of probable sale prior to their expiration date which in turn is primarily based on management’s internal estimates. The valuation of inventory requires management to estimate the value of inventory that may become expired prior to use. The Company may be required to expense previously capitalized inventory costs upon a change in management’s judgment, due to, among other potential factors, a denial or delay of approval of a product by the necessary regulatory bodies, or new information that suggests that the inventory will not be saleable. In addition, these circumstances may cause the Company to record a liability related to minimum purchase agreements that the Company has in place for raw materials. In 2014, the Company recorded charges to cost of goods sold of approximately $1.6 million, of which approximately $1.1 million related to the write-down of the cost basis of inventory and $500,000 related to the accrual of a liability for the minimum purchase commitment for the excipients. As of September 30, 2015, the remaining carrying value of the excipients in the Company’s inventory was $1.1 million. In addition, the Company has remaining unrecorded future purchase commitments totaling $2.0 million through 2018. In the event that management determines that the Company will not utilize all of these materials, there could be a potential write-off related to this inventory and/or a reserve for future purchase commitments. September 30, December 31, (unaudited) Raw materials $ 1,177 $ 1,242 Work in process 1,534 1,120 Finished goods 1,261 1,280 Total inventories $ 3,972 $ 3,642 Revenue Recognition Revenue from the sale of products is recognized when there is persuasive evidence that an arrangement exists, the product is shipped and title transfers to customers, provided no continuing obligation on the Company’s part exists, the price is fixed or determinable and the collectability of the amounts owed is reasonably assured. The Company enters into license and collaboration agreements under which it may receive upfront license fees, research funding and contingent milestone payments and royalties. The Company’s deliverables under these arrangements typically consist of granting licenses to intellectual property rights and providing research and development services. The accounting standards contain a presumption that separate contracts entered into at or near the same time with the same entity or related parties were negotiated as a package and should be evaluated as a single agreement. Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) Components of other comprehensive income (loss) are comprised entirely of unrealized gains and losses on the Company’s available-for-sale securities and marketable equity security for all periods presented. Total comprehensive loss has been disclosed in the Company’s Condensed Statements of Comprehensive Loss. The tax effect of the changes in accumulated other comprehensive income (loss) was immaterial for the periods presented. Accumulated other comprehensive income as of December 31, 2014 is entirely comprised of net unrealized gains on available-for-sale securities and a marketable equity security. Accumulated other comprehensive income as of September 30, 2015 is entirely comprised of net unrealized gains on available-for-sale securities. The following table summarizes changes in the components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2015 (in thousands): Balance at (Decrease)/ Reclassification Balance at 2015 Unrealized gain (loss) on available-for-sale investments, net of tax $ (7 ) $ 11 $ — $ 4 Unrealized gain on marketable equity security, net of tax 94 23 (117 ) — Total accumulated other comprehensive income (loss), net of tax 87 34 (117 ) 4 Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding and common stock equivalents (i.e., options to purchase common stock) outstanding during the period, if dilutive, using the treasury stock method for options and warrants. Options to purchase approximately 11.7 million and 16.5 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and nine months ended September 30, 2015, respectively, as the effect would be anti-dilutive. Options to purchase approximately 19.9 million and 19.6 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and nine months ended September 30, 2014, respectively, as the effect would be anti-dilutive. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued guidance codified in ASC 606, Revenue Recognition—Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The guidance provides companies with two implementation methods. Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). The standard was to have been effective for public entities for annual and interim periods beginning after December 15, 2016. In July 2015, the FASB voted to delay the effective date for this guidance. This guidance is effective for the Company in the first quarter of 2018. Early adoption up to the first quarter of 2017 is permitted. The Company is currently evaluating the impact of the provisions of ASC 606.

Strategic Agreements

Strategic Agreements	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Strategic Agreements	Note 2. Strategic Agreements The collaborative research and development and other revenues associated with the Company’s major third-party collaborators are as follows (in thousands): Three months ended Nine months ended 2015 2014 2015 2014 Collaborator Zogenix, Inc. (Zogenix) (1) $ 1,494 $ 1,253 $ 3,772 $ 3,417 Pain Therapeutics, Inc. (Pain Therapeutics) 346 473 509 1,170 Santen Pharmaceutical Co. Ltd. (Santen) (2) 93 — 641 — Pfizer Inc. (Pfizer) — 24 — 112 Impax Laboratories, Inc. (Impax) (3) — — — 2,090 Others 119 2 646 210 Total collaborative research and development and other revenue $ 2,052 $ 1,752 $ 5,568 $ 6,999 (1) Amounts related to ratable recognition of upfront fees were $64,000 and $191,000 for the three and nine months ended September 30, 2015 and 2014, respectively. (2) Amounts related to ratable recognition of upfront fees were $71,000 and $213,000 for the three and nine months ended September 30, 2015 respectively, compared to zero for the corresponding periods in 2014; the Company and Santen signed a license agreement effective December 11, 2014. (3) Amounts related to recognition of upfront fees were zero for both the three and nine months ended September 30, 2015, compared with zero and $2.0 million for the corresponding periods in 2014; the Company and Impax signed a license agreement effective January 3, 2014. Agreement with Pain Therapeutics, Inc. In December 2002, the Company entered into an exclusive agreement with Pain Therapeutics, Inc. (Pain Therapeutics) to develop and commercialize on a worldwide basis REMOXY and other oral sustained release, abuse deterrent opioid products incorporating four specified opioid drugs, using the ORADUR technology. Total collaborative research and development revenue recognized under the agreements with Pain Therapeutics was $346,000 and $509,000 for the three and nine months ended September 30, 2015, respectively compared with $473,000 and $1.2 million for the corresponding periods in 2014. In May 2015, Pain Therapeutics sent a letter to the Company that provided the Company with formal written notice that Pain Therapeutics is deleting, effective as of January 12, 2015, the opioid drug hydrocodone (and only hydrocodone) as a licensed product under the agreement. The letter does not alter the terms of the agreement regarding the remaining three licensed products (REMOXY, hydromorphone or oxymorphone) or otherwise amend the agreement. Under the agreement with Pain Therapeutics, subject to and upon the achievement of predetermined development and regulatory milestones for the three drug candidates, the Company is entitled to receive milestone payments of up to $7.2 million in the aggregate. The cumulative aggregate payments received by the Company from Pain Therapeutics as of September 30, 2015 were $37.9 million under this agreement. Under the terms of this agreement, Pain Therapeutics paid the Company an upfront license fee of $1.0 million, with the potential for an additional $7.2 million in performance milestone payments based on the successful development and approval of the three ORADUR-based opioids. Of these potential milestones, all $7.2 million are development-based milestones. As of September 30, 2015, the Company had received $1.7 million in cumulative milestone payments. There are no sales-based milestones under the agreement. In March 2009, King Pharmaceuticals (King) assumed the responsibility for further development of REMOXY from Pain Therapeutics. As a result of this change, the Company continued to perform REMOXY-related activities in accordance with the terms and conditions set forth in the license agreement between the Company and Pain Therapeutics. King was substituted in lieu of Pain Therapeutics with respect to interactions with the Company in its performance of those activities including the obligation to pay the Company with respect to all REMOXY-related costs incurred by the Company. In February 2011, Pfizer acquired King and thereby assumed the rights and obligations of King with respect to REMOXY; accordingly, amounts attributed to King are shown as Pfizer figures. In October 2014, Pfizer notified Pain Therapeutics that Pfizer had decided to discontinue development of REMOXY, and that Pfizer would return all rights, including responsibility for regulatory activities, to Pain Therapeutics and that Pfizer would continue ongoing activities under the agreement until the scheduled termination date in April 2015. In July 2015, Pain Therapeutics stated that it had substantially completed the transition of REMOXY from Pfizer, and that Pain Therapeutics expected to resubmit the NDA in the first quarter of 2016. Total collaborative research and development revenue recognized for REMOXY-related work performed by the Company for Pfizer was zero for the three and nine months ended September 30, 2015 compared with $24,000 and $112,000 for the corresponding periods in 2014. Total collaborative research and development revenue recognized for REMOXY-related work performed by the Company for Pain Therapeutics was $346,000 and $397,000 for the three and nine months ended September 30, 2015 compared with zero for the corresponding periods in 2014. Prior to March 2009, the Company recognized collaborative research and development revenue for REMOXY-related work under the agreements with Pain Therapeutics. The cumulative aggregate payments received by the Company from Pfizer as of September 30, 2015 were $7.1 million under this agreement. Long Term Supply Agreement with King (now Pfizer) In August 2009, the Company signed an exclusive long term excipient supply agreement with respect to REMOXY with King. In February 2011, Pfizer acquired King and thereby assumed the rights and obligations of King with respect to this long term supply agreement. This agreement stipulated the terms and conditions under which the Company would supply to King, based on the Company’s manufacturing cost plus a specified percentage mark-up, two key excipients used in the manufacture of REMOXY. The term of the agreement commenced in August 2009 and continued in effect until April 2015, when the related development and license agreement between Pain Therapeutics and King terminated. Total revenues recognized related to these excipients were zero and $96,000 in the three and nine months ended September 30, 2015 compared with $33,000 in each of the corresponding periods in 2014. The associated cost of goods sold was zero and $51,000 in the three and nine months ended September 30, 2015 compared with zero in each of the corresponding periods in 2014. Agreement with Zogenix, Inc. On July 11, 2011, the Company and Zogenix, Inc. (Zogenix) entered into a Development and License Agreement (the Zogenix Agreement). The Company and Zogenix had previously been working together under a feasibility agreement pursuant to which the Company’s research and development costs were reimbursed by Zogenix. Under the Zogenix Agreement, Zogenix will be responsible for the clinical development and commercialization of a proprietary, long-acting injectable formulation of risperidone using the Company’s SABER controlled-release formulation technology in combination with Zogenix’s DosePro ® Zogenix paid a non-refundable upfront fee to the Company of $2.25 million in July 2011. The Company’s research and development services are considered integral to utilizing the licensed intellectual property and, accordingly, the deliverables are accounted for as a single unit of accounting. The $2.25 million upfront fee will be recognized as collaborative research and development revenue ratably over the term of the Company’s continuing research and development involvement with Zogenix with respect to this product candidate. Zogenix is obligated to pay the Company up to $103 million in total future milestone payments with respect to the product subject to and upon the achievement of various developments, regulatory and sales milestones. Of these potential milestones, $28 million are development-based milestones (none of which has been achieved as of September 30, 2015), and $75 million are sales-based milestones (none of which has been achieved as of September 30, 2015). Zogenix is also required to pay a mid single-digit to low double-digit percentage patent royalty on annual net sales of the product determined on a jurisdiction-by-jurisdiction basis. The patent royalty term is equal to the later of the expiration of all DURECT technology patents or joint patent rights in a particular jurisdiction, the expiration of marketing exclusivity rights in such jurisdiction, or 15 years from first commercial sale in such jurisdiction. After the patent royalty term, Zogenix will continue to pay royalties on annual net sales of the product at a reduced rate for so long as Zogenix continues to sell the product in the jurisdiction. Zogenix is also required to pay to the Company a tiered percentage of fees received in connection with any sublicense of the licensed rights. The Company granted to Zogenix an exclusive worldwide license, with sub-license rights, to the Company’s intellectual property rights related to the Company’s proprietary polymeric and non-polymeric controlled-release formulation technology to make and have made, use, offer for sale, sell and import risperidone products, where risperidone is the sole active agent, for administration by injection in the treatment of schizophrenia, bipolar disorder or other psychiatric related disorders in humans. The Company retains the right to supply Zogenix’s Phase III clinical trial and commercial product requirements on the terms set forth in the Zogenix Agreement. Zogenix may terminate the Zogenix Agreement without cause at any time upon prior written notice, and either party may terminate the Zogenix Agreement upon certain circumstances including written notice of a material uncured breach. The following table provides a summary of collaborative research and development revenue recognized under the agreements with Zogenix (in thousands). The cumulative aggregate payments received by the Company as of September 30, 2015 were $17.9 million under these agreements. Three months ended Nine months ended 2015 2014 2015 2014 Ratable recognition of upfront payment $ 64 $ 64 $ 191 $ 191 Research and development expenses reimbursable by Zogenix 1,430 1,189 3,581 3,226 Total collaborative research and development revenue $ 1,494 $ 1,253 $ 3,772 $ 3,417 Agreement with Impax Laboratories, Inc. On January 3, 2014, the Company and Impax Laboratories, Inc. (Impax) entered into a definitive agreement (the Impax Agreement). Pursuant to the Agreement, the Company has granted Impax an exclusive worldwide license to the Company’s proprietary TRANSDUR transdermal delivery technology and other intellectual property to develop and commercialize ELADUR, the Company’s investigational transdermal bupivacaine patch for the treatment of pain associated with post-herpetic neuralgia (PHN), in addition to selling certain assets and rights in and related to the product. Impax will control and fund the development and commercialization programs, and the parties will establish a joint management committee to oversee, review and coordinate the development and commercialization activities of the parties under the Impax Agreement. Impax will reimburse the Company for certain future research and development it may be requested to conduct on the product. In connection with the Agreement, Impax paid a non-refundable upfront fee to the Company of $2.0 million in January 2014. The Company’s technology transfer activities were considered integral to utilizing the licensed intellectual property and, accordingly, the deliverables were accounted for as a single unit of accounting. The $2.0 million upfront fee was recognized as collaborative research and development revenue in the first quarter of 2014 when the license to the intellectual property right was delivered and the technology transfer with respect to this product candidate was completed. Impax agreed to make contingent cash payments to the Company of up to $61.0 million payable based upon the achievement of predefined milestones, of which $31.0 million are development-based milestones and $30.0 million are sales-based milestones (none of which has been achieved as of September 30, 2015). Since the milestones are expected to be achieved at points in time when there are no performance obligations or remaining deliverables of the Company, each milestone is expected to be recognized in full upon achievement. Upon the first commercialization of ELADUR by Impax, the Company would also receive a tiered mid single-digit to low double-digit royalty on annual net product sales determined on a country-by-country basis. Impax is also required to pay to the Company a percentage of fees received in connection with any sublicense of the licensed rights. Impax may terminate the Impax Agreement without cause at any time upon prior written notice, and either party may terminate the Impax Agreement upon certain circumstances including written notice of a material uncured breach. The following table provides a summary of collaborative research and development revenue recognized under the Impax Agreement (in thousands). The cumulative aggregate payments received by the Company as of September 30, 2015 were $2.1 million under the agreement. Three months ended Nine months ended 2015 2014 2015 2014 Recognition of upfront payment $ — $ — $ — $ 2,000 Research and development expenses reimbursable by Impax — — — 90 Total collaborative research and development revenue $ — $ — $ — $ 2,090 Agreement with Santen Pharmaceutical Co., Ltd. On December 11, 2014, the Company and Santen Pharmaceutical Co., Ltd. (Santen) entered into a definitive agreement (the Santen Agreement). Pursuant to the Santen Agreement, the Company granted Santen an exclusive worldwide license to the Company’s proprietary SABER formulation platform and other intellectual property to develop and commercialize a sustained release product utilizing the Company’s SABER technology to deliver an ophthalmology drug. Santen will control and fund the development and commercialization program, and the parties will establish a joint management committee to oversee, review and coordinate the development activities of the parties under the Santen Agreement. In connection with the Santen agreement, Santen agreed to pay the Company an upfront fee of $2.0 million in cash and to make contingent cash payments to the Company of up to $76.0 million upon the achievement of certain milestones, of which $13.0 million are development-based milestones and $63.0 million are commercialization-based milestones including milestones requiring the achievement of certain product sales targets (none of which has been achieved as of September 30, 2015). Santen will also pay for certain Company costs incurred in the development of the licensed product. If the product is commercialized, the Company would also receive a tiered royalty on annual net product sales ranging from single-digit to the low double digits, determined on a country-by-country basis. Santen may terminate the Santen Agreement without cause at any time upon prior written notice, and either party may terminate the Santen Agreement upon certain circumstances including written notice of a material uncured breach. As of September 30, 2015, the cumulative aggregate payments received by the Company under this agreement were $2.4 million. The following table provides a summary of collaborative research and development revenue recognized under the Santen Agreement (in thousands). Three months ended Nine months ended 2015 2014 2015 2014 Ratable recognition of upfront payment $ 71 $ — $ 213 $ — Research and development expenses reimbursable by Santen 22 — 428 — Total collaborative research and development revenue $ 93 $ — $ 641 $ —

Financial Instruments

Financial Instruments	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
Financial Instruments	Note 3. Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company’s valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company follows a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. These levels of inputs are the following: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company’s financial instruments are valued using quoted prices in active markets or based upon other observable inputs. Money market funds are classified as Level 1 financial assets. Certificates of deposit, commercial paper, corporate debt securities, and U.S. Government agency securities are classified as Level 2 financial assets. The fair value of the Level 2 assets is estimated using pricing models using current observable market information for similar securities. The Company’s Level 2 investments include U.S. government-backed securities and corporate securities that are valued based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. The fair value of the Company’s commercial paper is based upon the time to maturity and discounted using the three-month treasury bill rate. The average remaining maturity of the Company’s Level 2 investments as of September 30, 2015 is less than twelve months and these investments are rated by S&P and Moody’s at AAA or AA- for securities and A1 or P1 for commercial paper. The Company does not currently hold any investments that would be classified as Level 3 financial assets. The following is a summary of money market funds and available-for-sale securities as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Amortized Unrealized Unrealized Estimated Money market funds $ 11 $ — $ — $ 11 Certificates of deposit 250 — — 250 Commercial paper 4,574 — — 4,574 Corporate debt 6,212 1 — 6,213 U.S. Government agencies 17,589 3 — 17,592 $ 28,636 $ 4 $ — $ 28,640 Reported as: Cash and cash equivalents $ 1,585 $ — $ — $ 1,585 Short-term investments 26,801 4 — 26,805 Long-term restricted investments 250 — — 250 $ 28,636 $ 4 $ — $ 28,640 December 31, 2014 Amortized Unrealized Unrealized Estimated Money market funds $ 1,558 $ — $ — $ 1,558 Certificates of deposit 350 — — 350 Marketable equity security — 155 — 155 Commercial paper 1,250 — — 1,250 Corporate debt 7,744 — (4 ) 7,740 U.S. Government agencies 22,678 2 (5 ) 22,675 $ 33,580 $ 157 $ (9 ) $ 33,728 Reported as: Cash and cash equivalents $ 1,558 $ — $ — $ 1,558 Short-term investments 29,867 157 (8 ) 30,016 Long-term investments 1,805 — (1 ) 1,804 Long-term restricted investments 350 — — 350 $ 33,580 $ 157 $ (9 ) $ 33,728 The following is a summary of the cost and estimated fair value of available-for-sale securities at September 30, 2015, by contractual maturity (in thousands): September 30, 2015 Amortized Estimated Mature in one year or less $ 28,625 $ 28,629 Mature after one year through five years — — $ 28,625 $ 28,629 There were no securities that have had an unrealized loss for more than 12 months as of September 30, 2015. As of September 30, 2015, unrealized losses on available-for-sale investments are not attributed to credit risk and are considered to be temporary. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Note 4. Stock-Based Compensation As of September 30, 2015, the Company has three stock-based compensation plans. The stock-based compensation cost that has been included in the statements of comprehensive loss is shown as below (in thousands): Three months ended Nine months ended 2015 2014 2015 2014 Cost of product revenues $ 25 $ 37 $ 81 $ 112 Research and development 359 432 1,042 1,271 Selling, general and administrative 308 328 843 915 Total stock-based compensation $ 692 $ 797 $ 1,966 $ 2,298 As of September 30, 2015 and December 31, 2014, $13,000 and $13,000 of stock-based compensation cost was capitalized in inventory on the Company’s balance sheets, respectively. The Company uses the Black-Scholes option pricing model to value its stock options. The expected life computation is based on historical exercise patterns and post-vesting termination behavior. The Company considered its historical volatility in developing its estimate of expected volatility. The Company used the following assumptions to estimate the fair value of stock options granted (including fully vested options issued in January 2015 and 2014) and shares purchased under its employee stock purchase plan for the three and nine months ended September 30, 2015 and 2014: Three months ended Nine months ended 2015 2014 2015 2014 Stock options Risk-free rate 1.9-2.4 % 2.1-2.6 % 1.0-2.4 % 2.0-2.8 % Expected dividend yield — — — — Expected life of option (in years) 7.0-10.0 6.5-9.9 6.5-10.0 6.5-10.0 Volatility 78-84 % 76-82 % 78-85 % 76-84 % Three months ended Nine months ended 2015 2014 2015 2014 Employee Stock Purchase Plan Risk-free rate 0.1 % 0.1 % 0.1 % 0.1 % Expected dividend yield — — — — Expected life of option (in years) 0.5 0.5 0.5 0.5 Volatility 76 % 60 % 76-95 % 60-81 %

Long-Term Debt

Long-Term Debt	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
Long-Term Debt	Note 5. Long-Term Debt On June 26, 2014, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Oxford Finance LLC, pursuant to which Oxford provided a $20 million secured single-draw term loan to the Company with a maturity date of July 1, 2018. The term loan was fully drawn at close and the proceeds are to be used for working capital and general business requirements. The term loan repayment schedule provides for interest only payments for the first 18 months, followed by consecutive equal monthly payments of principal and interest in arrears starting on February 1, 2016 and continuing through the maturity date. The Loan Agreement provides for a 7.95% interest rate on the term loan, a $150,000 facility fee that was paid at closing and an additional payment equal to 8% of the principal amount of the term loan, which is due when the term loan becomes due or upon the prepayment of the facility. If the Company elects to prepay the loan, there is also a prepayment fee between 1% and 3% of the principal amount of the term loan depending on the timing and circumstances of prepayment. In connection with the term loan, the Company received proceeds of $19.8 million, net of debt offering/issuance costs. The debt offering/issuance costs have been recorded as debt discount on the Company’s balance sheet which together with the final $1.6 million payment and fixed interest rate payments will be amortized to interest expense throughout the life of the term loan using the effective interest rate method. The term loan is secured by substantially all of the assets of the Company, except that the collateral does not include any intellectual property (including licensing, collaboration and similar agreements relating thereto), and certain other excluded assets. The Loan Agreement contains customary representations, warranties and covenants by the Company, which covenants limit the Company’s ability to convey, sell, lease, transfer, assign or otherwise dispose of certain assets of the Company; engage in any business other than the businesses currently engaged in by the Company or reasonably related thereto; liquidate or dissolve; make certain management changes; undergo certain change of control events; create, incur, assume, or be liable with respect to certain indebtedness; grant certain liens; pay dividends and make certain other restricted payments; make certain investments; and make payments on any subordinated debt. The Loan Agreement also contains customary indemnification obligations and customary events of default, including, among other things, our failure to fulfill certain obligations of the Company under the Loan Agreement and the occurrence of a material adverse change which is defined as a material adverse change in the Company’s business, operations, or condition (financial or otherwise), a material impairment of the prospect of repayment of any portion of the loan, or a material impairment in the perfection or priority of lender’s lien in the collateral or in the value of such collateral. In the event of default by the Company under the Loan Agreement, the lender would be entitled to exercise its remedies thereunder, including the right to accelerate the debt, upon which the Company may be required to repay all amounts then outstanding under the Loan Agreement, which could harm the Company’s financial condition. The conditionally exercisable call option related to the event of default is considered to be an embedded derivative which is required to be bifurcated and accounted for as a separate financial instrument. In the periods presented, the value of the embedded derivative is not material, but could become material in future periods if an event of default became more probable than is currently estimated. In July 2015, the Company and Oxford Finance entered into the First Amendment of the Loan Agreement and modified the terms to the Loan Agreement to change the maturity date from July 1, 2018 to July 1, 2019 and to change the first principal payment date from February 1, 2016 to February 1, 2017. The interest rate remains unchanged, the Company paid a loan modification fee of $240,000 and the additional payment originally equal to 8% of the principal amount of the term loan, which is due when the term loan becomes due or upon the prepayment of the facility, was increased to 10%. As of September 30, 2015, the Company was in compliance with all material covenants under the Loan Agreement and there had been no material adverse change. As of September 30, 2015, the carrying value of the term loan approximated its fair value based on Level 3 unobservable inputs involving discounted cash flows and the estimated market rate of borrowing that could be obtained by companies with credit risk similar to the Company’s credit risk. Future maturities and interest payments under the term loan as of September 30, 2015, are as follows (in thousands): Three months ended December 31, 2015 $ 398 2016 1,590 2017 8,848 2018 8,848 2019 6,423 Total minimum payments 26,107 Less amount representing interest (6,107 ) Gross balance of long-term debt 20,000 Less unamortized debt discount (350 ) Carrying value of long-term debt 19,650 Less current portion of long-term debt — Long-term debt, less current portion and unamortized debt discount $ 19,650 Interest expense, including amortization of the debt discount, related to the long-term debt was $557,000 and $1.7 million for the three and nine months ended September 30, 2015, respectively, compared to $557,000 and $588,000 for the corresponding periods in 2014. Accrued interest, which is included in other long-term liabilities, was approximately $701,000 as of September 30, 2015.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2015
Equity [Abstract]
Stockholders' Equity	Note 6. Stockholders’ Equity In December 2013, the Company filed a shelf registration statement on Form S-3 with the SEC, which upon being declared effective in January 2014, allows for the offer of up to $100.9 million of securities from time to time in one or more public offerings of common stock. In addition, the Company entered into a Controlled Equity Offering SM

Summary of Significant Accoun12

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Nature of Operations	Nature of Operations DURECT Corporation (the Company) was incorporated in the state of Delaware on February 6, 1998. The Company is a biopharmaceutical company focused on the development of pharmaceuticals based on its proprietary drug delivery technology platforms, new chemical entities derived from its Epigenomic Regulator Program, and its expertise in drug development. The Company has several products under development by itself and with third party collaborators. The Company also manufactures and sells osmotic pumps used in laboratory research, and designs, develops and manufactures a wide range of standard and custom biodegradable polymers and excipients for pharmaceutical and medical device clients for use as raw materials in their products. In addition, the Company conducts research and development of pharmaceutical products in collaboration with third party pharmaceutical and biotechnology companies.
Basis of Presentation	Basis of Presentation The accompanying unaudited financial statements include the accounts of the Company. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and therefore do not include all the information and footnotes necessary for a complete presentation of the Company’s results of operations, financial position and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). The unaudited financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position at September 30, 2015, the operating results and comprehensive loss for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The balance sheet as of December 31, 2014 has been derived from audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These financial statements and notes should be read in conjunction with the Company’s audited financial statements and notes thereto, included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC. The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.
Inventories	Inventories Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out basis. Inventories, in part, include certain excipients that are sold to customers and included in products in development. These inventories are capitalized based on management’s judgment of probable sale prior to their expiration date which in turn is primarily based on management’s internal estimates. The valuation of inventory requires management to estimate the value of inventory that may become expired prior to use. The Company may be required to expense previously capitalized inventory costs upon a change in management’s judgment, due to, among other potential factors, a denial or delay of approval of a product by the necessary regulatory bodies, or new information that suggests that the inventory will not be saleable. In addition, these circumstances may cause the Company to record a liability related to minimum purchase agreements that the Company has in place for raw materials. In 2014, the Company recorded charges to cost of goods sold of approximately $1.6 million, of which approximately $1.1 million related to the write-down of the cost basis of inventory and $500,000 related to the accrual of a liability for the minimum purchase commitment for the excipients. As of September 30, 2015, the remaining carrying value of the excipients in the Company’s inventory was $1.1 million. In addition, the Company has remaining unrecorded future purchase commitments totaling $2.0 million through 2018. In the event that management determines that the Company will not utilize all of these materials, there could be a potential write-off related to this inventory and/or a reserve for future purchase commitments. September 30, December 31, (unaudited) Raw materials $ 1,177 $ 1,242 Work in process 1,534 1,120 Finished goods 1,261 1,280 Total inventories $ 3,972 $ 3,642
Revenue Recognition	Revenue Recognition Revenue from the sale of products is recognized when there is persuasive evidence that an arrangement exists, the product is shipped and title transfers to customers, provided no continuing obligation on the Company’s part exists, the price is fixed or determinable and the collectability of the amounts owed is reasonably assured. The Company enters into license and collaboration agreements under which it may receive upfront license fees, research funding and contingent milestone payments and royalties. The Company’s deliverables under these arrangements typically consist of granting licenses to intellectual property rights and providing research and development services. The accounting standards contain a presumption that separate contracts entered into at or near the same time with the same entity or related parties were negotiated as a package and should be evaluated as a single agreement.
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)	Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) Components of other comprehensive income (loss) are comprised entirely of unrealized gains and losses on the Company’s available-for-sale securities and marketable equity security for all periods presented. Total comprehensive loss has been disclosed in the Company’s Condensed Statements of Comprehensive Loss. The tax effect of the changes in accumulated other comprehensive income (loss) was immaterial for the periods presented. Accumulated other comprehensive income as of December 31, 2014 is entirely comprised of net unrealized gains on available-for-sale securities and a marketable equity security. Accumulated other comprehensive income as of September 30, 2015 is entirely comprised of net unrealized gains on available-for-sale securities. The following table summarizes changes in the components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2015 (in thousands): Balance at (Decrease)/ Reclassification Balance at 2015 Unrealized gain (loss) on available-for-sale investments, net of tax $ (7 ) $ 11 $ — $ 4 Unrealized gain on marketable equity security, net of tax 94 23 (117 ) — Total accumulated other comprehensive income (loss), net of tax 87 34 (117 ) 4
Net Income (Loss) Per Share	Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding. Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding and common stock equivalents (i.e., options to purchase common stock) outstanding during the period, if dilutive, using the treasury stock method for options and warrants. Options to purchase approximately 11.7 million and 16.5 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and nine months ended September 30, 2015, respectively, as the effect would be anti-dilutive. Options to purchase approximately 19.9 million and 19.6 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and nine months ended September 30, 2014, respectively, as the effect would be anti-dilutive.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued guidance codified in ASC 606, Revenue Recognition—Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The guidance provides companies with two implementation methods. Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). The standard was to have been effective for public entities for annual and interim periods beginning after December 15, 2016. In July 2015, the FASB voted to delay the effective date for this guidance. This guidance is effective for the Company in the first quarter of 2018. Early adoption up to the first quarter of 2017 is permitted. The Company is currently evaluating the impact of the provisions of ASC 606.

Summary of Significant Accoun13

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Summary of Components of Inventories	September 30, December 31, (unaudited) Raw materials $ 1,177 $ 1,242 Work in process 1,534 1,120 Finished goods 1,261 1,280 Total inventories $ 3,972 $ 3,642
Summary of Changes in Components of Accumulated Other Comprehensive Income (Loss), Net of Tax	The following table summarizes changes in the components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2015 (in thousands): Balance at (Decrease)/ Reclassification Balance at 2015 Unrealized gain (loss) on available-for-sale investments, net of tax $ (7 ) $ 11 $ — $ 4 Unrealized gain on marketable equity security, net of tax 94 23 (117 ) — Total accumulated other comprehensive income (loss), net of tax 87 34 (117 ) 4

Strategic Agreements (Tables)

Strategic Agreements (Tables)	9 Months Ended
	Sep. 30, 2015
Summary of Collaborative Research and Development and Other Revenues Associated with Company's Major Third-Party Collaborators	The collaborative research and development and other revenues associated with the Company’s major third-party collaborators are as follows (in thousands): Three months ended Nine months ended 2015 2014 2015 2014 Collaborator Zogenix, Inc. (Zogenix) (1) $ 1,494 $ 1,253 $ 3,772 $ 3,417 Pain Therapeutics, Inc. (Pain Therapeutics) 346 473 509 1,170 Santen Pharmaceutical Co. Ltd. (Santen) (2) 93 — 641 — Pfizer Inc. (Pfizer) — 24 — 112 Impax Laboratories, Inc. (Impax) (3) — — — 2,090 Others 119 2 646 210 Total collaborative research and development and other revenue $ 2,052 $ 1,752 $ 5,568 $ 6,999 (1) Amounts related to ratable recognition of upfront fees were $64,000 and $191,000 for the three and nine months ended September 30, 2015 and 2014, respectively. (2) Amounts related to ratable recognition of upfront fees were $71,000 and $213,000 for the three and nine months ended September 30, 2015 respectively, compared to zero for the corresponding periods in 2014; the Company and Santen signed a license agreement effective December 11, 2014. (3) Amounts related to recognition of upfront fees were zero for both the three and nine months ended September 30, 2015, compared with zero and $2.0 million for the corresponding periods in 2014; the Company and Impax signed a license agreement effective January 3, 2014.
Agreement with Zogenix, Inc. [Member]
Summary of Collaborative Research and Development Revenue Recognized	The following table provides a summary of collaborative research and development revenue recognized under the agreements with Zogenix (in thousands). The cumulative aggregate payments received by the Company as of September 30, 2015 were $17.9 million under these agreements. Three months ended Nine months ended 2015 2014 2015 2014 Ratable recognition of upfront payment $ 64 $ 64 $ 191 $ 191 Research and development expenses reimbursable by Zogenix 1,430 1,189 3,581 3,226 Total collaborative research and development revenue $ 1,494 $ 1,253 $ 3,772 $ 3,417
Agreement with Impax Laboratories, Inc. [Member]
Summary of Collaborative Research and Development Revenue Recognized	The following table provides a summary of collaborative research and development revenue recognized under the Impax Agreement (in thousands). The cumulative aggregate payments received by the Company as of September 30, 2015 were $2.1 million under the agreement. Three months ended Nine months ended 2015 2014 2015 2014 Recognition of upfront payment $ — $ — $ — $ 2,000 Research and development expenses reimbursable by Impax — — — 90 Total collaborative research and development revenue $ — $ — $ — $ 2,090
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Summary of Collaborative Research and Development Revenue Recognized	The following table provides a summary of collaborative research and development revenue recognized under the Santen Agreement (in thousands). Three months ended Nine months ended 2015 2014 2015 2014 Ratable recognition of upfront payment $ 71 $ — $ 213 $ — Research and development expenses reimbursable by Santen 22 — 428 — Total collaborative research and development revenue $ 93 $ — $ 641 $ —

Financial Instruments (Tables)

Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
Summary of Money Market Funds and Available-for-Sale Securities	The following is a summary of money market funds and available-for-sale securities as of September 30, 2015 and December 31, 2014 (in thousands): September 30, 2015 Amortized Unrealized Unrealized Estimated Money market funds $ 11 $ — $ — $ 11 Certificates of deposit 250 — — 250 Commercial paper 4,574 — — 4,574 Corporate debt 6,212 1 — 6,213 U.S. Government agencies 17,589 3 — 17,592 $ 28,636 $ 4 $ — $ 28,640 Reported as: Cash and cash equivalents $ 1,585 $ — $ — $ 1,585 Short-term investments 26,801 4 — 26,805 Long-term restricted investments 250 — — 250 $ 28,636 $ 4 $ — $ 28,640 December 31, 2014 Amortized Unrealized Unrealized Estimated Money market funds $ 1,558 $ — $ — $ 1,558 Certificates of deposit 350 — — 350 Marketable equity security — 155 — 155 Commercial paper 1,250 — — 1,250 Corporate debt 7,744 — (4 ) 7,740 U.S. Government agencies 22,678 2 (5 ) 22,675 $ 33,580 $ 157 $ (9 ) $ 33,728 Reported as: Cash and cash equivalents $ 1,558 $ — $ — $ 1,558 Short-term investments 29,867 157 (8 ) 30,016 Long-term investments 1,805 — (1 ) 1,804 Long-term restricted investments 350 — — 350 $ 33,580 $ 157 $ (9 ) $ 33,728
Summary of Cost and Estimated Fair Value of Available-for-Sale Securities by Contractual Maturity	The following is a summary of the cost and estimated fair value of available-for-sale securities at September 30, 2015, by contractual maturity (in thousands): September 30, 2015 Amortized Estimated Mature in one year or less $ 28,625 $ 28,629 Mature after one year through five years — — $ 28,625 $ 28,629

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock-Based Compensation Cost that has been Included in Statements of Comprehensive Loss	As of September 30, 2015, the Company has three stock-based compensation plans. The stock-based compensation cost that has been included in the statements of comprehensive loss is shown as below (in thousands): Three months ended Nine months ended 2015 2014 2015 2014 Cost of product revenues $ 25 $ 37 $ 81 $ 112 Research and development 359 432 1,042 1,271 Selling, general and administrative 308 328 843 915 Total stock-based compensation $ 692 $ 797 $ 1,966 $ 2,298
Summary of Assumptions Used to Estimate Fair Value of Options Granted and Shares Purchased	The Company used the following assumptions to estimate the fair value of stock options granted (including fully vested options issued in January 2015 and 2014) and shares purchased under its employee stock purchase plan for the three and nine months ended September 30, 2015 and 2014: Three months ended Nine months ended 2015 2014 2015 2014 Stock options Risk-free rate 1.9-2.4 % 2.1-2.6 % 1.0-2.4 % 2.0-2.8 % Expected dividend yield — — — — Expected life of option (in years) 7.0-10.0 6.5-9.9 6.5-10.0 6.5-10.0 Volatility 78-84 % 76-82 % 78-85 % 76-84 % Three months ended Nine months ended 2015 2014 2015 2014 Employee Stock Purchase Plan Risk-free rate 0.1 % 0.1 % 0.1 % 0.1 % Expected dividend yield — — — — Expected life of option (in years) 0.5 0.5 0.5 0.5 Volatility 76 % 60 % 76-95 % 60-81 %

Long-Term Debt (Tables)

Long-Term Debt (Tables)	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
Schedule of Future Maturities and Interest Payments under Term Loan	Future maturities and interest payments under the term loan as of September 30, 2015, are as follows (in thousands): Three months ended December 31, 2015 $ 398 2016 1,590 2017 8,848 2018 8,848 2019 6,423 Total minimum payments 26,107 Less amount representing interest (6,107 ) Gross balance of long-term debt 20,000 Less unamortized debt discount (350 ) Carrying value of long-term debt 19,650 Less current portion of long-term debt — Long-term debt, less current portion and unamortized debt discount $ 19,650

Summary of Significant Accoun18

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) shares in Millions	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Summary Of Significant Accounting Policies [Line Items]
State of incorporation			Delaware
Date of incorporation			Feb. 6, 1998
Cost of goods sold	$ 884,000	$ 2,337,000	$ 2,912,000	$ 4,491,000
Write-down of the cost basis of inventory			180,000	$ 1,214,000
Inventories	$ 3,972,000		$ 3,972,000		$ 3,642,000
Options to Purchase Common Stock [Member]
Summary Of Significant Accounting Policies [Line Items]
Options to purchase common stock excluded from the denominator in the calculation of diluted net loss per share	11.7	19.9	16.5	19.6
Agreement with Pain Therapeutics, Inc. [Member]
Summary Of Significant Accounting Policies [Line Items]
Cost of goods sold					1,600,000
Write-down of the cost basis of inventory					1,100,000
Minimum purchase commitment					$ 500,000
Inventories	$ 1,100,000		$ 1,100,000
Remaining unrecorded future purchase commitments	$ 2,000,000		$ 2,000,000

Summary of Significant Accoun19

Summary of Significant Accounting Policies - Summary of Components of Inventories (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Inventory, Net [Abstract]
Raw materials	$ 1,177	$ 1,242
Work in process	1,534	1,120
Finished goods	1,261	1,280
Total inventories	$ 3,972	$ 3,642

Summary of Significant Accoun20

Summary of Significant Accounting Policies - Summary of Changes in Components of Accumulated Other Comprehensive Income (Loss), Net of Tax (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ 87
(Decrease)/ Increase	34
Reclassification Adjustment	(117)
Ending balance	4
Unrealized gain (loss) on available-for-sale investments, net of tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(7)
(Decrease)/ Increase	11
Ending balance	4
Unrealized gain on marketable equity security, net of tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	94
(Decrease)/ Increase	23
Reclassification Adjustment	$ (117)

Strategic Agreements - Summary

Strategic Agreements - Summary of Collaborative Research and Development and Other Revenues Associated with Company's Major Third-Party Collaborators (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	$ 2,052	$ 1,752	$ 5,568	$ 6,999
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	1,494	1,253	3,772	3,417
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	93		641
Agreement with Impax Laboratories, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue				2,090
Agreement with Pain Therapeutics, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	346	473	509	1,170
Agreement with Pfizer [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	0	24	0	112
Agreements With Other Third Party Collaborators [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	$ 119	$ 2	$ 646	$ 210

Strategic Agreements - Summar22

Strategic Agreements - Summary of Collaborative Research and Development and Other Revenues Associated with Company's Major Third-Party Collaborators (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amounts related to the ratable recognition of upfront fees	$ 64	$ 64	$ 191	$ 191
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amounts related to the ratable recognition of upfront fees	71	0	213	0
Agreement with Impax Laboratories, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amounts related to the ratable recognition of upfront fees	$ 0	$ 0	$ 0	$ 2,000

Strategic Agreements - Agreemen

Strategic Agreements - Agreement with Pain Therapeutics, Inc. - Additional Information (Detail)	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended	154 Months Ended
	Dec. 31, 2002Drug	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2015USD ($)DrugLicense	Sep. 30, 2014USD ($)	Dec. 31, 2014USD ($)	Sep. 30, 2015USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue		$ 2,052,000	$ 1,752,000	$ 5,568,000	$ 6,999,000
Product revenue, net		2,691,000	2,506,000	8,389,000	8,133,000
Cost of goods sold		884,000	2,337,000	$ 2,912,000	4,491,000
Agreement with Pain Therapeutics, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of specified opioid drugs | Drug	4			3
Total collaborative research and development and other revenue		346,000	473,000	$ 509,000	1,170,000
Number of remaining licensed products | License				3
Performance milestone payments based on successful development		7,200,000		$ 7,200,000			$ 7,200,000
Cumulative aggregate payments received by the Company				37,900,000
Upfront license fee				1,000,000
Cost of goods sold						$ 1,600,000
Agreement with Pain Therapeutics, Inc. [Member] | Development-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Performance milestone payments based on successful development		7,200,000		7,200,000			7,200,000
Revenue recognition milestone achieved				1,700,000
Agreement with Pain Therapeutics, Inc. [Member] | Sales-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Performance milestone payments based on successful development		0		0			0
Agreement with Pfizer [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue		0	24,000	0	112,000
Cumulative aggregate payments received by the Company							$ 7,100,000
Product revenue, net		0	33,000	96,000	33,000
Cost of goods sold		$ 0	$ 0	$ 51,000	$ 0

Strategic Agreements - Agreem24

Strategic Agreements - Agreement with Zogenix, Inc. - Additional Information (Detail) - Agreement with Zogenix, Inc. [Member] - USD ($)	1 Months Ended	9 Months Ended	50 Months Ended
	Jul. 31, 2011	Sep. 30, 2015	Sep. 30, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments		$ 103,000,000	$ 103,000,000
Patent royalty term		15 years
Cumulative aggregate payments received by the Company		$ 17,900,000
Development-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments		28,000,000	28,000,000
Revenue recognition milestone achieved			0
Sales-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments		75,000,000	75,000,000
Revenue recognition milestone achieved			$ 0
Up-front Payment Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Non-refundable upfront fee	$ 2,250,000	$ 2,250,000

Strategic Agreements - Summar25

Strategic Agreements - Summary of Collaborative Research and Development Revenue Recognized (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development revenue	$ 2,052	$ 1,752	$ 5,568	$ 6,999
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Ratable recognition of upfront payment	64	64	191	191
Research and development expenses reimbursable by the Company	1,430	1,189	3,581	3,226
Total collaborative research and development revenue	1,494	1,253	3,772	3,417
Agreement with Impax Laboratories, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Ratable recognition of upfront payment	0	0	0	2,000
Research and development expenses reimbursable by the Company				90
Total collaborative research and development revenue				2,090
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Ratable recognition of upfront payment	71	$ 0	213	$ 0
Research and development expenses reimbursable by the Company	22		428
Total collaborative research and development revenue	$ 93		$ 641

Strategic Agreements - Agreem26

Strategic Agreements - Agreement with Impax Laboratories, Inc. - Additional Information (Detail) - Agreement with Impax Laboratories, Inc. [Member] - USD ($)	Jan. 03, 2014	Sep. 30, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Non-refundable upfront fee	$ 2,000,000
Future milestone payments	61,000,000
Cumulative aggregate payments received by the Company		$ 2,100,000
Development-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments	31,000,000
Sales-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments	$ 30,000,000
Revenue recognition milestone achieved		$ 0

Strategic Agreements - Agreem27

Strategic Agreements - Agreement with Santen Pharmaceutical Co., Ltd. - Additional Information (Detail) - Agreement with Santen Pharmaceutical Co., Ltd. [Member] - USD ($)	Dec. 11, 2014	Sep. 30, 2015
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront license fee	$ 2,000,000
Future milestone payments	76,000,000
Cumulative aggregate payments received by the Company		$ 2,400,000
Development-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments	13,000,000
Commercialization-Based Milestones [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments	$ 63,000,000
Revenue recognition milestone achieved		$ 0

Financial Instruments - Summary

Financial Instruments - Summary of Money Market Funds and Available-for-Sale Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 28,636	$ 33,580
Unrealized Gain	4	157
Unrealized Loss		(9)
Estimated Fair Value	28,640	33,728
Money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11	1,558
Estimated Fair Value	11	1,558
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	250	350
Estimated Fair Value	250	350
Marketable equity security [Member]
Schedule of Available-for-sale Securities [Line Items]
Unrealized Gain		155
Estimated Fair Value		155
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,574	1,250
Estimated Fair Value	4,574	1,250
Corporate debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	6,212	7,744
Unrealized Gain	1
Unrealized Loss		(4)
Estimated Fair Value	6,213	7,740
U.S. Government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	17,589	22,678
Unrealized Gain	3	2
Unrealized Loss		(5)
Estimated Fair Value	17,592	22,675
Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,585	1,558
Estimated Fair Value	1,585	1,558
Short-term investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	26,801	29,867
Unrealized Gain	4	157
Unrealized Loss		(8)
Estimated Fair Value	26,805	30,016
Long-term restricted investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	250	350
Estimated Fair Value	$ 250	350
Long-term investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,805
Unrealized Loss		(1)
Estimated Fair Value		$ 1,804

Financial Instruments - Summa29

Financial Instruments - Summary of Cost and Estimated Fair Value of Available-for-Sale Securities by Contractual Maturity (Detail) $ in Thousands	Sep. 30, 2015USD ($)
Investments, Debt and Equity Securities [Abstract]
Mature in one year or less, Amortized Cost	$ 28,625
Mature after one year through five years, Amortized Cost	0
Amortized Cost	28,625
Mature in one year or less, Estimated Fair Value	28,629
Mature after one year through five years, Estimated Fair Value	0
Estimated Fair Value	$ 28,629

Financial Instruments - Additio

Financial Instruments - Additional Information (Detail)	Sep. 30, 2015USD ($)
Investments, Debt and Equity Securities [Abstract]
Unrealized loss of securities	$ 0

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock-Based Compensation Cost that has been Included in Statements of Comprehensive Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	$ 692	$ 797	$ 1,966	$ 2,298
Cost of product revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	25	37	81	112
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	359	432	1,042	1,271
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	$ 308	$ 328	$ 843	$ 915

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation cost capitalized in inventory	$ 13,000	$ 13,000

Stock-Based Compensation - Su33

Stock-Based Compensation - Summary of Assumptions Used to Estimate Fair Value of Options Granted and Shares Purchased (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Employees Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate	0.10%	0.10%	0.10%	0.10%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Expected life of option (in years)	6 months	6 months	6 months	6 months
Volatility	76.00%	60.00%
Volatility, minimum			76.00%	60.00%
Volatility, maximum			95.00%	81.00%
Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate, minimum	1.90%	2.10%	1.00%	2.00%
Risk-free rate, maximum	2.40%	2.60%	2.40%	2.80%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Volatility, minimum	78.00%	76.00%	78.00%	76.00%
Volatility, maximum	84.00%	82.00%	85.00%	84.00%
Stock Option Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life of option (in years)	7 years	6 years 6 months	6 years 6 months	6 years 6 months
Stock Option Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life of option (in years)	10 years	9 years 10 months 24 days	10 years	10 years

Long-Term Debt - Additional Inf

Long-Term Debt - Additional Information (Detail) - USD ($)	Jun. 26, 2014	Jul. 31, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Proceeds from long term debt, net						$ 19,786,000
Loan modification fee		$ 240,000
Oxford Finance LLC Term Loan [Member]
Debt Instrument [Line Items]
Secured term loan	$ 20,000,000
Term loan, maturity date		Jul. 1, 2019			Jul. 1, 2018
Interest rate on term loan	7.95%
Percentage of an additional payment equal to principal amount	8.00%	10.00%			8.00%
Facility fee paid at final payment	$ 150,000
Term loan repayment description					The term loan repayment schedule provides for interest only payments for the first 18 months, followed by consecutive equal monthly payments of principal and interest in arrears starting on February 1, 2016
Proceeds from long term debt, net	19,800,000
Debt offering/issuance costs	$ 1,600,000
First principal payment date		Feb. 1, 2017			Feb. 1, 2016
Debt instrument, covenants in compliance					The Company was in compliance with all material covenants under the Loan Agreement and there had been no material adverse change.
Interest expense			$ 557,000	$ 557,000	$ 1,700,000	$ 588,000
Accrued interest			$ 701,000		$ 701,000
Oxford Finance LLC Term Loan [Member] | Minimum [Member]
Debt Instrument [Line Items]
Percentage of prepayment fee	1.00%
Oxford Finance LLC Term Loan [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percentage of prepayment fee	3.00%

Long-Term Debt - Schedule of Fu

Long-Term Debt - Schedule of Future Maturities and Interest Payments under Term Loan (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Future maturities and interest payments under the term loan:
Three months ended December 31, 2015	$ 398
2,016	1,590
2,017	8,848
2,018	8,848
2,019	6,423
Total minimum payments	26,107
Total minimum payments	26,107
Less amount representing interest	(6,107)
Gross balance of long-term debt	20,000
Gross balance of long-term debt	20,000
Less unamortized debt discount	(350)
Carrying value of long-term debt	19,650
Carrying value of long-term debt:
Carrying value of long-term debt	19,650
Less current portion of long-term debt	0
Long-term debt, less current portion and unamortized debt discount	$ 19,650	$ 19,824

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Securities offered					$ 100,900
Proceeds from sale of common stock, net of commission	$ 11,600	$ 12,626	$ 4,933	$ 4,700
Sale of common stock during period	5,856,299			2,907,664
Common stock weighted average price	$ 2.04			$ 1.65
Cantor Fitzgerald Co [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Securities offered					$ 25,000