DURECT (DRRX) 10-Q 9 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 04, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
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		146,998,596

Condensed Balance Sheets

Condensed Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 30,405	$ 5,404
Short-term investments	3,055	19,600
Accounts receivable (net of allowances of $75 at June 30, 2017 and $73 at December 31, 2016)	1,385	1,154
Inventories	3,714	3,782
Prepaid expenses and other current assets	3,454	2,486
Total current assets	42,013	32,426
Property and equipment (net of accumulated depreciation of $21,600 and $21,376 at June 30, 2017 and December 31, 2016, respectively)	1,089	1,297
Goodwill	6,399	6,399
Long-term restricted investments	150	150
Other long-term assets	282	236
Total assets	49,933	40,508
Current liabilities:
Accounts payable	1,783	2,086
Accrued liabilities	4,103	5,060
Contract research liabilities	2,131	783
Deferred revenue, current portion	16,207	968
Term loan, current portion, net	3,273	19,853
Total current liabilities	27,497	28,750
Deferred revenue, non-current portion	5,617	1,879
Term loan, non-current portion, net	16,611
Other long-term liabilities	2,046	1,541
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock	14	14
Additional paid-in capital	456,269	448,404
Accumulated other comprehensive income (loss)	(3)	(3)
Accumulated deficit	(458,118)	(440,077)
Stockholders’ equity (deficit)	(1,838)	8,338
Total liabilities and stockholders’ equity (deficit)	$ 49,933	$ 40,508

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Allowances for accounts receivable	$ 75	$ 73
Accumulated depreciation on property and equipment	$ 21,600	$ 21,376

Condensed Statements of Compreh

Condensed Statements of Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Collaborative research and development and other revenue	$ 1,268	$ 371	$ 1,702	$ 790
Product revenue, net	3,051	2,786	7,184	5,975
Total revenues	4,319	3,157	8,886	6,765
Operating expenses:
Cost of product revenues	924	913	2,467	2,155
Research and development	9,079	7,852	16,627	14,477
Selling, general and administrative	3,681	2,888	6,724	5,950
Total operating expenses	13,684	11,653	25,818	22,582
Loss from operations	(9,365)	(8,496)	(16,932)	(15,817)
Other income (expense):
Interest and other income	39	40	75	67
Interest expense	(601)	(558)	(1,184)	(1,116)
Net other income (expense)	(562)	(518)	(1,109)	(1,049)
Net loss	(9,927)	(9,014)	(18,041)	(16,866)
Net change in unrealized gain (loss) on available-for-sale securities, net of reclassification adjustments and taxes	2	7		24
Total comprehensive loss	$ (9,925)	$ (9,007)	$ (18,041)	$ (16,842)
Net loss per share
Basic	$ (0.07)	$ (0.07)	$ (0.13)	$ (0.13)
Diluted	$ (0.07)	$ (0.07)	$ (0.13)	$ (0.13)
Weighted-average shares used in computing net loss per share
Basic	142,532	132,812	142,176	127,480
Diluted	142,532	132,812	142,176	127,480

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities
Net loss	$ (18,041)	$ (16,866)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	224	206
Stock-based compensation	1,228	1,407
Amortization of debt issuance cost	31	68
Net accretion/amortization on investments	(65)	(107)
Changes in assets and liabilities:
Accounts receivable	(231)	367
Inventories	68	(241)
Prepaid expenses and other assets	(1,013)	540
Accounts payable	(303)	31
Accrued and other liabilities	1,154	257
Contract research liabilities	1,348	(6)
Deferred revenue	18,977	245
Total adjustments	21,418	2,767
Net cash provided by (used in) operating activities	3,377	(14,099)
Cash flows from investing activities
Purchases of property and equipment	(17)	(22)
Purchases of available-for-sale securities		(18,646)
Proceeds from maturities of available-for-sale securities	16,610	18,661
Net cash provided by (used in) investing activities	16,593	(7)
Cash flows from financing activities
Payments on equipment financing obligations	(6)	(12)
Net proceeds from issuances of common stock	5,037	18,571
Net cash provided by financing activities	5,031	18,559
Net increase in cash and cash equivalents	25,001	4,453
Cash and cash equivalents, beginning of the period	5,404	3,583
Cash and cash equivalents, end of the period	30,405	8,036
Supplementary disclosure of non-cash financing information
Fully vested options issued to settle accrued liabilities	$ 1,600	$ 1,143

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
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 with research and development programs broadly falling into two categories: (i) new chemical entities derived from our Epigenetics Regulator Program, in which we attempt to discover and develop molecules which have not previously been approved and marketed as therapeutics, and (ii) Drug Delivery Programs, in which we apply our formulation expertise and technologies largely to active pharmaceutical ingredients whose safety and efficacy have previously been established but which we aim to improve in some manner through a new formulation. 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 June 30, 2017, the operating results and comprehensive loss for the three and six months ended June 30, 2017 and 2016, and cash flows for the six months ended June 30, 2017 and 2016. The balance sheet as of December 31, 2016 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, 2016 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. Liquidity and Need to Raise Additional Capital As of June 30, 2017, the Company had an accumulated deficit of $458.1 million as well as negative cash flows from operating activities. The Company will continue to require substantial funds to continue research and development, including clinical trials of its product candidates. Management’s plans in order to meet its operating cash flow requirements include seeking additional collaborative agreements for certain of its programs and achieving milestone and other payments under its collaboration and licensing agreements as well as financing activities such as public offerings and private placements of its common stock, preferred stock offerings, issuances of debt and convertible debt instruments. There are no assurances that such additional funding will be obtained and that the Company will succeed in its future operations. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected. 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 a customer for a currently marketed animal health product and included in several products in development or awaiting regulatory approval. These inventories are capitalized based on management’s judgment of probable sale prior to their expiration dates. 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 customer’s 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. As of June 30, 2017, the remaining carrying value of the excipients in the Company’s inventory was $626,000. In addition, the Company has remaining unrecorded future purchase commitments totaling $1.0 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 a reserve for future purchase commitments. The Company’s inventories consisted of the following (in thousands): June 30, 2017 December 31, 2016 (unaudited) Raw materials $ 687 $ 745 Work in process 1,546 1,672 Finished goods 1,481 1,365 Total inventories $ 3,714 $ 3,782 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. For multiple-element arrangements, each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control. 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. Deferred revenue associated with a non-refundable payment received under a license and collaboration agreement for which the performance obligations are terminated will result in an immediate recognition of any remaining deferred revenue in the period that termination occurred provided that all performance obligations have been satisfied. Research and development revenue related to services performed under the collaborative arrangements with the Company’s third-party collaborators is recognized as the related research and development services are performed. These research payments received under each respective agreement are not refundable and are generally based on reimbursement of qualified expenses, as defined in the agreements. Research and development expenses under the collaborative research and development agreements generally approximate or exceed the revenue recognized under such agreements over the term of the respective agreements. Deferred revenue may result when the Company does not expend the required level of effort during a specific period in comparison to funds received under the respective agreement. Milestone payments under collaborative arrangements are triggered either by the results of the Company’s research and development efforts or by specified sales results by a third-party collaborator. Milestones related to the Company’s development-based activities may include initiation of various phases of clinical trials, successful completion of a phase of development or results from a clinical trial, acceptance of a New Drug Application by the FDA or an equivalent filing with an equivalent regulatory agency in another territory, or regulatory approval by the FDA or by an equivalent regulatory agency in another territory. Due to the uncertainty involved in meeting these development-based milestones, the development-based milestones are considered to be substantive (i.e., not just achieved through passage of time) at the inception of the collaboration agreement. In addition, the amounts of the payments assigned thereto are considered to be commensurate with the enhancement of the value of the delivered intellectual property as a result of the Company’s performance. The Company’s involvement is generally necessary to the achievement of development-based milestones. The Company would account for development-based milestones as revenue upon achievement of the substantive milestone events. Milestones related to sales-based activities may be triggered upon events such as the first commercial sale of a product or when sales first achieve a defined level. Under the Company’s collaborative agreements, the Company’s third-party collaborators will take the lead in commercialization activities and the Company is typically not involved in the achievement of sales-based milestones. These sales-based milestones would be achieved after the completion of the Company’s development activities. The Company would account for the sales-based milestones in the same manner as royalties, with revenue recognized upon achievement of the milestone. In addition, upon the achievement of either development-based or sales-based milestone events, the Company has no future performance obligations related to any milestone payments. 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 for all periods presented. Total comprehensive loss has been disclosed in the Company’s Condensed Statements of Comprehensive Loss. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding. Diluted net 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. Options to purchase approximately 26.2 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for each of the three and six months ended June 30, 2017, respectively, as the effect would be anti-dilutive. Options to purchase approximately 20.8 million and 20.6 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and six months ended June 30, 2016, respectively, as the effect would be anti-dilutive. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09), 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 will be effective for the Company in the first quarter of 2018. The Company is in the process of identifying revenue streams for analysis and has begun its analysis of a major collaboration under the new standard. However, the Company has not yet completed its final analysis of the impact of this guidance. To date, the Company’s revenues have been derived from product sales and from license and collaboration agreements. Based on the Company’s preliminary analysis, it does not currently anticipate a material quantitative impact on product revenue as the timing of revenue recognition for product sales is not expected to significantly change. For the Company’s license and collaboration agreements, the consideration the Company is eligible to receive under these agreements typically consists of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The Company continues to review the impact that this new standard will have on collaboration and license arrangements as well as on its financial statement disclosures. The Company currently anticipates it will select the modified retrospective method to adopt the standard. In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU becomes effective for the Company in the first quarter of fiscal year 2019 and early adoption is permitted. This ASU is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial statements.

Strategic Agreements

Strategic Agreements	6 Months Ended
	Jun. 30, 2017
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 June 30, Six months ended June 30, 2017 2016 2017 2016 Collaborator Sandoz AG (Sandoz) (1) $ 769 $ - $ 769 $ - Pain Therapeutics, Inc. (Pain Therapeutics) 81 6 105 10 Santen Pharmaceutical Co. Ltd. (Santen) (2) 54 148 148 310 Zogenix, Inc. (Zogenix) (3) 42 195 86 441 Others 322 22 594 29 Total collaborative research and development and other revenue $ 1,268 $ 371 $ 1,702 $ 790 (1) Amounts related to ratable recognition of upfront fees were $769,000 for each of the three and six months ended June 30, 2017 respectively, compared to zero for the corresponding periods in 2016. (2) Amounts related to ratable recognition of upfront fees were $48,000 and $105,000 for the three and six months ended June 30, 2017 respectively, compared to $57,000 and $114,000 for the corresponding periods in 2016. (3) Amounts related to ratable recognition of upfront fees were $42,000 and $84,000 for the three and six months ended June 30, 2017 respectively, compared to $52,000 and $104,000 for the corresponding periods in 2016. Agreement with Sandoz AG In May 2017, the Company and Sandoz AG (“Sandoz”) entered into a license agreement to develop and market POSIMIR in the United States. Following expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ( ® interactions through approval. DURECT also has certain manufacturing obligations under this agreement. Sandoz will have exclusive commercialization rights in the United States upon regulatory approval with sole funding responsibility for commercialization activities. Sandoz will pay the Company a tiered double-digit royalty on product sales for a defined period, after which the license granted to The Company evaluated the agreement under the accounting guidance for multiple element arrangements and identified three deliverables: the license to develop and market POSIMIR, the research and development services and the manufacturing services. Given that the delivery of the manufacturing services by the Company is dependent upon approval of POSIMIR by the FDA, and that the fee to be received by the Company for these services, should they be delivered, is consistent with their estimated selling price, the Company considers the manufacturing services to be a contingent deliverable and has excluded them from the initial measurement and allocation of the arrangement consideration. The Company evaluated the license deliverable and concluded that it did not have stand alone value separate from the research and development services and accordingly combined these deliverables into a single unit of accounting. The Company allocated the arrangement consideration, which consists of the $20.0 million upfront payment, to this single unit of accounting and will recognize this revenue ratably over the term of its estimated performance period under the agreement, which is the term over which the research and development services are provided. The effect of a change made to the estimated performance period, and the related ratably recognized revenue, would occur on a prospective basis in the period that the change was made. The Company considers the development and regulatory milestones to be substantive, and will recognize the associated milestone payments as revenue when the underlying milestone events are achieved. Total collaborative research and development revenue recognized by the Company for Sandoz was $769,000 for each of the three and six months ended June 30, 2017 respectively, compared with zero for the corresponding periods in 2016. The cumulative aggregate payments received by the Company from Sandoz as of June 30, 2017 were $20.0 million under this agreement. 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 ER and other oral sustained release, abuse deterrent opioid products incorporating four specified opioid drugs, using the ORADUR technology. This agreement currently covers only REMOXY ER. 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 $3.0 million in performance milestone payments based on the successful development and approval of REMOXY ER. Of these potential milestones, all $3.0 million are development-based milestones. There are no sales-based milestones under the agreement. As of June 30, 2017, the Company had received $1.5 million in cumulative milestone payments. In March 2016, Pain Therapeutics resubmitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA), and in September 2016, Pain Therapeutics received a Complete Response Letter from the FDA for REMOXY ER. Based on its review, the FDA has determined that the NDA cannot be approved in its present form and specifies additional actions and data that are needed for drug approval. Total collaborative research and development revenue recognized for REMOXY-related work performed by the Company for Pain Therapeutics was $81,000 and $105,000 for the three and six months ended June 30, 2017, compared with $6,000 and $10,000 for the corresponding periods in 2016. The cumulative aggregate payments received by the Company from Pain Therapeutics as of June 30, 2017 were $40.3 million under this agreement. The Company recognized no product revenue related to key excipients for REMOXY ER for each of the three and six months ended June 30, 2017 compared to zero and $279,000 for the corresponding periods in 2016. The associated cost of goods sold were zero for each of the three and six months ended June 30, 2017, compared to zero and $124,000 for the corresponding periods in 2016. Pursuant to the Company’s 2002 agreement with Pain Therapeutics, the Company is to be the exclusive supplier of certain defined excipients for products in the collaboration. 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 was 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 potentially in combination with Zogenix’s DosePro® needle-free, subcutaneous drug delivery system. DURECT was responsible for non-clinical, formulation and CMC development activities. The Company was to be reimbursed by Zogenix for its research and development efforts on the product. In August 2017, the Company and Zogenix terminated the Zogenix Agreement. Under the mutual termination agreement, Zogenix’s development and commercialization rights are returned to the Company, and Zogenix will transfer to the Company all regulatory filings and development information related to Relday. 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 has been recognized as collaborative research and development revenue ratably over the term of the Company’s research and development involvement with Zogenix with respect to this product candidate. 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 retained the right to supply Zogenix’s Phase III clinical trial and commercial product requirements on the terms set forth in the Zogenix Agreement. Zogenix was permitted to terminate the Zogenix Agreement without cause at any time upon prior written notice, and either party was permitted to 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 June 30, 2017 were $20.1 million under these agreements. Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Ratable recognition of upfront payment $ 42 $ 52 $ 84 $ 104 Research and development expenses reimbursable by Zogenix - 143 2 337 Total collaborative research and development revenue $ 42 $ 195 $ 86 $ 441 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 controls and funds the development and commercialization program, and the parties established 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 June 30, 2017). 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. As of June 30, 2017, the cumulative aggregate payments received by the Company under this agreement were $3.3 million. The following table provides a summary of collaborative research and development revenue recognized under the Santen Agreement (in thousands). Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Ratable recognition of upfront payment $ 48 $ 57 $ 105 $ 114 Research and development expenses reimbursable by Santen 6 91 43 196 Total collaborative research and development revenue $ 54 $ 148 $ 148 $ 310

Financial Instruments

Financial Instruments	6 Months Ended
	Jun. 30, 2017
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 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 June 30, 2017 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 following is a summary of available-for-sale securities as of June 30, 2017 and December 31, 2016 (in thousands): June 30, 2017 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Money market funds $ 579 $ — $ — $ 579 Certificates of deposit 150 — — 150 Commercial paper 27,450 — — 27,450 U.S. Government agencies 3,058 — (3 ) 3,055 $ 31,237 $ — $ (3 ) $ 31,234 Reported as: Cash and cash equivalents $ 28,029 $ — $ — $ 28,029 Short-term investments 3,058 — (3 ) 3,055 Long-term restricted investments 150 — — 150 $ 31,237 $ — $ (3 ) $ 31,234 December 31, 2016 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Money market funds $ 693 $ — $ — $ 693 Certificates of deposit 150 — — 150 Commercial paper 4,947 — — 4,947 Corporate debt 2,644 — (1 ) 2,643 U.S. Government agencies 14,461 1 (3 ) 14,459 $ 22,895 $ 1 $ (4 ) $ 22,892 Reported as: Cash and cash equivalents $ 3,142 $ — $ — $ 3,142 Short-term investments 19,603 1 (4 ) 19,600 Long-term restricted investments 150 — — 150 $ 22,895 $ 1 $ (4 ) $ 22,892 The following is a summary of the cost and estimated fair value of available-for-sale securities at June 30, 2017, by contractual maturity (in thousands): June 30, 2017 Amortized Cost Estimated Fair Value Mature in one year or less $ 30,658 $ 30,655 Mature after one year through two years — — $ 30,658 $ 30,655 There were no securities that have had an unrealized loss for more than 12 months as of June 30, 2017. As of June 30, 2017, 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	6 Months Ended
	Jun. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock-Based Compensation	Note 4. Stock-Based Compensation In the first quarter of 2017, the Company elected to adopt ASU 2016-09, Improvement to Employee Share-based Payment, which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as equity or liabilities, an option to recognize gross share compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company elected to account for forfeitures as they occur and therefore, share-based compensation expense for the six months ended June 30, 2017 has been calculated based on actual forfeitures, rather than the Company’s previous approach which was net of estimated forfeitures. The Company’s adoption of ASU 2016-09 in the first quarter of 2017 did not have a material impact on its financial statements. As of June 30, 2017, 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 June 30, Six months ended June 30, 2017 2016 2017 2016 Cost of product revenues $ 28 $ 26 $ 56 $ 53 Research and development 315 357 684 710 Selling, general and administrative 220 314 488 644 Total stock-based compensation $ 563 $ 697 $ 1,228 $ 1,407 As of June 30, 2017 and December 31, 2016, $13,000 and $14,000 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 and shares purchased under its employee stock purchase plan for the three and six months ended June 30, 2017 and 2016: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Stock Options Risk-free rate 2.0-2.3% 1.3-1.8% 2.0-2.5% 1.3-1.9% Expected dividend yield — — — — Expected life of option (in years) 6.8-10.0 7.0-10.0 6.8-10.0 6.5-10.0 Volatility 75-81% 76-81% 75-82% 76-83% Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Employee Stock Purchase Plan Risk-free rate 1.0% 0.4% 0.6-1.0% 0.3-0.4% Expected dividend yield — — — — Expected life of option (in years) 0.5 0.5 0.5 0.5 Volatility 44% 66% 44-81% 66-68%

Term Loan

Term Loan	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Term Loan	Note 5. Term Loan In July 2016, the Company renegotiated the terms of its $20.0 million secured single-draw term loan with Oxford Finance LLC (Oxford Finance) with such renegotiated terms being formalized in a new Loan and Security Agreement (the “2016 Loan Agreement”). The 2016 Loan Agreement supersedes the 2014 Loan Agreement with Oxford Finance and the 2015 amendment to such agreement. The 2016 Loan Agreement provides for interest only payments for the first 18 months, followed by consecutive monthly payments of principal and interest in arrears starting on March 1, 2018 and continuing through the maturity date of the term loan of August 1, 2020. The 2016 Loan Agreement also provides for a floating interest rate (7.95% initially) based on an index rate plus a spread, a $150,000 facility fee that was paid at closing and an additional payment equal to 9.25% 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 of prepayment. The facility fee and other debt offering/issuance costs have been recorded as debt discount on the Company’s balance sheet and together with the final $1.9 million payment and interest rate payments are being amortized to interest expense during 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 2016 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 2016 Loan Agreement also contains customary indemnification obligations and customary events of default, including, among other things, the Company’s failure to fulfill certain obligations of the Company under the 2016 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 2016 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 2016 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. As of June 30, 2017, the Company was in compliance with all material covenants under the Loan Agreement and the Company believes that there have been no material adverse changes. In accordance with ASC 470-10-45-2, the term loan had been reclassified to a current liability from a non-current liability on the Company’s balance sheet as of December 31, 2016 due to recurring losses, liquidity concerns and a subjective acceleration clause in the Company’s 2016 Loan Agreement. In May 2017, the Company signed an agreement with Sandoz whereby Sandoz will have the exclusive commercialization rights to POSIMIR (SABER-bupivacaine) in the United States. Consequently, the Company has sufficient resources to meet its plans for the next twelve months following the issuance of these financial statements. As a result, that portion of the term loan that is due more than 12 months after June 30, 2017 has been reclassified to a non-current liability from a current liability as of June 30, 2017. The fair value of the term loan approximates the carrying value. Future maturities and interest payments under the term loan as of June 30, 2017, are as follows (in thousands): Six months ended December 31, 2017 $ 813 2018 8,698 2019 8,724 2020 6,641 Total minimum payments 24,876 Less amount representing interest (4,876 ) Gross balance of term loan 20,000 Less unamortized debt discount (116 ) Carrying value of term loan 19,884 Less term loan, current portion, net (3,273 ) Term loan, non-current portion, net 16,611

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2017
Equity [Abstract]
Stockholders' Equity	Note 6. Stockholders’ Equity During the second quarter of 2017, the Company raised net proceeds (net of commissions) of approximately $4.1 million from the sale of 3,085,561 shares of the Company’s common stock in the open market at a weighted average price of $1.37 per share, through its Controlled Equity Offering sales agreement with Cantor Fitzgerald, entered into in November 2015 (Controlled Equity Offering).

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2017
Subsequent Events [Abstract]
Subsequent Events	Note 7. Subsequent Events In July 2017, Impax Laboratories, Inc. provided notice to DURECT that Impax is terminating their agreement with DURECT and returning its development and commercialization rights to ELADUR ® ® In August 2017, DURECT and Zogenix mutually agreed to terminate their collaboration whereby Zogenix had the worldwide development and commercialization rights to Relday. Licensed by DURECT to Zogenix in July 2011, Relday is an investigational long-acting formulation of risperidone, an atypical anti-psychotic agent. Under the mutual termination agreement, Zogenix’s development and commercialization rights are returned to DURECT, and Zogenix will transfer to DURECT all regulatory filings and development information related to Relday. From July 1, 2017 through August 4, 2017, the Company raised net proceeds (net of commissions) of approximately $2.8 million from the sale of 1,758,172 shares of the Company’s common stock in the open market through the Controlled Equity Offering program with Cantor Fitzgerald at a weighted average price of $1.63 per share. As of August 4, 2017, the Company had up to approximately $22.4 million of common stock available for sale under the Controlled Equity Offering program and approximately $67.8 million of common stock available for sale under its shelf registration statement.

Summary of Significant Accoun13

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
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 with research and development programs broadly falling into two categories: (i) new chemical entities derived from our Epigenetics Regulator Program, in which we attempt to discover and develop molecules which have not previously been approved and marketed as therapeutics, and (ii) Drug Delivery Programs, in which we apply our formulation expertise and technologies largely to active pharmaceutical ingredients whose safety and efficacy have previously been established but which we aim to improve in some manner through a new formulation. 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 June 30, 2017, the operating results and comprehensive loss for the three and six months ended June 30, 2017 and 2016, and cash flows for the six months ended June 30, 2017 and 2016. The balance sheet as of December 31, 2016 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, 2016 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.
Liquidity and Need to Raise Additional Capital	Liquidity and Need to Raise Additional Capital As of June 30, 2017, the Company had an accumulated deficit of $458.1 million as well as negative cash flows from operating activities. The Company will continue to require substantial funds to continue research and development, including clinical trials of its product candidates. Management’s plans in order to meet its operating cash flow requirements include seeking additional collaborative agreements for certain of its programs and achieving milestone and other payments under its collaboration and licensing agreements as well as financing activities such as public offerings and private placements of its common stock, preferred stock offerings, issuances of debt and convertible debt instruments. There are no assurances that such additional funding will be obtained and that the Company will succeed in its future operations. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected.
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 a customer for a currently marketed animal health product and included in several products in development or awaiting regulatory approval. These inventories are capitalized based on management’s judgment of probable sale prior to their expiration dates. 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 customer’s 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. As of June 30, 2017, the remaining carrying value of the excipients in the Company’s inventory was $626,000. In addition, the Company has remaining unrecorded future purchase commitments totaling $1.0 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 a reserve for future purchase commitments. The Company’s inventories consisted of the following (in thousands): June 30, 2017 December 31, 2016 (unaudited) Raw materials $ 687 $ 745 Work in process 1,546 1,672 Finished goods 1,481 1,365 Total inventories $ 3,714 $ 3,782
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. For multiple-element arrangements, each deliverable within a multiple deliverable revenue arrangement is accounted for as a separate unit of accounting if both of the following criteria are met: (1) the delivered item or items have value to the customer on a standalone basis and (2) for an arrangement that includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the Company’s control. 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. Deferred revenue associated with a non-refundable payment received under a license and collaboration agreement for which the performance obligations are terminated will result in an immediate recognition of any remaining deferred revenue in the period that termination occurred provided that all performance obligations have been satisfied. Research and development revenue related to services performed under the collaborative arrangements with the Company’s third-party collaborators is recognized as the related research and development services are performed. These research payments received under each respective agreement are not refundable and are generally based on reimbursement of qualified expenses, as defined in the agreements. Research and development expenses under the collaborative research and development agreements generally approximate or exceed the revenue recognized under such agreements over the term of the respective agreements. Deferred revenue may result when the Company does not expend the required level of effort during a specific period in comparison to funds received under the respective agreement. Milestone payments under collaborative arrangements are triggered either by the results of the Company’s research and development efforts or by specified sales results by a third-party collaborator. Milestones related to the Company’s development-based activities may include initiation of various phases of clinical trials, successful completion of a phase of development or results from a clinical trial, acceptance of a New Drug Application by the FDA or an equivalent filing with an equivalent regulatory agency in another territory, or regulatory approval by the FDA or by an equivalent regulatory agency in another territory. Due to the uncertainty involved in meeting these development-based milestones, the development-based milestones are considered to be substantive (i.e., not just achieved through passage of time) at the inception of the collaboration agreement. In addition, the amounts of the payments assigned thereto are considered to be commensurate with the enhancement of the value of the delivered intellectual property as a result of the Company’s performance. The Company’s involvement is generally necessary to the achievement of development-based milestones. The Company would account for development-based milestones as revenue upon achievement of the substantive milestone events. Milestones related to sales-based activities may be triggered upon events such as the first commercial sale of a product or when sales first achieve a defined level. Under the Company’s collaborative agreements, the Company’s third-party collaborators will take the lead in commercialization activities and the Company is typically not involved in the achievement of sales-based milestones. These sales-based milestones would be achieved after the completion of the Company’s development activities. The Company would account for the sales-based milestones in the same manner as royalties, with revenue recognized upon achievement of the milestone. In addition, upon the achievement of either development-based or sales-based milestone events, the Company has no future performance obligations related to any milestone payments.
Comprehensive Income (Loss)	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 for all periods presented. Total comprehensive loss has been disclosed in the Company’s Condensed Statements of Comprehensive Loss.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding. Diluted net 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. Options to purchase approximately 26.2 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for each of the three and six months ended June 30, 2017, respectively, as the effect would be anti-dilutive. Options to purchase approximately 20.8 million and 20.6 million shares of common stock were excluded from the denominator in the calculation of diluted net loss per share for the three and six months ended June 30, 2016, respectively, as the effect would be anti-dilutive.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09), 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 will be effective for the Company in the first quarter of 2018. The Company is in the process of identifying revenue streams for analysis and has begun its analysis of a major collaboration under the new standard. However, the Company has not yet completed its final analysis of the impact of this guidance. To date, the Company’s revenues have been derived from product sales and from license and collaboration agreements. Based on the Company’s preliminary analysis, it does not currently anticipate a material quantitative impact on product revenue as the timing of revenue recognition for product sales is not expected to significantly change. For the Company’s license and collaboration agreements, the consideration the Company is eligible to receive under these agreements typically consists of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The Company continues to review the impact that this new standard will have on collaboration and license arrangements as well as on its financial statement disclosures. The Company currently anticipates it will select the modified retrospective method to adopt the standard. In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU becomes effective for the Company in the first quarter of fiscal year 2019 and early adoption is permitted. This ASU is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. The Company is currently evaluating the impact that ASU 2016-02 will have on its financial statements.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
Summary of Components of Inventories	The Company’s inventories consisted of the following (in thousands): June 30, 2017 December 31, 2016 (unaudited) Raw materials $ 687 $ 745 Work in process 1,546 1,672 Finished goods 1,481 1,365 Total inventories $ 3,714 $ 3,782

Strategic Agreements (Tables)

Strategic Agreements (Tables)	6 Months Ended
	Jun. 30, 2017
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 June 30, Six months ended June 30, 2017 2016 2017 2016 Collaborator Sandoz AG (Sandoz) (1) $ 769 $ - $ 769 $ - Pain Therapeutics, Inc. (Pain Therapeutics) 81 6 105 10 Santen Pharmaceutical Co. Ltd. (Santen) (2) 54 148 148 310 Zogenix, Inc. (Zogenix) (3) 42 195 86 441 Others 322 22 594 29 Total collaborative research and development and other revenue $ 1,268 $ 371 $ 1,702 $ 790 (1) Amounts related to ratable recognition of upfront fees were $769,000 for each of the three and six months ended June 30, 2017 respectively, compared to zero for the corresponding periods in 2016. (2) Amounts related to ratable recognition of upfront fees were $48,000 and $105,000 for the three and six months ended June 30, 2017 respectively, compared to $57,000 and $114,000 for the corresponding periods in 2016. (3) Amounts related to ratable recognition of upfront fees were $42,000 and $84,000 for the three and six months ended June 30, 2017 respectively, compared to $52,000 and $104,000 for the corresponding periods in 2016.
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 June 30, 2017 were $20.1 million under these agreements. Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Ratable recognition of upfront payment $ 42 $ 52 $ 84 $ 104 Research and development expenses reimbursable by Zogenix - 143 2 337 Total collaborative research and development revenue $ 42 $ 195 $ 86 $ 441
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 June 30, Six months ended June 30, 2017 2016 2017 2016 Ratable recognition of upfront payment $ 48 $ 57 $ 105 $ 114 Research and development expenses reimbursable by Santen 6 91 43 196 Total collaborative research and development revenue $ 54 $ 148 $ 148 $ 310

Financial Instruments (Tables)

Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2017
Fair Value Disclosures [Abstract]
Summary of Money Market Funds and Available-for-Sale Securities	The following is a summary of available-for-sale securities as of June 30, 2017 and December 31, 2016 (in thousands): June 30, 2017 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Money market funds $ 579 $ — $ — $ 579 Certificates of deposit 150 — — 150 Commercial paper 27,450 — — 27,450 U.S. Government agencies 3,058 — (3 ) 3,055 $ 31,237 $ — $ (3 ) $ 31,234 Reported as: Cash and cash equivalents $ 28,029 $ — $ — $ 28,029 Short-term investments 3,058 — (3 ) 3,055 Long-term restricted investments 150 — — 150 $ 31,237 $ — $ (3 ) $ 31,234 December 31, 2016 Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Money market funds $ 693 $ — $ — $ 693 Certificates of deposit 150 — — 150 Commercial paper 4,947 — — 4,947 Corporate debt 2,644 — (1 ) 2,643 U.S. Government agencies 14,461 1 (3 ) 14,459 $ 22,895 $ 1 $ (4 ) $ 22,892 Reported as: Cash and cash equivalents $ 3,142 $ — $ — $ 3,142 Short-term investments 19,603 1 (4 ) 19,600 Long-term restricted investments 150 — — 150 $ 22,895 $ 1 $ (4 ) $ 22,892
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 June 30, 2017, by contractual maturity (in thousands): June 30, 2017 Amortized Cost Estimated Fair Value Mature in one year or less $ 30,658 $ 30,655 Mature after one year through two years — — $ 30,658 $ 30,655

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Summary of Stock-Based Compensation Cost that has been Included in Statements of Comprehensive Loss	The stock-based compensation cost that has been included in the statements of comprehensive loss is shown as below (in thousands): Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Cost of product revenues $ 28 $ 26 $ 56 $ 53 Research and development 315 357 684 710 Selling, general and administrative 220 314 488 644 Total stock-based compensation $ 563 $ 697 $ 1,228 $ 1,407
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 and shares purchased under its employee stock purchase plan for the three and six months ended June 30, 2017 and 2016: Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Stock Options Risk-free rate 2.0-2.3% 1.3-1.8% 2.0-2.5% 1.3-1.9% Expected dividend yield — — — — Expected life of option (in years) 6.8-10.0 7.0-10.0 6.8-10.0 6.5-10.0 Volatility 75-81% 76-81% 75-82% 76-83% Three months ended June 30, Six months ended June 30, 2017 2016 2017 2016 Employee Stock Purchase Plan Risk-free rate 1.0% 0.4% 0.6-1.0% 0.3-0.4% Expected dividend yield — — — — Expected life of option (in years) 0.5 0.5 0.5 0.5 Volatility 44% 66% 44-81% 66-68%

Term Loan (Tables)

Term Loan (Tables)	6 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Schedule of Future Maturities and Interest Payments under Term Loan	Future maturities and interest payments under the term loan as of June 30, 2017, are as follows (in thousands): Six months ended December 31, 2017 $ 813 2018 8,698 2019 8,724 2020 6,641 Total minimum payments 24,876 Less amount representing interest (4,876 ) Gross balance of term loan 20,000 Less unamortized debt discount (116 ) Carrying value of term loan 19,884 Less term loan, current portion, net (3,273 ) Term loan, non-current portion, net 16,611

Summary of Significant Accoun19

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Summary Of Significant Accounting Policies [Line Items]
State of incorporation			Delaware
Date of incorporation			Feb. 6, 1998
Accumulated deficit	$ 458,118,000		$ 458,118,000		$ 440,077,000
Inventories	$ 3,714,000		$ 3,714,000		$ 3,782,000
Options to purchase common stock excluded from computation of diluted net loss per share	26.2	20.8	26.2	20.6
Agreement with Pain Therapeutics, Inc. [Member]
Summary Of Significant Accounting Policies [Line Items]
Inventories	$ 626,000		$ 626,000
Remaining unrecorded future purchase commitments	$ 1,000,000		$ 1,000,000

Summary of Significant Accoun20

Summary of Significant Accounting Policies - Summary of Components of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Inventory Net [Abstract]
Raw materials	$ 687	$ 745
Work in process	1,546	1,672
Finished goods	1,481	1,365
Total inventories	$ 3,714	$ 3,782

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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	$ 1,268	$ 371	$ 1,702	$ 790
Agreement with Sandoz AG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	769	0	769	0
Agreement with Pain Therapeutics, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	81	6	105	10
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	54	148	148	310
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	42	195	86	441
Agreements With Other Third Party Collaborators [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue	$ 322	$ 22	$ 594	$ 29

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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Agreement with Sandoz AG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amounts related to the ratable recognition of upfront fees	$ 769	$ 0	$ 769	$ 0
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	48	57	105	114
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Amounts related to the ratable recognition of upfront fees	$ 42	$ 52	$ 84	$ 104

Strategic Agreements - Agreemen

Strategic Agreements - Agreement with Sandoz AG - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue		$ 1,268,000	$ 371,000	$ 1,702,000	$ 790,000
Agreement with Sandoz AG [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront license fee	$ 20,000,000
Total collaborative research and development and other revenue		$ 769,000	$ 0	769,000	$ 0
Cumulative aggregate payments received by the Company				$ 20,000,000
Agreement with Sandoz AG [Member] | Maximum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Performance milestone payments based on successful development	43,000,000
Sales-Based Milestones [Member] | Agreement with Sandoz AG [Member] | Maximum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Performance milestone payments based on successful development	$ 230,000,000

Strategic Agreements - Agreem24

Strategic Agreements - Agreement with Pain Therapeutics, Inc. - Additional Information (Detail)	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2002Drug	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development and other revenue		$ 1,268,000	$ 371,000	$ 1,702,000	$ 790,000
Product revenue, net		3,051,000	2,786,000	7,184,000	5,975,000
Cost of goods sold		924,000	913,000	2,467,000	2,155,000
Agreement with Pain Therapeutics, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of specified opioid drugs | Drug	4
Upfront license fee				1,000,000
Performance milestone payments based on successful development		3,000,000		3,000,000
Revenue recognition milestone achieved				1,500,000
Total collaborative research and development and other revenue		81,000	6,000	105,000	10,000
Cumulative aggregate payments received by the Company				40,300,000
Product revenue, net		0	0	0	279,000
Cost of goods sold		0	$ 0	0	$ 124,000
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		3,000,000		3,000,000
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

Strategic Agreements - Agreem25

Strategic Agreements - Agreement with Zogenix, Inc. - Additional Information (Detail) - Agreement with Zogenix, Inc. [Member] - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Jul. 31, 2011	Jun. 30, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Agreement termination month and year		2017-08
Cumulative aggregate payments received by the Company		$ 20,100
Up-front Payment Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Non-refundable upfront fee	$ 2,250	$ 2,250

Strategic Agreements - Summar26

Strategic Agreements - Summary of Collaborative Research and Development Revenue Recognized (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total collaborative research and development revenue	$ 1,268	$ 371	$ 1,702	$ 790
Agreement with Zogenix, Inc. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Ratable recognition of upfront payment	42	52	84	104
Research and development expenses reimbursable by the Company		143	2	337
Total collaborative research and development revenue	42	195	86	441
Agreement with Santen Pharmaceutical Co., Ltd. [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Ratable recognition of upfront payment	48	57	105	114
Research and development expenses reimbursable by the Company	6	91	43	196
Total collaborative research and development revenue	$ 54	$ 148	$ 148	$ 310

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	Jun. 30, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Upfront license fee	$ 2,000,000
Cumulative aggregate payments received by the Company		$ 3,300,000
Maximum [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Future milestone payments	76,000,000
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	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 31,237	$ 22,895
Unrealized Gain		1
Unrealized Loss	(3)	(4)
Estimated Fair Value	31,234	22,892
Money market funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	579	693
Estimated Fair Value	579	693
Certificates of deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	150	150
Estimated Fair Value	150	150
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	27,450	4,947
Estimated Fair Value	27,450	4,947
U.S. Government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,058	14,461
Unrealized Gain		1
Unrealized Loss	(3)	(3)
Estimated Fair Value	3,055	14,459
Cash and cash equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,029	3,142
Estimated Fair Value	28,029	3,142
Short-term investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,058	19,603
Unrealized Gain		1
Unrealized Loss	(3)	(4)
Estimated Fair Value	3,055	19,600
Long-term restricted investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	150	150
Estimated Fair Value	$ 150	150
Corporate debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		2,644
Unrealized Loss		(1)
Estimated Fair Value		$ 2,643

Financial Instruments - Summa29

Financial Instruments - Summary of Cost and Estimated Fair Value of Available-for-Sale Securities by Contractual Maturity (Detail) $ in Thousands	Jun. 30, 2017USD ($)
Investments Debt And Equity Securities [Abstract]
Mature in one year or less, Amortized Cost	$ 30,658
Amortized Cost	30,658
Mature in one year or less, Estimated Fair Value	30,655
Estimated Fair Value	$ 30,655

Financial Instruments - Additio

Financial Instruments - Additional Information (Detail)	Jun. 30, 2017USD ($)
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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	$ 563	$ 697	$ 1,228	$ 1,407
Cost of product revenues [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	28	26	56	53
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	315	357	684	710
Selling, general and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total employee stock-based compensation cost	$ 220	$ 314	$ 488	$ 644

Stock-Based Compensation - Addi

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock-based compensation cost capitalized in inventory	$ 13,000	$ 14,000

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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Employees Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate	1.00%	0.40%
Risk-free rate, minimum			0.60%	0.30%
Risk-free rate, maximum			1.00%	0.40%
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	44.00%	66.00%
Volatility, minimum			44.00%	66.00%
Volatility, maximum			81.00%	68.00%
Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free rate, minimum	2.00%	1.30%	2.00%	1.30%
Risk-free rate, maximum	2.30%	1.80%	2.50%	1.90%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Volatility, minimum	75.00%	76.00%	75.00%	76.00%
Volatility, maximum	81.00%	81.00%	82.00%	83.00%
Stock Option Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life of option (in years)	6 years 9 months 18 days	7 years	6 years 9 months 18 days	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	10 years	10 years	10 years

Term Loan - Additional Informat

Term Loan - Additional Information (Detail) - USD ($)	1 Months Ended	6 Months Ended
	Jul. 31, 2016	Jun. 30, 2017
Debt Instrument [Line Items]
Debt instrument, covenants in compliance		The Company was in compliance with all material covenants under the Loan Agreement and the Company believes that there have been no material adverse changes.
Oxford Finance 2016 Term Loan [Member]
Debt Instrument [Line Items]
Secured term loan	$ 20,000,000
Term loan repayment description		The 2016 Loan Agreement provides for interest only payments for the first 18 months, followed by consecutive monthly payments of principal and interest in arrears starting on March 1, 2018
First principal payment date	Mar. 1, 2018
Term loan, maturity date	Aug. 1, 2020
Interest rate on term loan	7.95%
Term loan, floating interest rate basis		index rate plus a spread
Facility fee paid at final payment	$ 150,000
Percentage of an additional payment equal to principal amount	9.25%
Debt offering/issuance costs	$ 1,900,000
Oxford Finance 2016 Term Loan [Member] | Minimum [Member]
Debt Instrument [Line Items]
Percentage of prepayment fee	1.00%
Oxford Finance 2016 Term Loan [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percentage of prepayment fee	3.00%

Term Loan - Schedule of Future

Term Loan - Schedule of Future Maturities and Interest Payments under Term Loan (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Future maturities and interest payments under the term loan:
Six months ended December 31, 2017	$ 813
2,018	8,698
2,019	8,724
2,020	6,641
Total minimum payments	24,876
Less amount representing interest	(4,876)
Gross balance of term loan	20,000
Less unamortized debt discount	(116)
Carrying value of term loan	19,884
Less term loan, current portion, net	(3,273)	$ (19,853)
Term loan, non-current portion, net	$ 16,611

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from sale of common stock, net of commission		$ 5,037	$ 18,571
Controlled Equity Offering Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from sale of common stock, net of commission	$ 4,100
Sale of common stock during period	3,085,561
Common stock weighted average price	$ 1.37	$ 1.37

Subsequent Event - Additional I

Subsequent Event - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Aug. 04, 2017	Jun. 30, 2017	Jun. 30, 2017	Jun. 30, 2016
Subsequent Event [Line Items]
Proceeds from sale of common stock, net of commission			$ 5,037	$ 18,571
Subsequent Event [Member]
Subsequent Event [Line Items]
Common stock available for sale	$ 67,800
Controlled Equity Offering Program [Member]
Subsequent Event [Line Items]
Proceeds from sale of common stock, net of commission		$ 4,100
Sale of common stock during period		3,085,561
Common stock weighted average price		$ 1.37	$ 1.37
Controlled Equity Offering Program [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Proceeds from sale of common stock, net of commission	$ 2,800
Sale of common stock during period	1,758,172
Common stock weighted average price	$ 1.63
Cantor Fitzgerald Co [Member] | Maximum [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Common stock available for sale	$ 22,400