Insmed (INSM) 10-Q 3 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document and Entity Information
Entity Registrant Name	INSMED INC
Entity Central Index Key	1,104,506
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		62,090,141
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 125,839	$ 162,591
Prepaid expenses and other current assets	5,785	5,816
Total current assets	131,624	168,407
In-process research and development	58,200	58,200
Fixed assets, net	9,807	10,020
Other assets	1,028	1,329
Total assets	200,659	237,956
Current liabilities:
Accounts payable	8,454	10,439
Accrued expenses	14,143	16,822
Other current liabilities	674	728
Total current liabilities	23,271	27,989
Long-term liabilities:
Debt, long-term	54,993	54,791
Other long-term liabilities	711	693
Total liabilities	78,975	83,473
Shareholders' equity:
Common stock, $0.01 par value; 500,000,000 authorized shares, 62,087,828 and 62,019,889 issued and outstanding shares at March 31, 2017 and December 31, 2016, respectively	621	620
Additional paid-in capital	923,760	919,164
Accumulated deficit	(802,650)	(765,236)
Accumulated other comprehensive loss	(47)	(65)
Total shareholders' equity	121,684	154,483
Total liabilities and shareholders' equity	$ 200,659	$ 237,956

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Consolidated Balance Sheets
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	500,000,000	500,000,000
Common stock, issued shares	62,087,828	62,019,889
Common stock, outstanding shares	62,087,828	62,019,889

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating expenses:
Research and development	$ 22,254	$ 20,547
General and administrative	13,715	12,520
Total operating expenses	35,969	33,067
Operating loss	(35,969)	(33,067)
Investment income	154	170
Interest expense	(1,474)	(622)
Other (expense) income, net	(95)	15
Loss before income taxes	(37,384)	(33,504)
Provision for income taxes	30	28
Net loss	$ (37,414)	$ (33,532)
Basic and diluted net loss per share	$ (0.60)	$ (0.54)
Weighted average basic and diluted common shares outstanding (in shares)	62,041	61,858
Net loss	$ (37,414)	$ (33,532)
Other comprehensive income (loss):
Foreign currency translation gains (losses)	18	(3)
Total comprehensive loss	$ (37,396)	$ (33,535)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net loss	$ (37,414)	$ (33,532)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	716	514
Stock based compensation expense	4,032	4,219
Amortization of debt discount and debt issuance costs	31	38
Accrual of backend fee on debt	171
Changes in operating assets and liabilities:
Prepaid expenses and other assets	352	(316)
Accounts payable	(2,026)	527
Accrued expenses and other	(2,774)	(978)
Net cash used in operating activities	(36,912)	(29,528)
Investing activities
Purchase of fixed assets	(417)	(588)
Net cash used in investing activities	(417)	(588)
Financing activities
Proceeds from exercise of stock options	565	81
Net cash provided by financing activities	565	81
Effect of exchange rates on cash and cash equivalents	12	31
Net decrease in cash and cash equivalents	(36,752)	(30,004)
Cash and cash equivalents at beginning of period	162,591	282,876
Cash and cash equivalents at end of period	125,839	252,872
Supplemental disclosures of cash flow information:
Cash paid for interest	1,273	$ 975
Cash paid for income taxes	$ 17

The Company and Basis of Presen

The Company and Basis of Presentation	3 Months Ended
	Mar. 31, 2017
The Company and Basis of Presentation
The Company and Basis of Presentation	1. The Company and Basis of Presentation Insmed is a global biopharmaceutical company focused on the unmet needs of patients with rare diseases. The Company’s lead product candidate is ARIKAYCE®, or liposomal amikacin for inhalation (LAI), which is in late-stage development for adult patients with treatment refractory nontuberculous mycobacteria (NTM) lung disease caused by Mycobacterium avium complex (MAC), a rare and often chronic infection that can cause irreversible lung damage and which can be fatal. The Company’s earlier clinical-stage pipeline includes INS1007, a novel oral reversible inhibitor of dipeptidyl peptidase 1, and INS1009, an inhaled treprostinil prodrug nanoparticle formulation. The Company was incorporated in the Commonwealth of Virginia on November 29, 1999 and its principal executive offices are in Bridgewater, New Jersey. The Company has legal entities in the United States (US), Ireland, Germany, France, the United Kingdom (UK) and the Netherlands. All intercompany transactions and balances have been eliminated in consolidation. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and disclosures required by accounting principles generally accepted in the US for complete consolidated financial statements are not included herein. The interim statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year. The unaudited interim consolidated financial information presented herein reflects all normal adjustments that are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies The following are interim updates to certain of the policies described in “Note 2” to the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016: Fair Value Measurements - The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgments associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows: · Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. · Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. · Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Each major category of financial assets and liabilities measured at fair value on a recurring basis are categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments in Level 1 generally include US treasuries and mutual funds listed in active markets. The Company’s only assets and liabilities which were measured at fair value as of March 31, 2017 and December 31, 2016 were Level 1 and such assets were comprised of cash and cash equivalents of $125.8 million and $162.6 million, respectively. The Company’s cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. Cash equivalents consist of liquid investments with a maturity of three months or less from the date of purchase. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers in or out of Level 1, Level 2 or Level 3 during the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 and December 31, 2016, the Company held no securities that were in an unrealized gain or loss position. The Company reviews the status of each security quarterly to determine whether an other-than-temporary impairment has occurred. In making its determination, the Company considers a number of factors, including: (1) the significance of the decline; (2) whether the securities were rated below investment grade; (3) how long the securities have been in an unrealized loss position; and (4) the Company’s ability and intent to retain the investment for a sufficient period of time for it to recover. Net Loss Per Common Share - Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares and other dilutive securities outstanding during the period. Potentially dilutive securities from stock options and restricted stock units (RSUs) would be antidilutive as the Company incurred a net loss. Potentially dilutive common shares resulting from the assumed exercise of outstanding stock options are determined based on the treasury stock method. The following table sets forth the reconciliation of the weighted average number of shares used to compute basic and diluted net loss per share for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, 2017 2016 Numerator: Net loss $ ) $ ) Denominator: Weighted average common shares used in calculation of basic net loss per share Effect of dilutive securities: Stock options to purchase common stock — — RSUs — — Weighted average common shares outstanding used in calculation of diluted net loss per share Net loss per share: Basic and diluted net loss per share $ ) $ ) The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2017 and 2016 as their effect would have been anti-dilutive (in thousands): 2017 2016 Stock options to purchase common stock Unvested RSUs — Recently Adopted Accounting Pronouncements - In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which defines management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The new standard was effective for the annual period ending after December 15, 2016, and for interim periods thereafter. The Company adopted ASU 2014-15 in the fourth quarter of 2016, which had no impact on the Company’s consolidated financial statements. The interim assessment during the first quarter of 2017 did not have an impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation—Stock Compensation . ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted ASU 2016-09 in the first quarter of 2017 and impact of the adoption was not material to the consolidated financial statements as of and for the quarter ended March 31, 2017.

Identifiable Intangible Asset

Identifiable Intangible Asset	3 Months Ended
	Mar. 31, 2017
Identifiable Intangible Asset
Identifiable Intangible Asset	3. Identifiable Intangible Asset The Company believes there are no indicators of impairment relating to its in-process research and development intangible asset as of March 31, 2017.

Accrued Expenses

Accrued Expenses	3 Months Ended
	Mar. 31, 2017
Accrued Expenses
Accrued Expenses	4. Accrued Expenses Accrued expenses consist of the following: As of March 31, As of December 31, 2017 2016 (in thousands) Accrued clinical trial expenses $ $ Accrued compensation Accrued professional fees Accrued technical operation expenses Accrued interest payable Other accrued expenses $ $

Debt

Debt	3 Months Ended
	Mar. 31, 2017
Debt
Debt	5. Debt On September 30, 2016, the Company and its domestic subsidiaries, as co-borrowers, entered into an Amended and Restated Loan and Security Agreement (the A&R Loan Agreement) with Hercules Capital, Inc. (Hercules). The A&R Loan Agreement included a total commitment from Hercules of up to $55.0 million, of which $25.0 million was previously outstanding. The amount of borrowings was increased by $10.0 million to an aggregate total of $35.0 million on September 30, 2016. An additional $20.0 million was available at the Company’s option through June 30, 2017 subject to certain conditions, including the payment of a facility fee of 0.375%. The Company exercised this option in early October 2016 and borrowed an additional $20.0 million in connection with its upfront payment obligation under the license agreement with AstraZeneca AB. The interest rate for the term is floating and is calculated as the greater of (i) 9.25% or (ii) 9.25% plus the sum of the US prime rate minus 4.50%, along with a backend fee of 4.15% of the aggregate principal amount outstanding and an aggregate facility fee of $337,500. Upon entry into the A&R Loan Agreement, the interest-only period was extended through November 1, 2018, and it could be extended up to six additional months under certain conditions. The maturity date of the loan facility was also extended to October 1, 2020. Pursuant to the A&R Loan Agreement, the Company is required to have consolidated minimum cash liquidity in an amount no less than $25.0 million. Such requirement terminates upon the earlier of the date by which the Company completes an equity financing with at least $75.0 million in proceeds or the date the Company generates and announces data from the CONVERT study in a manner that could support the filing of a new drug application. In addition, pursuant to the A&R Loan Agreement, Hercules has the right to participate, in an aggregate amount of up to $2.0 million, in a subsequent private financing that involves the issuance of our equity securities. In connection with the A&R Loan Agreement, the Company granted Hercules a first position lien on all of the Company’s assets, excluding intellectual property. Prepayment of the loans made pursuant to the A&R Loan Agreement is subject to penalty. The backend fee of 4.15% on the aggregate outstanding principal balance is being charged to interest expense (and accreted to the debt) using the effective interest method over the original life of the A&R Loan Agreement. Debt issuance fees paid to Hercules were recorded as a discount on the debt and are being amortized to interest expense using the effective interest method over the life of the A&R Loan Agreement. The following table presents the components of the Company’s debt balance as of March 31, 2017 (in thousands): Debt: Notes payable $ Accretion of backend fee Debt issuance costs, unamortized ) Debt, long-term $ As of March 31, 2017, future principal repayments of the debt for each of the fiscal years through maturity were as follows (in thousands): Year Ending in December 31: 2017 $ — 2018 2019 2020 $ The estimated fair value of the debt (categorized as a Level 2 liability for fair value measurement purposes) is determined using current market factors and the ability of the Company to obtain debt at comparable terms to those that are currently in place. The Company believes the estimated fair value at March 31, 2017 approximates the carrying amount.

Shareholders' Equity

Shareholders' Equity	3 Months Ended
	Mar. 31, 2017
Shareholders' Equity
Shareholders' Equity	6. Shareholders’ Equity Common Stock — As of March 31, 2017, the Company had 500,000,000 shares of common stock authorized with a par value of $0.01 and 62,087,828 shares of common stock issued and outstanding. In addition, as of March 31, 2017, the Company had reserved 7,718,990 shares of common stock for issuance upon the exercise of outstanding common stock options and 89,194 shares of common stock for issuance upon the vesting of RSUs. Preferred Stock — As of March 31, 2017, the Company had 200,000,000 shares of preferred stock authorized with a par value of $0.01 and no shares of preferred stock were issued and outstanding.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Stock-Based Compensation	7. Stock-Based Compensation The Company’s current equity compensation plan, the 2015 Incentive Plan, was approved by shareholders at the Company’s 2015 Annual Meeting of Shareholders. The 2015 Incentive Plan is administered by the Compensation Committee and the Board of Directors of the Company. Under the terms of the 2015 Incentive Plan, the Company is authorized to grant a variety of incentive awards based on its common stock, including stock options (both incentive stock options and non-qualified stock options), performance options/shares and other stock awards, as well as the payment of incentive bonuses to all employees and non-employee directors. The Company has 5,000,000 shares of common stock authorized for issuance under the 2015 Incentive Plan and, as of March 31, 2017, there were 1,596,242 shares remaining for future grants (or issuances) of stock options, stock appreciation rights, restricted stock, restricted stock units and incentive bonuses thereunder. The 2015 Incentive Plan will terminate on April 9, 2025 unless it is extended or terminated earlier pursuant to its terms. The Company has submitted a proposal to its shareholders to approve a new equity compensation plan, the 2017 Incentive Plan, at the 2017 Annual Meeting of Shareholders. The 2017 Incentive Plan, if approved, will provide for the issuance of 5,000,000 shares, plus any shares that were subject to outstanding awards under the 2015 Incentive Plan and the 2013 Incentive Plan, as of the effective date of the 2017 Incentive Plan, that are cancelled, terminate unearned, expire, are forfeited, lapse for any reason or are settled in cash without the delivery of shares. If approved, no additional awards will be granted under the 2015 Incentive Plan. In addition, from time to time, the Company makes inducement grants of stock options. These awards are made pursuant to the NASDAQ inducement grant exception as a component of new hires’ employment compensation. Stock Options - The Company calculates the fair value of stock options granted using the Black-Scholes valuation model. The following table summarizes the Company’s grant date fair value and assumptions used in determining the fair value of all stock options granted: Three Months Ended March 31, 2017 2016 Volatility 73%-74% 77% Risk-free interest rate 1.86%-1.99% 1.16%-1.73% Dividend yield 0.0% 0.0% Expected option term (in years) 6.25 6.25 Weighted average fair value of stock options granted $9.18 $10.68 For each period presented, the volatility factor was based on the Company’s historical volatility since the closing of the Company’s merger with Transave in December 2010. The expected life was determined using the simplified method as described in ASC Topic 718, Accounting for Stock Compensation, which is the midpoint between the vesting date and the end of the contractual term. The risk-free interest rate is based on the US Treasury yield in effect at the date of grant. Estimated forfeitures are based on the actual percentage of option forfeitures since the closing of the Company’s merger with Transave in December 2010. From time to time, the Company grants performance-condition options to certain of its employees. Vesting of these options is subject to the Company achieving certain performance criteria established at the date of grant and the grantees fulfilling a service condition (continued employment). As of March 31, 2017, the Company had performance options totaling 133,334 shares outstanding which had not yet met the recognition criteria. The following table summarizes the Company’s aggregate stock option activity for the three months ended March 31, 2017: Number of Weighted Weighted Aggregate Options outstanding at December 31, 2016 $ Granted $ Exercised ) $ Forfeited or expired ) $ Options outstanding at March 31, 2017 $ $ Vested and expected to vest at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $ The total intrinsic value of stock options exercised during the three months ended March 31, 2017 and 2016 was $0.5 million and $0.1 million, respectively. As of March 31, 2017, there was $28.4 million of unrecognized compensation expense related to unvested stock options which is expected to be recognized over a weighted average period of 2.7 years. Included in unrecognized compensation expense was $1.1 million related to outstanding performance-based options. The following table summarizes the range of exercise prices and the number of stock options outstanding and exercisable: Outstanding as of March 31, 2017 Exercisable as of March 31, 2017 Weighted Average Remaining Weighted Range of Exercise Number of Contractual Average Number of Weighted Average Prices ($) Options Term (in years) Exercise Price ($) Options Exercise Price ($) — — Restricted Stock and Restricted Stock Units — The Company may grant Restricted Stock (RS) and RSUs to eligible employees, including its executives, and non-employee directors. Each share of RS vests upon, and each RSU represents a right to receive one share of the Company’s common stock upon the completion of a specific period of continued service or achievement of a certain milestone. RS and RSU awards granted are valued at the market price of the Company’s common stock on the date of grant. The Company recognizes noncash compensation expense for the fair values of these RS and RSUs on a straight-line basis over the requisite service period of these awards. The following table summarizes the Company’s RSU award activity during the three months ended March 31, 2017: Weighted Number of Average RSUs Grant Price ($) Outstanding at December 31, 2016 Granted — — Released — — Outstanding at March 31, 2017 The following table summarizes the aggregate stock-based compensation recorded in the Consolidated Statements of Comprehensive Loss related to stock options and RSUs during the three months ended March 31, 2017 and 2016: Three months ended March 31, 2017 2016 (in millions) Research and development expenses $ $ General and administrative expenses Total $ $

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Taxes
Income Taxes	8. Income Taxes The Company’s provision for income taxes was $30,000 and $28,000 for the three months ended March 31, 2017 and 2016, respectively. The provision for income taxes in both periods was a result of certain of the Company’s subsidiaries in Europe, which had taxable income during the three months ended March 31, 2017 and 2016. In jurisdictions where the Company has net losses, there was a full valuation allowance recorded against the Company’s deferred tax assets and therefore no tax benefit was recorded. The Company is subject to US federal, US state and foreign income taxes. The statute of limitations for tax audit is open for the Company’s US federal tax returns for the years ended 2013 and later and is generally open for certain states for the years 2012 and later. The Company’s US federal tax return for the year ended December 31, 2013 is currently under audit by the Internal Revenue Service. The Company has incurred net operating losses since inception, except for 2009. Such loss carryforwards are subject to audit in any tax year in which those losses are utilized, notwithstanding the year of origin. As of March 31, 2017 and December 31, 2016, the Company had recorded no reserves for unrecognized income tax benefits, nor had it recorded any accrued interest or penalties related to uncertain tax positions. The Company does not anticipate any material changes in the amount of unrecognized tax positions over the next twelve months.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies
Commitments and Contingencies	9. Commitments and Contingencies Commitments The Company has an operating lease for office and laboratory space located in Bridgewater, NJ, its corporate headquarters, for which the initial lease term expires in November 2019. Future minimum rental payments under this lease are $2.7 million. In July 2016, the Company signed an operating lease for additional laboratory space located in Bridgewater, NJ for which the initial lease term expires in September 2021. Future minimum rental payments under this lease are $2.2 million. Rent expense charged to operations was $0.4 million and $0.2 million for the three months ended March 31, 2017 and 2016, respectively. Future minimum rental payments required under the Company’s operating leases for the period from April 1, 2017 to December 31, 2017 and for each of the five years thereafter are as follows (in thousands): Year Ending December 31: 2017 (remaining) $ 2018 2019 2020 2021 2022 — $ Legal Proceedings On July 15, 2016, a lawsuit captioned Hoey v. Insmed Incorporated, et al, No. 3:16-cv-04323-FLW-TJB (D.N.J. July 15, 2016) was filed in the US District Court for the District of New Jersey on behalf of a putative class of investors who purchased the Company’s common stock from March 18, 2013 through June 8, 2016. The complaint alleged that the Company and certain of its executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (Exchange Act) by misrepresenting and/or omitting the likelihood of the EMA approving the Company’s European MAA for use of ARIKAYCE in the treatment of NTM lung disease and the likelihood of commercialization of ARIKAYCE in Europe. On October 25, 2016, the Court issued an order appointing Bucks County Employees Retirement Fund as lead plaintiff for the putative class. On December 15, 2016, lead plaintiff filed an amended complaint that shortens the putative class period for the Exchange Act claims to March 26, 2014 through June 8, 2016 and adds claims under Sections 11, 12, and 15 of the Securities Act on behalf of a putative class of investors who purchased common stock in or traceable to the Company’s March 31, 2015 public offering. The amended complaint names as defendants in the Securities Act claims the Company, certain directors and officers, and the investment banks who served as underwriters in connection with the secondary offering. The amended complaint alleges defendants violated the Securities Act by using a purportedly misleading definition of “culture conversion” and supposedly failing to disclose in the offering materials purported flaws in its Phase 2 study that made the secondary offering risky or speculative. The amended complaint seeks damages in an unspecified amount. The Company moved to dismiss the amended complaint on March 1, 2017. The lead plaintiff’s opposition to the motion is currently due by May 17, 2017. The Company believes that the allegations in the complaints are without merit and intends to defend the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of the lawsuit. From time to time, the Company is a party to various other lawsuits, claims and other legal proceedings that arise in the ordinary course of business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies
Fair Value Measurements	Fair Value Measurements - The Company categorizes its financial assets and liabilities measured and reported at fair value in the financial statements on a recurring basis based upon the level of judgments associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs used to determine the fair value of financial assets and liabilities, are as follows: · Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. · Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. · Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Each major category of financial assets and liabilities measured at fair value on a recurring basis are categorized based upon the lowest level of significant input to the valuations. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Financial instruments in Level 1 generally include US treasuries and mutual funds listed in active markets. The Company’s only assets and liabilities which were measured at fair value as of March 31, 2017 and December 31, 2016 were Level 1 and such assets were comprised of cash and cash equivalents of $125.8 million and $162.6 million, respectively. The Company’s cash and cash equivalents permit daily redemption and the fair values of these investments are based upon the quoted prices in active markets provided by the holding financial institutions. Cash equivalents consist of liquid investments with a maturity of three months or less from the date of purchase. The Company recognizes transfers between levels within the fair value hierarchy, if any, at the end of each quarter. There were no transfers in or out of Level 1, Level 2 or Level 3 during the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017 and December 31, 2016, the Company held no securities that were in an unrealized gain or loss position. The Company reviews the status of each security quarterly to determine whether an other-than-temporary impairment has occurred. In making its determination, the Company considers a number of factors, including: (1) the significance of the decline; (2) whether the securities were rated below investment grade; (3) how long the securities have been in an unrealized loss position; and (4) the Company’s ability and intent to retain the investment for a sufficient period of time for it to recover.
Net Loss Per Common Share	Net Loss Per Common Share - Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares and other dilutive securities outstanding during the period. Potentially dilutive securities from stock options and restricted stock units (RSUs) would be antidilutive as the Company incurred a net loss. Potentially dilutive common shares resulting from the assumed exercise of outstanding stock options are determined based on the treasury stock method. The following table sets forth the reconciliation of the weighted average number of shares used to compute basic and diluted net loss per share for the three months ended March 31, 2017 and 2016: Three Months Ended March 31, 2017 2016 Numerator: Net loss $ ) $ ) Denominator: Weighted average common shares used in calculation of basic net loss per share Effect of dilutive securities: Stock options to purchase common stock — — RSUs — — Weighted average common shares outstanding used in calculation of diluted net loss per share Net loss per share: Basic and diluted net loss per share $ ) $ ) The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2017 and 2016 as their effect would have been anti-dilutive (in thousands): 2017 2016 Stock options to purchase common stock Unvested RSUs —
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements - In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern , which defines management’s responsibility to perform interim and annual assessments of an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The new standard was effective for the annual period ending after December 15, 2016, and for interim periods thereafter. The Company adopted ASU 2014-15 in the fourth quarter of 2016, which had no impact on the Company’s consolidated financial statements. The interim assessment during the first quarter of 2017 did not have an impact on the consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting , which amends ASC Topic 718, Compensation—Stock Compensation . ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company adopted ASU 2016-09 in the first quarter of 2017 and impact of the adoption was not material to the consolidated financial statements as of and for the quarter ended March 31, 2017.

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2017
Summary of Significant Accounting Policies
Reconciliation of the weighted average number of shares used to compute basic and diluted net loss per share	Three Months Ended March 31, 2017 2016 Numerator: Net loss $ ) $ ) Denominator: Weighted average common shares used in calculation of basic net loss per share Effect of dilutive securities: Stock options to purchase common stock — — RSUs — — Weighted average common shares outstanding used in calculation of diluted net loss per share Net loss per share: Basic and diluted net loss per share $ ) $ )
Potentially dilutive securities excluded from computations of diluted weighted average common shares outstanding	The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding as of March 31, 2017 and 2016 as their effect would have been anti-dilutive (in thousands): 2017 2016 Stock options to purchase common stock Unvested RSUs —

Accrued Expenses (Tables)

Accrued Expenses (Tables)	3 Months Ended
	Mar. 31, 2017
Accrued Expenses
Accrued Expenses	As of March 31, As of December 31, 2017 2016 (in thousands) Accrued clinical trial expenses $ $ Accrued compensation Accrued professional fees Accrued technical operation expenses Accrued interest payable Other accrued expenses $ $

Debt (Tables)

Debt (Tables)	3 Months Ended
	Mar. 31, 2017
Debt
Components of the Company's debt balance	The following table presents the components of the Company’s debt balance as of March 31, 2017 (in thousands): Debt: Notes payable $ Accretion of backend fee Debt issuance costs, unamortized ) Debt, long-term $
Future principal repayments of the Company's long-term debt	As of March 31, 2017, future principal repayments of the debt for each of the fiscal years through maturity were as follows (in thousands): Year Ending in December 31: 2017 $ — 2018 2019 2020 $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Stock-Based Compensation
Summary of Company's grant date fair value and assumptions used in determining fair value of stock options	Three Months Ended March 31, 2017 2016 Volatility 73%-74% 77% Risk-free interest rate 1.86%-1.99% 1.16%-1.73% Dividend yield 0.0% 0.0% Expected option term (in years) 6.25 6.25 Weighted average fair value of stock options granted $9.18 $10.68
Summary of Company's stock option activity	Number of Weighted Weighted Aggregate Options outstanding at December 31, 2016 $ Granted $ Exercised ) $ Forfeited or expired ) $ Options outstanding at March 31, 2017 $ $ Vested and expected to vest at March 31, 2017 $ $ Exercisable at March 31, 2017 $ $
Summary of range of exercise prices and the number of stock options outstanding and exercisable	Outstanding as of March 31, 2017 Exercisable as of March 31, 2017 Weighted Average Remaining Weighted Range of Exercise Number of Contractual Average Number of Weighted Average Prices ($) Options Term (in years) Exercise Price ($) Options Exercise Price ($) — —
Summary of Company's RSU activity	Weighted Number of Average RSUs Grant Price ($) Outstanding at December 31, 2016 Granted — — Released — — Outstanding at March 31, 2017
Summary of aggregate stock-based compensation recorded in the Consolidated Statements of Comprehensive Loss	Three months ended March 31, 2017 2016 (in millions) Research and development expenses $ $ General and administrative expenses Total $ $

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies
Future minimum rental payments required under operating leases	Future minimum rental payments required under the Company’s operating leases for the period from April 1, 2017 to December 31, 2017 and for each of the five years thereafter are as follows (in thousands): Year Ending December 31: 2017 (remaining) $ 2018 2019 2020 2021 2022 — $

Summary of Significant Accoun21

Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Summary of Significant Accounting Policies
Cash and cash equivalents	$ 125.8		$ 162.6
Fair value transfers in or out of Level 1, Level 2, or Level 3	0	$ 0
Securities that were in an unrealized loss or gain position	$ 0		$ 0

Summary of Significant Accoun22

Summary of Significant Accounting Policies - Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net loss	$ (37,414)	$ (33,532)
Denominator:
Weighted average common shares used in calculation of basic net loss per share	62,041	61,858
Weighted average common shares outstanding used in calculation of diluted net loss per share	62,041	61,858
Net loss per share:
Basic and diluted net loss per share	$ (0.60)	$ (0.54)

Summary of Significant Accoun23

Summary of Significant Accounting Policies - Anti-dilutive Securities (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock options to purchase common stock
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	7,719	6,221
Unvested RSUs
Anti-dilutive securities excluded from computations of diluted weighted-average common shares outstanding
Potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding (in shares)	89

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accrued Expenses
Accrued clinical trial expenses	$ 7,842	$ 7,071
Accrued compensation	2,674	6,937
Accrued professional fees	2,290	1,604
Accrued technical operation expenses	534	591
Accrued interest payable	438	438
Other accrued expenses	365	181
Total accrued expenses	$ 14,143	$ 16,822

Debt (Details)

Debt (Details) - A&R Loan Agreement - USD ($)	Mar. 31, 2017	Mar. 31, 2017	Dec. 31, 2016	Oct. 31, 2016	Sep. 30, 2016
Debt
Maximum borrowing capacity of term loan					$ 55,000,000
Amount outstanding			$ 25,000,000		35,000,000
Amount of borrowings during the period		$ 10,000,000
Remaining borrowing capacity of term loan					$ 20,000,000
Facility fee paid (as a percent)	0.375%	0.375%
Interest rate (as a percent)	9.25%	9.25%
Backend fee (as a percent)	4.15%
Facility fee	$ 337,500
Maximum interest-only extension period (in months)	6 months
Minimum cash liquidity requirement to be consolidated	$ 25,000,000	$ 25,000,000
Limit on lender's participation rights in certain future private equity financings	$ 2,000,000	$ 2,000,000
License Agreement with AstraZeneca
Debt
Amount outstanding				$ 20,000,000
Prime Rate
Debt
Variable interest rate	prime rate
Basis spread (as a percent)	(4.50%)
Minimum
Debt
Amount of cash proceeds required to extend maturity date of loan	$ 75,000,000

Debt - Components and Principal

Debt - Components and Principal Payments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Debt:
Notes payable	$ 55,000
Accretion Of Backend Fee	342
Debt issuance costs, unamortized	(349)
Debt, long-term	54,993	$ 54,791
Future principal repayments of the long term debt
2,018	3,271
2,019	20,753
2,020	30,976
Total	$ 55,000

Shareholders' Equity (Details)

Shareholders' Equity (Details) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Common stock, authorized shares	500,000,000	500,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, issued shares	62,087,828	62,019,889
Common stock, outstanding shares	62,087,828	62,019,889
Preferred stock
Preferred stock, authorized	200,000,000	200,000,000
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Stock options to purchase common stock
Common stock shares reserved for issuance	7,718,990
Unvested RSUs
Common stock shares reserved for issuance	89,194

Stock-Based Compensation - Disc

Stock-Based Compensation - Disclosures (Details)	Mar. 31, 2017shares
Stock-Based Compensation
Shares of common stock, maximum authorized for issuance	5,000,000
Shares available for grant	1,596,242

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Number of Shares
Options outstanding beginning of the year (in shares)	7,116,706
Granted (in shares)	940,060
Exercised (in shares)	(67,939)
Forfeited or expired (in shares)	(269,837)
Options outstanding end of the year (in shares)	7,718,990
Vested and expected to vest (in shares)	7,418,298
Exercisable (in shares)	3,436,957
Weighted Average Exercise Price
Options outstanding beginning of the year (in dollars per share)	$ 13.30
Granted (in dollars per share)	13.77
Exercised (in dollars per share)	8.58
Forfeited or expired (in dollars per share)	14.50
Options outstanding end of the year (in dollars per share)	13.36
Vested and expected to vest (in dollars per share)	13.32
Exercisable (in dollars per share)	$ 11.80
Weighted Average Remaining Contractual Life in Years
Options outstanding	7 years 6 months 29 days
Vested and expected to vest	7 years 6 months 7 days
Exercisable	6 years 2 months 1 day
Aggregate Intrinsic Value
Options outstanding (in dollars)	$ 37,828
Vested and expected to vest (in dollars)	36,705
Exercisable (in dollars)	$ 22,276
Stock options to purchase common stock
Fair value and assumptions used in determining fair value of stock options
Volatility (as a percent)		77.00%
Dividend yield (as a percent)	0.00%	0.00%
Expected option term (in years)	6 years 3 months	6 years 3 months
Weighted average fair value of stock options granted (in dollars per share)	$ 9.18	$ 10.68
Stock options to purchase common stock | Minimum
Fair value and assumptions used in determining fair value of stock options
Volatility (as a percent)	73.00%
Risk-free interest rate (as a percent)	1.86%	1.16%
Stock options to purchase common stock | Maximum
Fair value and assumptions used in determining fair value of stock options
Volatility (as a percent)	74.00%
Risk-free interest rate (as a percent)	1.99%	1.73%
Performance-based options
Number of Shares
Options outstanding end of the year (in shares)	133,334

Stock-Based Compensation - Rang

Stock-Based Compensation - Range of Exercise Prices (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock options to purchase common stock
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Total intrinsic value of stock options exercised during the period	$ 0.5	$ 0.1
Unrecognized compensation expense related to unvested stock options	$ 28.4
Expected weighted average period for recognizing unrecognized compensation expense	2 years 8 months 12 days
Performance-based options
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Unrecognized compensation expense related to unvested stock options	$ 1.1
$3.03 to $3.40
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	$ 3.03
Range of Exercise Prices upper range limit (in dollars per share)	$ 3.40
Number of Options outstanding (in shares)	841,850
Weighted Average Remaining Contractual Term	5 years 4 months 2 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 3.34
Number of Options exercisable (in shares)	841,850
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 3.34
$3.60 to $6.90
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	3.60
Range of Exercise Prices upper range limit (in dollars per share)	$ 6.90
Number of Options outstanding (in shares)	452,003
Weighted Average Remaining Contractual Term	4 years 3 months
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 5.82
Number of Options exercisable (in shares)	414,503
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 5.72
$6.96 to $10.85
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	6.96
Range of Exercise Prices upper range limit (in dollars per share)	$ 10.85
Number of Options outstanding (in shares)	1,096,296
Weighted Average Remaining Contractual Term	9 years 18 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 10.76
Number of Options exercisable (in shares)	23,751
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 6.96
$11.14 to $12.58
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	11.14
Range of Exercise Prices upper range limit (in dollars per share)	$ 12.58
Number of Options outstanding (in shares)	1,121,225
Weighted Average Remaining Contractual Term	6 years 9 months 15 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 12.18
Number of Options exercisable (in shares)	664,466
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 12.21
$12.66 to $13.58
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	12.66
Range of Exercise Prices upper range limit (in dollars per share)	$ 13.58
Number of Options outstanding (in shares)	187,880
Weighted Average Remaining Contractual Term	8 years 2 months 1 day
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 13.24
Number of Options exercisable (in shares)	68,887
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 13.30
$13.67 to $13.67
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	13.67
Range of Exercise Prices upper range limit (in dollars per share)	$ 13.67
Number of Options outstanding (in shares)	880,750
Weighted Average Remaining Contractual Term	9 years 9 months 7 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 13.67
$13.94 to $16.07
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	13.94
Range of Exercise Prices upper range limit (in dollars per share)	$ 16.07
Number of Options outstanding (in shares)	867,990
Weighted Average Remaining Contractual Term	7 years 5 months 19 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 15.18
Number of Options exercisable (in shares)	467,219
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 15.13
$16.09 to $16.54
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	16.09
Range of Exercise Prices upper range limit (in dollars per share)	$ 16.54
Number of Options outstanding (in shares)	775,528
Weighted Average Remaining Contractual Term	8 years 6 months 18 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 16.18
Number of Options exercisable (in shares)	215,355
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 16.17
$17.14 to $22.76
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	17.14
Range of Exercise Prices upper range limit (in dollars per share)	$ 22.76
Number of Options outstanding (in shares)	1,427,631
Weighted Average Remaining Contractual Term	7 years 6 months 15 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 21.27
Number of Options exercisable (in shares)	714,903
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 21
$22.84 to $27.38
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range
Range of Exercise Prices lower range limit (in dollars per share)	22.84
Range of Exercise Prices upper range limit (in dollars per share)	$ 27.38
Number of Options outstanding (in shares)	67,837
Weighted Average Remaining Contractual Term	8 years 1 month 17 days
Outstanding Options, Weighted Average Exercise Price (in dollars per share)	$ 23.78
Number of Options exercisable (in shares)	26,023
Exercisable Options, Weighted Average Exercise Price (in dollars per share)	$ 23.79

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock and Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Stock options and RSUs
Weighted Average Grant Price
Allocated share-based compensation expense	$ 4	$ 4.2
Stock options and RSUs | Research and development expenses
Weighted Average Grant Price
Allocated share-based compensation expense	1.5	1.4
Stock options and RSUs | General and administrative expenses
Weighted Average Grant Price
Allocated share-based compensation expense	$ 2.5	$ 2.8
Unvested RSUs
Number of RSUs
Outstanding, beginning balance (in shares)	89,194
Outstanding, ending balance (in shares)	89,194
Weighted Average Grant Price
Outstanding weighted average grant price (in dollars per share)	$ 10.85
Outstanding weighted average grant price (in dollars per share)	$ 10.85
Restricted stock and restricted stock units
Stock-Based Compensation
Number of common shares each award holder is entitled to receive	1

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Income Taxes
Provision for income taxes	$ 30	$ 28
Deferred tax benefit	0
Unrecognized tax benefits, interest and penalties accrued	$ 0		$ 0

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Details) $ in Thousands	Mar. 31, 2017USD ($)
Commitments
Future minimum rental payments under leases	$ 5,018
Bridgewater, NJ
Commitments
Future minimum rental payments under leases	2,700
Future minimum rental payments for additional laboratory space	$ 2,200

Commitments and Contingencies34

Commitments and Contingencies - Minimum Rental Payments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Commitments and Contingencies
Rent expense charged to operations	$ 400	$ 200
Future minimum rental payments under operating leases
2017 (remaining)	1,107
2,018	1,515
2,019	1,421
2,020	477
2,021	498
Total	$ 5,018