XenoPort (XNPT) 10-Q 6 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 15, 2015
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Trading Symbol	XNPT
Entity Registrant Name	XENOPORT INC
Entity Central Index Key	1,130,591
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		63,077,405

BALANCE SHEETS

BALANCE SHEETS - Entity [Domain] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 31,360	$ 11,958
Short-term investments	139,057	90,098
Accounts receivable	3,494	2,895
Inventories	1,894	1,458
Prepaids and other current assets	7,338	3,185
Total current assets	183,143	109,594
Property and equipment, net	2,208	2,422
Long-term inventories	8,381	9,098
Restricted investments and other assets	105	1,947
Total assets	193,837	123,061
Current liabilities:
Accounts payable	2,598	2,835
Accrued compensation	4,696	7,148
Accrued preclinical and clinical costs	1,910	1,554
Other accrued liabilities	6,184	5,117
Deferred revenue	1,134	1,134
Total current liabilities	16,522	17,788
Convertible senior notes, net	111,520
Deferred revenue	10,297	10,864
Other noncurrent liability	$ 3,543	$ 3,269
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 200,000 and 100,000 shares authorized at June 30, 2015 and December 31, 2014, respectively; 63,075 and 62,475 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	$ 63	$ 62
Additional paid-in capital	683,533	677,924
Accumulated other comprehensive income (loss)	65	(30)
Accumulated deficit	(631,706)	(586,816)
Total stockholders' equity	51,955	91,140
Total liabilities and stockholders' equity	$ 193,837	$ 123,061

BALANCE SHEETS (Parenthetical)

BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	100,000,000
Common stock, shares issued	63,075,000	62,475,000
Common stock, shares outstanding	63,075,000	62,475,000

STATEMENTS OF COMPREHENSIVE LOS

STATEMENTS OF COMPREHENSIVE LOSS - Entity [Domain] - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues:
Product sales, net	$ 8,214	$ 4,920	$ 14,853	$ 7,877
Collaboration revenue	283	283	567	566
Royalty revenue	124	131	268	266
Total revenues	8,621	5,334	15,688	8,709
Operating expenses:
Cost of product sales	506	599	960	1,029
Research and development	6,215	5,203	12,599	9,860
Selling, general and administrative	25,554	18,865	45,653	37,636
Total operating expenses	32,275	24,667	59,212	48,525
Income (loss) from operations	(23,654)	(19,333)	(43,524)	(39,816)
Interest income	151	66	267	115
Interest expense	(978)	(120)	(1,633)	(234)
Net income (loss)	(24,481)	(19,387)	(44,890)	(39,935)
Other comprehensive loss:
Unrealized gains on available-for-sale securities	3	18	95	14
Comprehensive income (loss)	$ (24,478)	$ (19,369)	$ (44,795)	$ (39,921)
Basic and diluted net income (loss) per share	$ (0.39)	$ (0.31)	$ (0.71)	$ (0.67)
Shares used to compute basic and diluted net loss per share	62,920	61,994	62,821	59,441

STATEMENTS OF CASH FLOWS

STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net loss	$ (44,890)	$ (39,935)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	275	353
Accretion of investment discounts and amortization of investment premiums, net	608	491
Amortization of discount and debt issuance costs on convertible senior notes	193
Stock-based compensation expense	5,867	5,109
Changes in assets and liabilities:
Accounts receivable	(599)	(709)
Prepaids and other current and noncurrent assets	(2,311)	(603)
Inventories	281	339
Accounts payable	(237)	2,105
Accrued compensation	(2,452)	924
Accrued preclinical and clinical costs	356	17
Other accrued liabilities, current and noncurrent	1,341	2,480
Deferred revenue, current and noncurrent	(567)	19,434
Net cash used in operating activities	(42,135)	(9,995)
Investing activities
Purchases of investments	(131,844)	(103,541)
Proceeds from maturities of investments	82,374	48,843
Purchases of property and equipment	(62)	(177)
Net cash used in investing activities	(49,532)	(54,875)
Financing activities
Proceeds from issuance of convertible senior notes, net of discount and debt issuance costs	111,327
Net cash proceeds provided by (used in) issuance of common stock and exercise of stock options	(258)	76,938
Net cash provided by financing activities	111,069	76,938
Net increase in cash and cash equivalents	19,402	12,068
Cash and cash equivalents at beginning of period	11,958	20,584
Cash and cash equivalents at end of period	$ 31,360	$ 32,652

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Organization and Summary of Significant Accounting Policies	1. Organization and Summary of Significant Accounting Policies Nature of Operations XenoPort, Inc., or the Company, is a biopharmaceutical company focused on developing and commercializing a portfolio of internally discovered product candidates for the potential treatment of neurological and other disorders. The Company is currently commercializing HORIZANT ® Basis of Preparation The accompanying financial statements as of June 30, 2015, and for the three and six months ended June 30, 2015 and 2014, are unaudited. These unaudited financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2015 and comprehensive losses for the three and six months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014. The Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or the Codification, is the single source of authoritative U.S. generally accepted accounting principles, or GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015, or for any other interim period or any other future year. For more complete financial information, these financial statements, and the notes hereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2015. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers: Topic 606 In August 2014, the FASB issued 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 substantial doubt; In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.

License and Collaboration Arran

License and Collaboration Arrangements	6 Months Ended
	Jun. 30, 2015
License and Collaboration Arrangements	2. License and Collaboration Arrangements Indivior PLC In May 2014, the Company entered into an exclusive license agreement with Indivior, which became effective on June 19, 2014. Under the terms of this agreement, the Company granted to Indivior exclusive, world-wide rights to develop and commercialize pharmaceutical products containing AP Products for all indications, subject to its right of first negotiation with Indivior to collaborate to develop and commercialize AP Products for non-addiction indications. In exchange for these rights, the Company received an upfront, non-refundable cash payment of $20,000,000 in June 2014 and also received an additional $5,000,000 payment in July 2014 after delivery of specified materials to Indivior. The Company is also eligible to receive aggregate cash payments of up to $120,000,000 upon the achievement by Indivior of certain contingent event-based payments, of which $70,000,000 are regulatory and development-based and $50,000,000 are commercialization-based. In addition, the Company is entitled to receive tiered double-digit royalty payments of up to the mid-teens on a percentage basis on potential future net sales of the products in the United States, and high single-digit royalty payments on potential future net sales of the products outside the United States. The Company also agreed to transfer its existing AP Investigational New Drug applications, or INDs, and know-how to Indivior, and to provide supply transition assistance to facilitate the establishment of Indivior’s AP Product manufacturing capabilities pursuant to a mutually agreed supply transition plan. The Company assessed its transfer and assistance obligations under the Indivior agreement using the multiple-element arrangements revenue recognition guidance since those obligations involved more than one deliverable to Indivior. This analysis involved identification of the deliverables, determining if they qualify as separate units of accounting, arriving at fair value estimates for each separate unit of accounting, and allocating total consideration to each unit of accounting. The Company identified the following non-contingent deliverables under the license agreement: (1) grant of exclusive rights, or the license; (2) transfer of know-how necessary for the manufacture and development of AP Products; (3) transfer of INDs; (4) transfer of specified materials; and (5) supply of transition assistance to facilitate the establishment of Indivior’s AP Product manufacturing capabilities pursuant to a mutually agreed upon supply transition plan. The license, know-how, INDs and supply of transition assistance deliverables were combined into one unit of accounting since each of these deliverables was dependent on, and not separate from each other, and accordingly did not have stand-alone value. The transfer of specified materials represented the other unit of accounting. The total of the upfront cash payment of $20,000,000 and the additional cash payment of $5,000,000 were allocated into two units of accounting using the relative estimated selling price method. The Company developed its best estimate of selling prices for each deliverable in order to allocate the non-contingent arrangement consideration to the two units of accounting. For the license, know-how, INDs and supply of transition assistance, the Company used the discounted cash flow method to estimate the price at which it could sell them on a stand-alone basis. Embedded in the estimate were significant assumptions including: (1) probabilities of success during the development process; (2) potential customer market for the drug; (3) selling price for the drug; (4) costs to develop, maintain and manufacture the developed drug; and (5) discount rate. For the transfer of specified materials, the Company estimated the selling price based on the cost to purchase such materials from third party suppliers. Both the initial upfront cash payment of $20,000,000 and the additional cash payment of $5,000,000 were recognized as collaboration revenue upon the transfer of the deliverables to Indivior, which occurred in the third quarter of 2014. Astellas Pharma Inc. Under a December 2005 license agreement with Astellas Pharma Inc., as amended in July 2012, Astellas is commercializing gabapentin enacarbil in Japan under the trade name of REGNITE ®

Net Loss per Share

Net Loss per Share	6 Months Ended
	Jun. 30, 2015
Net Loss per Share	3. 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 for the period without consideration for potential common shares. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period plus any dilutive potential common shares for the period determined using the treasury-stock method for restricted stock units and options to purchase stock and using the if-converted method for the convertible senior notes. For purposes of this calculation, restricted stock units, options to purchase stock and convertible senior notes are considered to be potential common shares and are only included in the calculation of diluted net loss per share when their effect is dilutive. Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands, except (In thousands, except per share amounts) per share amounts) Numerator: Net loss $ (24,481 ) $ (19,387 ) $ (44,890 ) $ (39,935 ) Denominator: Weighted-average common shares outstanding 62,920 61,994 62,821 59,441 Basic and diluted net loss per share $ (0.39 ) $ (0.31 ) $ (0.71 ) $ (0.67 ) Outstanding securities at period end not included in the computation of diluted net loss per share as they had an anti-dilutive effect: Restricted stock units and options to purchase common stock 9,155 8,148 9,155 8,148 Convertible senior notes 10,729 — 10,729 — 19,884 8,148 19,884 8,148 On January 29, 2014, the Company completed an underwritten public offering of 12,000,000 shares of its common stock at a price to the public of $6.00 per share. On February 21, 2014, the underwriters exercised in full their option to purchase 1,800,000 additional shares. On February 3, 2015, the Company completed a private placement of $115,000,000 aggregate principal amount of 2.50% Convertible Senior Notes due 2022, or the 2022 Notes. The 2022 Notes are convertible at an initial conversion rate of 93.2945 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, which is equal to an initial conversion price of approximately $10.72 per share of common stock. As of June 30, 2015, 10,728,867 shares of the Company’s common stock were issuable upon conversion of the 2022 Notes (see Note 7 for more information).

Cash and Cash Equivalents, Shor

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments	6 Months Ended
	Jun. 30, 2015
Cash and Cash Equivalents, Short-Term Investments and Restricted Investments	4. Cash and Cash Equivalents, Short-Term Investments and Restricted Investments The following are summaries of cash and cash equivalents, short-term investments and restricted investments (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value As of June 30, 2015: Cash $ 1,919 $ 1,919 Money market funds 25,534 25,534 Corporate debt securities 142,899 89 (24 ) 142,964 Certificates of deposit 1,725 1,725 $ 172,077 $ 89 $ (24 ) $ 172,142 Reported as: Cash and cash equivalents $ 31,360 Short-term investments 139,057 Restricted investments (1) 1,725 $ 172,142 As of December 31, 2014: Cash $ 3,383 $ — $ — $ 3,383 Money market funds 8,576 — — 8,576 U.S. government-sponsored agencies 2,000 — (2 ) 1,998 Corporate debt securities 88,127 12 (40 ) 88,099 Certificates of deposit 1,725 — — 1,725 $ 103,811 $ 12 $ (42 ) $ 103,781 Reported as: Cash and cash equivalents $ 11,958 Short-term investments 90,098 Restricted investments (1) 1,725 $ 103,781 (1) Included in “Prepaids and other current assets” and “Restricted investments and other assets” as of June 30, 2015 and December 31, 2014, respectively. The Company considers all highly liquid investments with original maturities of 90 days or less at the time of purchase to be cash equivalents, which primarily consist of money market funds. Management determines the appropriate classification of securities at the time of purchase. All investments have been designated as available-for-sale. The Company classifies its available-for-sale investments as either current or noncurrent based on their maturities and the Company’s intent with regard to those investments. The Company currently views its available-for-sale investments that mature within one year as available for its current operations and classified as short-term investments, while available-for-sale investments that mature beyond one year are classified as long-term investments. All available-for-sale securities are carried at estimated fair value with unrealized gains and losses reported as a component of other comprehensive loss in the statements of comprehensive loss. No gross realized gains or losses were recognized and accordingly, there were no amounts reclassified out of accumulated other comprehensive income (loss) to earnings in the three and six months ended June 30, 2015 or in the same periods in 2014. The Company’s available-for-sale investments, which include cash equivalents and short-term investments, are measured at fair value on a recurring basis and are classified at the following fair value hierarchy (in thousands): Fair Value Measurements at Reporting Date Using Description Total As of Quoted Prices in Significant Other (Level 2) Significant Money market funds $ 25,534 $ 25,534 $ — $ — Corporate debt securities 142,964 — 142,964 — Certificates of deposit 1,725 — 1,725 — Total $ 170,223 $ 25,534 $ 144,689 $ — Fair Value Measurements at Reporting Date Using Description Total As of Quoted Prices in Identical Assets Significant Other Significant Money market funds $ 8,576 $ 8,576 $ — $ — U.S. government-sponsored agencies 1,998 — 1,998 — Corporate debt securities 88,099 — 88,099 — Certificates of deposit 1,725 — 1,725 — Total $ 100,398 $ 8,576 $ 91,822 $ —

Inventories

Inventories	6 Months Ended
	Jun. 30, 2015
Inventories	5. Inventories Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out, or FIFO, basis. Inventories include active pharmaceutical ingredient, or API, contract manufacturing costs and overhead allocations. The Company regularly evaluates the Company’s inventories for excess quantities and obsolescence (expiration), taking into account such factors as historical and anticipated future sales compared to quantities on hand and the remaining shelf life of HORIZANT. Write-downs of inventories are considered to be permanent reductions in the cost basis of inventories. Inventories that are not expected to be consumed within 12 months following the balance sheet date are classified as long-term inventories. Inventories as of June 30, 2015 and December 31, 2014 were as follows (in thousands): June 30, December 31, 2015 2014 Raw materials $ 8,445 $ 9,273 Work in progress 121 517 Finished goods 1,709 766 Total inventory 10,275 10,556 Less: Long-term inventories 8,381 9,098 Total inventory classified as current $ 1,894 $ 1,458 Long-term inventories primarily consisted of gabapentin enacarbil API used for production of HORIZANT. The Company evaluates demand for HORIZANT and expected consumption of the API based on long-term projected sales of HORIZANT.

Other Accrued Liabilities

Other Accrued Liabilities	6 Months Ended
	Jun. 30, 2015
Other Accrued Liabilities	6. Other Accrued Liabilities Other accrued liabilities at June 30, 2015 and December 31, 2014 were as follows (in thousands): June 30, December 31, 2015 2014 Accrued product costs $ 165 $ 2,009 Accrued selling and marketing expenses 1,691 1,210 Accrued general and administrative expenses 922 466 Accrued rebates, allowances and returns 1,468 986 Interest payable - convertible senior notes 1,166 — Other liabilities 772 446 Total other accrued liabilities $ 6,184 $ 5,117

Convertible Senior Notes

Convertible Senior Notes	6 Months Ended
	Jun. 30, 2015
Convertible Senior Notes	7. Convertible Senior Notes On February 3, 2015, the Company completed a private placement of $115,000,000 aggregate principal amount of the 2022 Notes. The net proceeds from the offering of the 2022 Notes were $111,327,000, after deducting the initial purchaser’s discount and debt issuance costs payable by the Company. Beginning on August 1, 2015, interest on the 2022 Notes will be payable semi-annually in cash in arrears on February 1 and August 1 of each year, at a rate of 2.50% per year. The 2022 Notes mature on February 1, 2022, unless earlier converted or repurchased. The 2022 Notes are not redeemable prior to the maturity date. Holders may convert all or any portion of their 2022 Notes at their option at any time prior to the close of business on the business day immediately preceding the maturity date. The 2022 Notes are convertible at an initial conversion rate of 93.2945 shares of the Company’s common stock per $1,000 principal amount of the 2022 Notes, subject to adjustment, which is equal to an initial conversion price of approximately $10.72 per share of common stock. Upon conversion, the 2022 Notes may be settled in shares of the Company’s common stock, together with a cash payment in lieu of delivering any fractional share. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that may occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 2022 Notes in connection with such a corporate event in certain circumstances. If the Company undergoes a fundamental change, which would include specified change of control transactions, or liquidation or dissolution or the Company’s common stock ceasing to be listed or quoted on specified national securities exchanges, and the fundamental change occurs prior to the maturity date of the 2022 Notes, holders of the 2022 Notes may require the Company to repurchase all or part of their 2022 Notes at a repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. As of June 30, 2015, the outstanding principal balance on the 2022 Notes was $115,000,000 and 10,728,867 shares of the Company’s common stock were issuable upon conversion of the 2022 Notes. The 2022 Notes are accounted for in accordance with ASC Subtopic 470-20, Debt with Conversion and Other Options The Company incurred $568,000 in debt issuance costs in connection with the issuance of the 2022 Notes, which are being amortized through the maturity date through the application of the interest method and reported as interest expense. In accordance with ASU No. 2015-03, the Company has presented debt issuance costs as a direct deduction from the carrying value of the 2022 Notes. As of June 30, 2015, the 2022 Notes were reported at their current carrying value which approximated fair value based on Level 3 unobservable inputs involving discounted cash flows and the estimated market rate of borrowing that could be obtained by companies with credit risk similar to the Company’s credit risk.

Stock-Based Compensation

Stock-Based Compensation	6 Months Ended
	Jun. 30, 2015
Stock-Based Compensation	8. Stock-Based Compensation The Company’s non-cash stock-based compensation expense was as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands) (In thousands) Research and development $ 747 $ 622 $ 1,129 $ 1,324 Selling, general and administrative 2,449 1,803 4,738 3,785 $ 3,196 $ 2,425 $ 5,867 $ 5,109

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2015
Stockholders' Equity	9. Stockholders’ Equity Common Stock On May 19, 2015, the Company’s stockholders approved an amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 100,000,000 shares to 200,000,000 shares. The increase in the number of authorized shares of the Company’s common stock was effected pursuant to a Certificate of Amendment of Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on May 19, 2015 and was effective as of such date. Employee Stock Purchase Plan On May 19, 2015, the Company’s stockholders also approved the XenoPort, Inc. 2015 Employee Stock Purchase Plan, or the 2015 ESPP, which became effective on May 19, 2015. The Company’s prior plan, the 2005 Employee Stock Purchase Plan, was terminated as a result of this approval. The 2015 ESPP will be implemented by offerings of rights to purchase the Company’s common stock to all eligible employees. The plan administrator will determine the duration of each offering period, provided that in no event may an offering period exceed 27 months. Each offering period will have one or more purchase dates, as determined by the plan administrator prior to the commencement of the offering period. The purchase price per share at which shares of the Company’s common stock are purchased on each purchase date during an offering period will not be less than the lower of (i) 85% of the fair market value of a share of the Company’s common stock on the first day of the offering period or (ii) 85% of the fair market value of a share of the Company’s common stock on the purchase date. The maximum number of shares of the Company’s common stock that may be issued under the 2015 ESPP is 4,000,000 shares, subject to adjustment for certain changes in the Company’s capitalization. At June 30, 2015, there were 4,000,000 shares available for future grant under the 2015 ESPP.

Organization and Summary of S15

Organization and Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Basis of Preparation	Basis of Preparation The accompanying financial statements as of June 30, 2015, and for the three and six months ended June 30, 2015 and 2014, are unaudited. These unaudited financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2015 and comprehensive losses for the three and six months ended June 30, 2015 and 2014, and cash flows for the six months ended June 30, 2015 and 2014. The Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or the Codification, is the single source of authoritative U.S. generally accepted accounting principles, or GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015, or for any other interim period or any other future year. For more complete financial information, these financial statements, and the notes hereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2015.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers: Topic 606 In August 2014, the FASB issued 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 substantial doubt; In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.

Net Loss per Share (Tables)

Net Loss per Share (Tables)	6 Months Ended
	Jun. 30, 2015
Net Loss Per Share	Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands, except (In thousands, except per share amounts) per share amounts) Numerator: Net loss $ (24,481 ) $ (19,387 ) $ (44,890 ) $ (39,935 ) Denominator: Weighted-average common shares outstanding 62,920 61,994 62,821 59,441 Basic and diluted net loss per share $ (0.39 ) $ (0.31 ) $ (0.71 ) $ (0.67 ) Outstanding securities at period end not included in the computation of diluted net loss per share as they had an anti-dilutive effect: Restricted stock units and options to purchase common stock 9,155 8,148 9,155 8,148 Convertible senior notes 10,729 — 10,729 — 19,884 8,148 19,884 8,148

Cash and Cash Equivalents, Sh17

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments (Tables)	6 Months Ended
	Jun. 30, 2015
Cash and Cash Equivalents, Short-Term Investments and Restricted Investments	The following are summaries of cash and cash equivalents, short-term investments and restricted investments (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value As of June 30, 2015: Cash $ 1,919 $ 1,919 Money market funds 25,534 25,534 Corporate debt securities 142,899 89 (24 ) 142,964 Certificates of deposit 1,725 1,725 $ 172,077 $ 89 $ (24 ) $ 172,142 Reported as: Cash and cash equivalents $ 31,360 Short-term investments 139,057 Restricted investments (1) 1,725 $ 172,142 As of December 31, 2014: Cash $ 3,383 $ — $ — $ 3,383 Money market funds 8,576 — — 8,576 U.S. government-sponsored agencies 2,000 — (2 ) 1,998 Corporate debt securities 88,127 12 (40 ) 88,099 Certificates of deposit 1,725 — — 1,725 $ 103,811 $ 12 $ (42 ) $ 103,781 Reported as: Cash and cash equivalents $ 11,958 Short-term investments 90,098 Restricted investments (1) 1,725 $ 103,781 (1) Included in “Prepaids and other current assets” and “Restricted investments and other assets” as of June 30, 2015 and December 31, 2014, respectively.
Available-For-Sale Investments Measured at Fair Value	Fair Value Measurements at Reporting Date Using Description Total As of Quoted Prices in Significant Other (Level 2) Significant Money market funds $ 25,534 $ 25,534 $ — $ — Corporate debt securities 142,964 — 142,964 — Certificates of deposit 1,725 — 1,725 — Total $ 170,223 $ 25,534 $ 144,689 $ — Fair Value Measurements at Reporting Date Using Description Total As of Quoted Prices in Identical Assets Significant Other Significant Money market funds $ 8,576 $ 8,576 $ — $ — U.S. government-sponsored agencies 1,998 — 1,998 — Corporate debt securities 88,099 — 88,099 — Certificates of deposit 1,725 — 1,725 — Total $ 100,398 $ 8,576 $ 91,822 $ —

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2015
Inventory	Inventories as of June 30, 2015 and December 31, 2014 were as follows (in thousands): June 30, December 31, 2015 2014 Raw materials $ 8,445 $ 9,273 Work in progress 121 517 Finished goods 1,709 766 Total inventory 10,275 10,556 Less: Long-term inventories 8,381 9,098 Total inventory classified as current $ 1,894 $ 1,458

Other Accrued Liabilities (Tabl

Other Accrued Liabilities (Tables)	6 Months Ended
	Jun. 30, 2015
Other Accrued Liabilities	Other accrued liabilities at June 30, 2015 and December 31, 2014 were as follows (in thousands): June 30, December 31, 2015 2014 Accrued product costs $ 165 $ 2,009 Accrued selling and marketing expenses 1,691 1,210 Accrued general and administrative expenses 922 466 Accrued rebates, allowances and returns 1,468 986 Interest payable - convertible senior notes 1,166 — Other liabilities 772 446 Total other accrued liabilities $ 6,184 $ 5,117

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2015
Non-Cash Stock-Based Compensation	The Company’s non-cash stock-based compensation expense was as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2015 2014 2015 2014 (In thousands) (In thousands) Research and development $ 747 $ 622 $ 1,129 $ 1,324 Selling, general and administrative 2,449 1,803 4,738 3,785 $ 3,196 $ 2,425 $ 5,867 $ 5,109

Organization and Summary of S21

Organization and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2015	Jun. 30, 2015
Convertible Senior Notes Due 2022
Organization and Summary of Significant Accounting Policies Disclosure [Line Items]
Debt issuance cost	$ 568,000	$ 568,000

License and Collaboration Arr22

License and Collaboration Arrangements - Additional Information (Detail) - USD ($)	1 Months Ended		3 Months Ended			6 Months Ended
	Jul. 31, 2014	Jun. 30, 2014	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	May. 31, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue			$ 283,000		$ 283,000	$ 567,000	$ 566,000
Royalty revenue			124,000		131,000	268,000	266,000
Revenue recognized			8,621,000		5,334,000	15,688,000	8,709,000
Deferred revenue, current			1,134,000			1,134,000		$ 1,134,000
Deferred revenue, non-current			10,297,000			10,297,000		$ 10,864,000
Licensing Agreements | Indivior PLC | Upfront, non-refundable cash payment
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue, initial up-front license payment and payment for specified materials received		$ 20,000,000
Collaboration revenue				$ 20,000,000
Licensing Agreements | Indivior PLC | Additional payment for specified materials
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue, initial up-front license payment and payment for specified materials received	$ 5,000,000
Collaboration revenue				$ 5,000,000
Licensing Agreements | Indivior PLC | Achievement of certain predefined milestones
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payments, maximum amount									$ 120,000,000
Licensing Agreements | Indivior PLC | Regulatory and development-based milestones
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payments, maximum amount									70,000,000
Licensing Agreements | Indivior PLC | Commercialization-based milestones
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payments, maximum amount									$ 50,000,000
Licensing Agreements | Astellas Pharma Inc.
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Royalty revenue			124,000		131,000	268,000	266,000
Revenue recognized			54,908,000
Deferred revenue			11,431,000			11,431,000
Deferred revenue, current			1,134,000			1,134,000
Deferred revenue, non-current			10,297,000			10,297,000
Licensing Agreements | Astellas Pharma Inc. | Upfront, non-refundable cash payment
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue			$ 283,000		$ 283,000	$ 567,000	$ 566,000

Net Loss Per Share (Detail)

Net Loss Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Numerator:
Net loss	$ (24,481)	$ (19,387)	$ (44,890)	$ (39,935)
Denominator:
Weighted-average common shares outstanding	62,920	61,994	62,821	59,441
Basic and diluted net loss per share	$ (0.39)	$ (0.31)	$ (0.71)	$ (0.67)
Outstanding securities at period end not included in the computation of diluted net loss per share as they had an anti-dilutive effect:
Outstanding securities not included in the computation of diluted net loss per share	19,884	8,148	19,884	8,148
Restricted stock units and options to purchase common stock
Outstanding securities at period end not included in the computation of diluted net loss per share as they had an anti-dilutive effect:
Outstanding securities not included in the computation of diluted net loss per share	9,155	8,148	9,155	8,148
Convertible Senior Notes
Outstanding securities at period end not included in the computation of diluted net loss per share as they had an anti-dilutive effect:
Outstanding securities not included in the computation of diluted net loss per share	10,729		10,729

Net Loss Per Share - Additional

Net Loss Per Share - Additional Information (Detail)	Feb. 03, 2015USD ($)$ / shares	Jan. 29, 2014$ / sharesshares	Jun. 30, 2015USD ($)shares	Feb. 21, 2014shares
Computation of Earnings Per Share [Line Items]
Underwriters exercised the full option to purchase additional shares				1,800,000
Convertible Senior Notes Due 2022
Computation of Earnings Per Share [Line Items]
Convertible senior notes, principal offer amount | $	$ 115,000,000		$ 115,000,000
Convertible senior notes, stated interest rate	2.50%
Convertible senior notes, due date	2,022
Convertible senior notes, conversion share per 1000 principal amount	93.2945
Convertible senior notes, initial conversion price | $ / shares	$ 10.72
Common stock issuable upon conversion cf convertible senior notes			10,728,867
Underwritten Public Offering
Computation of Earnings Per Share [Line Items]
Common stock issued in underwritten public offering		12,000,000
Common stock price | $ / shares		$ 6

Cash and Cash Equivalents, Sh25

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments (Detail) - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Cost		$ 172,077	$ 103,811
Gross Unrealized Gains		89	12
Gross Unrealized Losses		(24)	(42)
Estimated Fair Value		172,142	103,781
Cash
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available for Sale Securities Cost		1,919	3,383
Available-for-sale investments		1,919	3,383
Money market funds
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available for Sale Securities Cost		25,534	8,576
Available-for-sale investments		25,534	8,576
Corporate debt securities
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available for Sale Securities Cost		142,899	88,127
Gross Unrealized Gains		89	12
Gross Unrealized Losses		(24)	(40)
Available-for-sale investments		142,964	88,099
Certificates of deposit
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Restricted Cost		1,725	1,725
Restricted Fair Value		1,725	1,725
Cash and cash equivalents
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available-for-sale investments		31,360	11,958
Short-term investments
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available-for-sale investments		139,057	90,098
Restricted Investments
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Restricted Fair Value	[1]	$ 1,725	1,725
U.S. government-sponsored agencies
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Available for Sale Securities Cost			2,000
Gross Unrealized Losses			(2)
Available-for-sale investments			$ 1,998
[1]	Included in "Prepaids and other current assets" and "Restricted investments and other assets" as of June 30, 2015 and December 31, 2014, respectively.

Cash and Cash Equivalents, Sh26

Cash and Cash Equivalents, Short-Term Investments and Restricted Investments - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Cash Cash Equivalents Short Term Investments and Restricted Investments [Line Items]
Gross realized gains or losses recognized	$ 0	$ 0	$ 0	$ 0
Amounts reclassified out of accumulated other comprehensive loss to earnings	$ 0	$ 0	$ 0	$ 0

Available-For-Sale Investments

Available-For-Sale Investments Measured at Fair Value (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Fair Value	$ 172,142	$ 103,781
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	25,534	8,576
U.S. government-sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		1,998
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	142,964	88,099
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted Fair Value	1,725	1,725
Fair Value Measurements, Recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Fair Value	170,223	100,398
Fair Value Measurements, Recurring basis | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	25,534	8,576
Fair Value Measurements, Recurring basis | U.S. government-sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		1,998
Fair Value Measurements, Recurring basis | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	142,964	88,099
Fair Value Measurements, Recurring basis | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted Fair Value	1,725	1,725
Fair Value Measurements, Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Fair Value	25,534	8,576
Fair Value Measurements, Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	25,534	8,576
Fair Value Measurements, Recurring basis | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Fair Value	144,689	91,822
Fair Value Measurements, Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. government-sponsored agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments		1,998
Fair Value Measurements, Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale investments	142,964	88,099
Fair Value Measurements, Recurring basis | Significant Other Observable Inputs (Level 2) | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Restricted Fair Value	$ 1,725	$ 1,725

Inventory (Detail)

Inventory (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 8,445	$ 9,273
Work in progress	121	517
Finished goods	1,709	766
Total inventory	10,275	10,556
Less: Long-term inventories	8,381	9,098
Total inventory classified as current	$ 1,894	$ 1,458

Other Accrued Liabilities (Deta

Other Accrued Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Payables And Accruals [Abstract]
Accrued product costs	$ 165	$ 2,009
Accrued selling and marketing expenses	1,691	1,210
Accrued general and administrative expenses	922	466
Accrued rebates, allowances and returns	1,468	986
Interest payable - convertible senior notes	1,166
Other liabilities	772	446
Total other accrued liabilities	$ 6,184	$ 5,117

Convertible Senior Notes - Addi

Convertible Senior Notes - Additional Information (Detail) - USD ($)	Feb. 03, 2015	Mar. 31, 2015	Jun. 30, 2015
Debt Instrument [Line Items]
Proceeds from issuance of convertible senior notes, net of discount and debt issuance costs			$ 111,327,000
Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Convertible senior notes, principal offer amount	$ 115,000,000		115,000,000
Convertible senior notes, due date	2,022
Proceeds from issuance of convertible senior notes, net of discount and debt issuance costs			$ 111,327,000
Convertible senior notes, repayment terms	Beginning on August 1, 2015, interest on the 2022 Notes will be payable semi-annually in cash in arrears on February 1 and August 1 of each year, at a rate of 2.50% per year.
Convertible senior notes, interest payment commencement date	Aug. 1, 2015
Convertible senior notes, maturity date	Feb. 1, 2022
Convertible senior notes, stated interest rate	2.50%
Convertible senior notes, conversion share per 1000 principal amount	93.2945
Convertible senior notes, initial conversion price	$ 10.72
Repurchase price of principal amount	100.00%
Common stock issuable upon conversion of notes			10,728,867
Debt issuance cost		$ 568,000	$ 568,000

Non-Cash Stock-Based Compensati

Non-Cash Stock-Based Compensation (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Non-cash stock-based compensation	$ 3,196	$ 2,425	$ 5,867	$ 5,109
Research and development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Non-cash stock-based compensation	747	622	1,129	1,324
Selling, general and administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Non-cash stock-based compensation	$ 2,449	$ 1,803	$ 4,738	$ 3,785

Stockholders Equity - Additiona

Stockholders Equity - Additional Information (Detail) - shares	6 Months Ended
	Jun. 30, 2015	May. 19, 2015	May. 18, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares authorized	200,000,000	200,000,000	100,000,000	100,000,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plans, shares available for future grant	4,000,000
Maximum | Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plans, exercise prices as a percentage of fair value of common stock	85.00%
Equity Incentive Plans, exercise prices as a percentage of fair value of common stock on purchase date	85.00%
Equity Incentive Plans, shares authorized for issuance	4,000,000