Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 05, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | GLAUKOS Corp | |
Entity Central Index Key | 0001192448 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity File Number | 001-37463 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 33-0945406 | |
Entity Address, Address Line One | 229 Avenida Fabricante | |
Entity Address, City or Town | San Clemente | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92672 | |
City Area Code | 949 | |
Local Phone Number | 367-9600 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | GKOS | |
Security Exchange Name | NYSE | |
Entity Interactive Data Current | Yes | |
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 | 36,834,375 | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 39,992 | $ 29,821 |
Short-term investments | 110,402 | 110,667 |
Accounts receivable, net | 22,041 | 18,673 |
Inventory, net | 14,038 | 13,282 |
Prepaid expenses and other current assets | 14,728 | 4,124 |
Total current assets | 201,201 | 176,567 |
Restricted cash | 8,848 | 8,775 |
Property and equipment, net | 20,497 | 19,153 |
Operating lease right-of-use asset | 12,369 | |
Finance lease right-of-use asset | 53,935 | |
Income tax receivable | 213 | 213 |
Deposits and other assets | 5,022 | 2,262 |
Total assets | 302,085 | 206,970 |
Current liabilities: | ||
Accounts payable | 5,052 | 6,286 |
Accrued liabilities | 25,949 | 23,964 |
Deferred rent | 115 | |
Total current liabilities | 31,001 | 30,365 |
Operating lease liability | 11,657 | |
Finance lease liability | 68,209 | |
Other liabilities | 3,413 | 2,745 |
Total liabilities | 114,280 | 33,110 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued and outstanding | ||
Common stock, $0.001 par value; 150,000 shares authorized; 36,666 and 36,135 shares issued and 36,638 and 36,107 shares outstanding at June 30, 2019 and December 31, 2018, respectively | 37 | 36 |
Additional paid-in capital | 399,452 | 378,352 |
Accumulated other comprehensive income | 1,233 | 738 |
Accumulated deficit | (212,785) | (205,134) |
Less treasury stock (28 shares as of June 30, 2019 and December 31, 2018) | (132) | (132) |
Total stockholders' equity | 187,805 | 173,860 |
Total liabilities and stockholders' equity | $ 302,085 | $ 206,970 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 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 (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 36,666,000 | 36,135,000 |
Common stock, shares outstanding | 36,638,000 | 36,107,000 |
Treasury stock, shares | 28,000 | 28,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Net sales | $ 58,600,000 | $ 43,161,000 | $ 112,626,000 | $ 83,294,000 |
Cost of sales | 7,870,000 | 6,160,000 | 14,981,000 | 11,946,000 |
Gross profit | 50,730,000 | 37,001,000 | 97,645,000 | 71,348,000 |
Operating expenses: | ||||
Selling, general and administrative | 37,656,000 | 28,638,000 | 72,581,000 | 55,793,000 |
Research and development | 17,069,000 | 12,611,000 | 30,999,000 | 23,517,000 |
In-process research and development (Note 1) | 2,245,000 | 2,245,000 | ||
Total operating expenses | 56,970,000 | 41,249,000 | 105,825,000 | 79,310,000 |
Loss from operations | (6,240,000) | (4,248,000) | (8,180,000) | (7,962,000) |
Non-operating income (expense): | ||||
Interest income | 800,000 | 505,000 | 1,588,000 | 978,000 |
Interest expense | (1,013,000) | (1,013,000) | ||
Other income (expense), net | 216,000 | (1,644,000) | 148,000 | (1,109,000) |
Total non-operating income (expense) | 3,000 | (1,139,000) | 723,000 | (131,000) |
Loss before taxes | (6,237,000) | (5,387,000) | (7,457,000) | (8,093,000) |
Provision for income taxes | 72,000 | 11,000 | 194,000 | 16,000 |
Net loss | $ (6,309,000) | $ (5,398,000) | $ (7,651,000) | $ (8,109,000) |
Basic net loss per share (in dollar per share) | $ (0.17) | $ (0.15) | $ (0.21) | $ (0.23) |
Diluted net loss per share (in dollar per share) | $ (0.17) | $ (0.15) | $ (0.21) | $ (0.23) |
Weighted average shares used to compute basic net loss per share | 36,470 | 34,942 | 36,338 | 34,778 |
Weighted average shares used to compute diluted net loss per share | 36,470 | 34,942 | 36,338 | 34,778 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
Net loss | $ (6,309) | $ (5,398) | $ (7,651) | $ (8,109) |
Other comprehensive income: | ||||
Foreign currency translation (loss) gain | (230) | 1,541 | (166) | 1,047 |
Unrealized gain (loss) on short-term investments, net of tax | 289 | 65 | 661 | (145) |
Other comprehensive income | 59 | 1,606 | 495 | 902 |
Total comprehensive loss | $ (6,250) | $ (3,792) | $ (7,156) | $ (7,207) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-in-Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Treasury Stock | Total |
Balance at Dec. 31, 2017 | $ 35 | $ 331,073 | $ (591) | $ (192,183) | $ (132) | $ 138,202 |
Balance (in shares) at Dec. 31, 2017 | 34,647 | (28) | ||||
Stockholders' Deficit | ||||||
Common stock issued under stock plans | 2,839 | 2,839 | ||||
Common stock issued under stock plans (in shares) | 208 | |||||
Stock-based compensation | 5,402 | 5,402 | ||||
Other comprehensive income | (704) | (704) | ||||
Net loss | (2,711) | (2,711) | ||||
Balance at Mar. 31, 2018 | $ 35 | 339,314 | (1,295) | (194,894) | $ (132) | 143,028 |
Balance (in shares) at Mar. 31, 2018 | 34,855 | (28) | ||||
Balance at Dec. 31, 2017 | $ 35 | 331,073 | (591) | (192,183) | $ (132) | 138,202 |
Balance (in shares) at Dec. 31, 2017 | 34,647 | (28) | ||||
Stockholders' Deficit | ||||||
Other comprehensive income | 902 | |||||
Net loss | (8,109) | |||||
Balance at Jun. 30, 2018 | $ 35 | 348,611 | 311 | (200,292) | $ (132) | 148,533 |
Balance (in shares) at Jun. 30, 2018 | 35,166 | (28) | ||||
Balance at Mar. 31, 2018 | $ 35 | 339,314 | (1,295) | (194,894) | $ (132) | 143,028 |
Balance (in shares) at Mar. 31, 2018 | 34,855 | (28) | ||||
Stockholders' Deficit | ||||||
Common stock issued under stock plans | 2,836 | 2,836 | ||||
Common stock issued under stock plans (in shares) | 311 | |||||
Stock-based compensation | 6,461 | 6,461 | ||||
Other comprehensive income | 1,606 | 1,606 | ||||
Net loss | (5,398) | (5,398) | ||||
Balance at Jun. 30, 2018 | $ 35 | 348,611 | 311 | (200,292) | $ (132) | 148,533 |
Balance (in shares) at Jun. 30, 2018 | 35,166 | (28) | ||||
Balance at Dec. 31, 2018 | $ 36 | 378,352 | 738 | (205,134) | $ (132) | $ 173,860 |
Balance (in shares) at Dec. 31, 2018 | 36,135 | (28) | 36,107 | |||
Stockholders' Deficit | ||||||
Common stock issued under stock plans | 5,406 | $ 5,406 | ||||
Common stock issued under stock plans (in shares) | 226 | |||||
Stock-based compensation | 7,129 | 7,129 | ||||
Other comprehensive income | 436 | 436 | ||||
Net loss | (1,342) | (1,342) | ||||
Balance at Mar. 31, 2019 | $ 36 | 390,887 | 1,174 | (206,476) | $ (132) | 185,489 |
Balance (in shares) at Mar. 31, 2019 | 36,361 | (28) | ||||
Balance at Dec. 31, 2018 | $ 36 | 378,352 | 738 | (205,134) | $ (132) | $ 173,860 |
Balance (in shares) at Dec. 31, 2018 | 36,135 | (28) | 36,107 | |||
Stockholders' Deficit | ||||||
Other comprehensive income | $ 495 | |||||
Net loss | (7,651) | |||||
Balance at Jun. 30, 2019 | $ 37 | 399,452 | 1,233 | (212,785) | $ (132) | $ 187,805 |
Balance (in shares) at Jun. 30, 2019 | 36,666 | (28) | 36,638 | |||
Balance at Mar. 31, 2019 | $ 36 | 390,887 | 1,174 | (206,476) | $ (132) | $ 185,489 |
Balance (in shares) at Mar. 31, 2019 | 36,361 | (28) | ||||
Stockholders' Deficit | ||||||
Common stock issued under stock plans | $ 1 | 318 | 319 | |||
Common stock issued under stock plans (in shares) | 305 | |||||
Stock-based compensation | 8,247 | 8,247 | ||||
Other comprehensive income | 59 | 59 | ||||
Net loss | (6,309) | (6,309) | ||||
Balance at Jun. 30, 2019 | $ 37 | $ 399,452 | $ 1,233 | $ (212,785) | $ (132) | $ 187,805 |
Balance (in shares) at Jun. 30, 2019 | 36,666 | (28) | 36,638 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Operating Activities | ||
Net loss | $ (7,651) | $ (8,109) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,728 | 3,361 |
Amortization of lease right-of-use assets | 1,396 | |
Loss on disposal of fixed assets | 7 | 78 |
Stock-based compensation | 15,376 | 11,863 |
Unrealized foreign currency (gains) losses | (204) | 1,185 |
Amortization of discount on short-term investments | (221) | (135) |
Deferred rent and other liabilities | 2,090 | 1,350 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (3,353) | (644) |
Inventory | (752) | (2,726) |
Prepaid expenses and other current assets | 462 | (1,801) |
Accounts payable and accrued liabilities | (2,011) | (6,149) |
Other assets | (57) | (899) |
Net cash provided by (used in) operating activities | 6,810 | (2,626) |
Investing activities | ||
Purchases of short-term investments | (40,858) | (47,132) |
Proceeds from sales and maturities of short-term investments | 41,069 | 46,422 |
Purchases of property and equipment | (2,523) | (2,006) |
Net cash used in investing activities | (2,312) | (2,716) |
Financing activities | ||
Proceeds from exercise of stock options | 9,171 | 4,606 |
Proceeds from share purchases under Employee Stock Purchase Plan | 902 | 1,388 |
Payments of employee taxs related to vested restricted stock units | (4,348) | (318) |
Net cash provided by financing activities | 5,725 | 5,676 |
Effect of exchange rate changes on cash and cash equivalents | 21 | 99 |
Net increase in cash, cash equivalents and restricted cash | 10,244 | 433 |
Cash, cash equivalents and restricted cash at beginning of period | 38,596 | 24,508 |
Cash, cash equivalents and restricted cash at end of period | 48,840 | 24,941 |
Supplemental disclosures of cash flow information | ||
Taxes paid | $ 91 | $ 365 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | Note 1. Organization and Basis of Presentation Organization and business Glaukos Corporation (Glaukos or the Company), incorporated in Delaware on July 14, 1998, is an ophthalmic medical technology and pharmaceutical company focused on the development and commercialization of novel therapies designed to treat glaucoma, corneal disorders and retinal diseases. The Company initially developed Micro-Invasive Glaucoma Surgery (MIGS) to address the shortcomings of traditional glaucoma treatment options. MIGS procedures involve the insertion of a micro-scale device or drug delivery system from within the eye’s anterior chamber through a small corneal incision. The Company’s MIGS devices are designed to reduce intraocular pressure by restoring the natural outflow pathways for aqueous humor. The Company’s MIGS drug delivery systems are designed to reduce intraocular pressure (IOP) by continuously eluting a glaucoma drug from within the eye, potentially providing sustained pharmaceutical therapy for extended periods of time. Glaukos intends to leverage its capabilities to build a portfolio of micro-scale surgical and pharmaceutical therapies in corneal health and retinal disease as well. The accompanying condensed consolidated financial statements include the accounts of Glaukos and its wholly-owned subsidiaries. All significant intercompany balances and transactions among the consolidated entities have been eliminated in consolidation. Basis of presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements. As permitted under those rules, certain footnotes and other financial information that are normally required by GAAP have been condensed or omitted. In the opinion of management, the unaudited interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for the fair presentation of the Company’s financial information contained herein. The condensed consolidated balance sheet as of December 31, 2018 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements. These interim financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2018, which are contained in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (SEC) on February 28, 2019. The results for the period ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period. Acquisition of DOSE Medical On June 19, 2019, the Company entered into a definitive agreement and plan of merger to acquire DOSE Medical Corporation (DOSE) for $2.5 million in cash, plus potential future performance-based consideration upon achievement of certain regulatory approvals and commercial milestones and royalties on commercial sales (the Merger). If certain DOSE products receive U.S. Food and Drug Administration (FDA) approval within ten years following the closing of the Merger, the Company will pay the DOSE shareholders amounts between $5.0 million and $22.5 million, depending on the type of DOSE product approved. The Company will pay additional performance-based payments to DOSE shareholders if within ten years of closing of the Merger, such DOSE products receive approval from the EU European Medicines Agency, in which case the Company will pay the DOSE shareholders either $1.25 million and/or $2.5 million, depending on the type of DOSE product approved. Following FDA approval of such DOSE products, the Company will pay the DOSE shareholders quarterly royalty payments equal to 5% of net sales of such DOSE products for a period of ten years . The Company will also pay the DOSE shareholders additional performance-based payments of $7.5 million and $20.0 million upon the achievement of certain net sales milestones with respect to such DOSE products. Finally, under the terms of the Merger, the Company may elect to buyout the additional milestone and royalty payments described above by paying former DOSE shareholders between $10.0 and $55.0 million, depending on the type of DOSE product involved. On June 27, 2019, the Company completed its acquisition of DOSE and DOSE became a wholly-owned subsidiary of the Company. The transaction was accounted for as an asset acquisition. Of the $2.5 million initial cash payment, $2.2 DOSE was previously a wholly-owned subsidiary of the Company. In 2010, it was spun-out as a standalone entity and was accounted for as a consolidated variable interest entity. In 2015, the Company acquired the iDose |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies There have been no significant changes in the Company’s significant accounting policies during the six months ended June 30, 2019, as compared with those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 28, 2019, with the exception of the Company’s adoption of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) Leases Use of estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. The most significant estimates in the accompanying condensed consolidated financial statements relate to revenue recognition and stock-based compensation expense. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, this process may result in actual results differing materially from those estimated amounts used in the preparation of the condensed consolidated financial statements. Foreign currency translation The accompanying condensed consolidated financial statements are presented in United States (U.S.) dollars. The Company considers the local currency to be the functional currency for its international subsidiaries. Accordingly, their assets and liabilities are translated into U.S. dollars using the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing throughout the periods presented. As a result, currency translation adjustments arising from period to period are charged or credited to accumulated other comprehensive income in stockholders’ equity. For the three and six months ended June 30, 2019, the Company reported a foreign currency translation loss of approximately $0.2 million. For the three and six months ended June 30, 2018, the Company reported a foreign currency translation gain of approximately $1.5 million and $1.0 million, respectively. Unrealized gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, primarily gains and losses on intercompany loans, are included in the condensed consolidated statements of operations as a component of other income (expense), net. For the three and six months ended June 30, 2019 the Company reported net unrealized foreign currency transaction gains of $0.3 million and $0.2 million, respectively. For the three and six months ended June 30, 2018, the Company reported net unrealized foreign currency transaction losses of $1.7 million and $1.2 million, respectively. Cash, cash equivalents and short-term investments The Company invests its excess cash in marketable securities, including money market funds, money market securities, bank certificates of deposits, corporate bonds, corporate commercial paper, U.S. government bonds and U.S. government agency bonds. For financial reporting purposes, liquid investment instruments purchased with an original maturity of three months or less are considered to be cash equivalents. Cash and cash equivalents are recorded at face value or cost, which approximates fair market value. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Commission. Investments are stated at fair value as determined by quoted market prices. Investments are considered available-for-sale and, accordingly, unrealized gains and losses are included in accumulated other comprehensive income within stockholders’ equity. The Company’s entire investment portfolio, except for restricted cash, is considered to be available for use in current operations and, accordingly, all such investments are stated at fair value using quoted market prices and classified as current assets, although the stated maturity of individual investments may be one year or more beyond the balance sheet date. The Company did not have any trading securities or restricted investments at June 30, 2019 or December 31, 2018. Realized gains and losses and declines in value, if any, judged to be other-than-temporary on available-for-sale securities are reported in other income (expense), net. When securities are sold, any associated unrealized gain or loss previously reported as a separate component of stockholders’ equity is reclassified out of stockholders’ equity and recorded in the statements of operations in the period sold using the specific identification method. Accrued interest and dividends from investments are included in other income (expense), net. The Company periodically reviews its available-for-sale securities for other-than-temporary declines in fair value below the cost basis, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Restricted cash The Company had a bank issue a letter of credit in the amount of $8.8 million related to its Aliso Viejo, California office building lease, which commenced on April 1, 2019. The letter of credit is secured with an amount of cash held in a restricted account equal to its face value, or $8.8 million as of June 30, 2019 and December 31, 2018. Beginning as of the first day of the thirty-seventh month of the lease term, and on each twelve month anniversary thereafter, the letter of credit will be reduced by 20% until the letter of credit amount has been reduced to $2.0 million. See Note 10, Commitments and Contingencies The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statement of cash flows as of the beginning and end of the six month period ended June 30, 2019 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 39,992 $ 29,821 Restricted cash 8,848 8,775 Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 48,840 $ 38,596 Fair value of financial instruments The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Leases In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842) Consistent with historical guidance, a lessee’s recognition, measurement, and presentation of expenses and cash flows arising from a lease will continue to depend primarily on its classification. ASC 842 was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted the requirements of ASC 842 effective January 1, 2019 and elected the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning on or after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, Leases. For leases that commenced before the effective date of ASC 842, the Company elected the transition package of three practical expedients permitted within ASC 842, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of right-of-use assets. Further, the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. As a result of adopting ASC 842 as of January 1, 2019, the Company recorded an operating lease right-of-use asset of $12.8 million and related operating lease liability of $13.4 million, respectively, primarily related to facilities and certain equipment, based on the present value of the future lease payments on the date of adoption . Leases The Company determines if an arrangement is a lease at inception. As a lessee, right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company does not have any outstanding debt or committed credit facilities, the Company estimates the incremental borrowing rate based on prevailing financial market conditions, peer company credit analyses, and management judgment. Operating lease right-of-use assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The lease terms used to calculate the right-of-use asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. As of April 1, 2019, the Company recorded a finance lease right-of-use asset of $54.5 million and related finance lease liability of $67.2 million with respect to the commencement of its lease in Aliso Viejo, California based on the present value of the future lease payments on the date of commencement. As of June 30, 2019, the finance lease right-of-use asset excludes lease incentives totaling $12.6 million, comprised of $10.9 million included in prepaid expenses and other current assets and $1.7 million included in deposits and other assets on the condensed consolidated balance sheets. Revenue recognition The Company accounts for revenue in accordance with ASC 606, Revenue Recognition – Revenue from Contracts with Customers and its related amendments contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company derives its revenue from sales of its products in the United States and internationally. Customers are primarily comprised of ambulatory surgery centers and hospitals, with distributors being used in certain international locations where the Company does not have a direct commercial presence. The Company concluded that one performance obligation exists for the majority of its contracts with customers which is to deliver products in accordance with the Company’s normal delivery times. Revenue is recognized when this performance obligation is satisfied, which is the point in time when the Company considers control of a product to have transferred to the customer. Revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company has determined the transaction price to be the invoice price, net of adjustments, which includes estimates of variable consideration for product returns. The Company offers volume-based rebate agreements to certain customers and, in these instances, the Company provides a rebate (in the form of a credit memo) at the contract’s conclusion, if earned by the customer. In such cases, the transaction price is allocated between the Company’s delivery of product and the issuance of a rebate at the contract’s conclusion for the customer to utilize on prospective purchases. The performance obligation to issue a customer’s rebate, if earned, is transferred over time and the Company’s method of measuring progress is the output method, whereby the progress is measured by the estimated rebate earned to date over the total rebate estimated to be earned over the contract period. The provision for volume-based rebates is estimated based on customers' contracted rebate programs and the customers’ projected sales levels. The Company periodically monitors its customer rebate programs to ensure the rebate allowance is fairly stated. The Company’s rebate allowance is included in accrued liabilities in the condensed consolidated balance sheets and estimated rebates accrued were not material during the periods presented. Customers are not granted specific rights of return; however, the Company may permit returns of product from customers if such product is returned in a timely manner and in good condition. The Company provides a warranty on its products for one year from the date of shipment, and any product found to be defective or out of specification will be replaced at no charge during the warranty period. Estimated allowances for sales returns and warranty replacements are recorded at the time of sale of the product and are estimated based upon the historical patterns of product returns matched against sales, and an evaluation of specific factors that may increase the risk of product returns. Product returns and warranty replacements to date have been consistent with amounts reserved or accrued and have not been significant. Research and development expenses Major components of research and development expense include personnel costs, preclinical studies, clinical trials and related clinical product manufacturing, materials and supplies, and fees paid to consultants. Research and development costs are expensed as goods are received or services are rendered. Costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use are also expensed as incurred as in-process research and development. At each financial reporting date, the Company accrues the estimated unpaid costs of clinical study activities performed during a period by third party clinical sites with whom the Company has agreements that provide for fees based upon the quantities of subjects enrolled and clinical evaluation visits that occur over the life of the study. The cost estimates are determined based upon a review of the agreements and data collected by internal and external clinical personnel as to the status of enrollment and subject visits, and are based upon the facts and circumstances known to the Company at each financial reporting date. If the actual performance of activities varies from the assumptions used in the cost estimates, the accruals are adjusted accordingly. There have been no material adjustments to the Company’s prior period accrued estimates for clinical trial activities during the three and six months ended June 30, 2019. Stock-based compensation The Company recognizes compensation expense for all stock-based awards granted to employees and nonemployees, including members of its board of directors. The fair value of stock option awards is estimated at the grant date using the Black-Scholes option pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period using the straight-line method. The determination of the fair value-based measurement of stock options on the date of grant using an option pricing model is affected by the determination of the fair value of the underlying stock as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price volatility over the expected term of the grants, and actual and projected stock option exercise behaviors. In the future, as additional empirical evidence regarding these estimates becomes available, the Company may change or refine its approach of deriving them, and these changes could impact the fair value-based measurement of stock options granted in the future. Changes in the fair value-based measurement of stock awards could materially impact the Company’s operating results. The fair value of restricted stock unit (RSU) awards is equal to the closing market price of the Company’s common stock on the grant date. Software costs The Company currently expenses software service costs along with any associated implementation costs as services are provided and implementation costs are incurred. Comprehensive loss All components of comprehensive loss, including net loss, are reported in the condensed consolidated financial statements in the period in which they are recognized. Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities and foreign currency translation adjustments. Net loss per share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares that were outstanding for the period, without consideration for common stock equivalents. For periods when the Company realizes a net loss, no common stock equivalents are included in the calculation of weighted average number of dilutive common stock equivalents as the effect of applying the treasury stock method is considered anti-dilutive. For periods when the Company realizes net income, diluted net income per share is calculated by dividing the net income by the weighted average number of common shares plus the sum of the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury stock method. Common stock equivalents are comprised of stock options, RSUs outstanding under the Company’s stock option plans and shares issuable under the Company’s Employee Stock Purchase Plan (ESPP). Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive were as follows (in common stock equivalent shares, in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Stock options outstanding 3,750 5,819 3,648 5,937 Unvested restricted stock units 380 141 363 333 Employee stock purchase plan 20 31 18 27 4,150 5,991 4,029 6,297 Recently adopted accounting pronouncements In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered, or the service has been rendered, and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The accounting standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted the guidance effective January 1, 2019 and the guidance did not have a material impact to the Company’s condensed consolidated financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification See above under “ Leases Recently issued accounting pronouncements not yet adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments—Credit Losses In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company has not yet completed its assessment of the impact of ASU 2018-14 on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606 |
Balance Sheet Details
Balance Sheet Details | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Details | |
Balance Sheet Details | Note 3. Balance Sheet Details Short-term investments Short-term investments consisted of the following (in thousands): At June 30, 2019 Maturity Amortized cost Unrealized Unrealized Estimated (in years) or cost gains losses fair value U.S. government agency bonds less than 1 1,999 - (2) 1,997 Bank certificates of deposit less than 2 9,000 20 - 9,020 Commercial paper less than 1 8,423 12 (1) 8,434 Corporate notes less than 3 64,624 293 (11) 64,906 Asset-backed securities less than 2 25,935 122 (12) 26,045 Total $ 109,981 $ 447 $ (26) $ 110,402 At December 31, 2018 Maturity Amortized cost Unrealized Unrealized Estimated (in years) or cost gains losses fair value U.S. government bonds less than 1 $ 1,300 $ - $ (3) $ 1,297 U.S. government agency bonds less than 1 1,994 - (12) 1,982 Bank certificates of deposit less than 2 15,201 2 (3) 15,200 Commercial paper less than 1 9,597 1 (5) 9,593 Corporate notes less than 3 60,923 24 (194) 60,753 Asset-backed securities less than 3 21,918 18 (94) 21,842 Total $ 110,933 $ 45 $ (311) $ 110,667 Accounts receivable, net Accounts receivable consisted of the following (in thousands): June 30, December 31, 2019 2018 Accounts receivable $ 22,789 $ 19,333 Allowance for doubtful accounts (748) (660) $ 22,041 $ 18,673 Inventory, net Inventory consisted of the following (in thousands): June 30, December 31, 2019 2018 Finished goods $ 6,055 $ 4,256 Work in process 3,999 3,197 Raw material 3,984 5,829 $ 14,038 $ 13,282 Accrued liabilities Accrued liabilities consisted of the following (in thousands): June 30, December 31, 2019 2018 Accrued bonuses $ 5,446 $ 8,604 Accrued vacation benefits 2,742 2,446 Accrued legal expenses 3,260 2,466 Accrued Employee Stock Purchase Plan liability 2,458 1,154 Other accrued liabilities 12,043 9,294 $ 25,949 $ 23,964 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | Note 4. Fair Value Measurements Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands). The Company did not have any financial liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. At June 30, 2019 Quoted prices Significant in active other Significant markets for observable unobservable June 30, identical assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Assets Money market funds (i) $ 2,001 $ 2,001 $ - $ - U.S. government agency bonds (ii) 1,997 - 1,997 - Bank certificates of deposit (ii) (iii) 10,520 - 10,520 - Commercial paper (ii) 8,434 - 8,434 - Corporate notes (ii) 64,906 - 64,906 - Asset-backed securities (ii) 26,045 - 26,045 - $ 113,903 $ 2,001 $ 111,902 $ - At December 31, 2018 Quoted prices Significant in active other Significant markets for observable unobservable December 31, identical assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Assets Money market funds (i) $ 1,156 $ 1,156 $ - $ - U.S. government agency bonds (ii) 1,982 - 1,982 - U.S. government bonds (ii) 1,297 - 1,297 - Bank certificates of deposit (ii) 15,201 - 15,201 - Commercial paper (ii) 9,593 - 9,593 - Corporate notes (ii) (iv) 61,752 - 61,752 - Asset-backed securities (ii) 21,842 - 21,842 - $ 112,823 $ 1,156 $ 111,667 $ - (i) Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets. (ii) Included in short-term investments on the condensed consolidated balance sheets. (iii) As of June 30, 2019, a bank certificate of deposit investment totaling $1,500 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets. (iv) As of December 31, 2018, a corporate note investment totaling $1,000 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets. Money market funds and currency are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. U.S. government agency bonds, U.S. government bonds, bank certificates of deposit, commercial paper, corporate notes and asset-backed securities are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy. There were no transfers between levels within the fair value hierarchy during the periods presented. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Leases | Note 5. Leases The Company has operating and finance leases for facilities and certain equipment. Leases with an initial term of 12 months or less are not recorded on the condensed consolidated balance sheet. Lease expense for leases is recognized on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of ASC 842, the Company combines lease and non-lease components. See Note 2, Summary of Significant Accounting Policies The Company's leases have remaining non-cancelable lease terms of approximately one year to thirteen years, some of which include options to extend the leases for up to ten years, and some of which include options to terminate the lease within one year. The exercise of lease renewal options is at the Company's sole discretion. In certain of the Company’s lease agreements, the rental payments are adjusted periodically to reflect actual charges incurred for common area maintenance, landlord incentives and/or inflation. The Company leases two adjacent facilities located in San Clemente, California. During December 2018, the Company extended the term of these facilities by three years, both of which now expire on December 31, 2024. Each agreement contains an option to extend the lease for one additional three year period at market rates. The total leased square footage of these facilities equals approximately 98,000. In conjunction with these extensions, the lease landlord agreed to provide the Company with a tenant improvement allowance in the amount of the cost of any leasehold improvements, not to exceed approximately $0.3 million upon the Company providing the necessary documentation evidencing the costs of the allowable leasehold improvements. On November 14, 2018, the Company entered into an office building lease pursuant to which the Company will lease one property containing three existing office buildings, comprising approximately 160,000 rentable square feet of space, located in Aliso Viejo, California (Aliso Facility) which was accounted for as a finance lease. The term of the Aliso Facility commenced on April 1, 2019 and continues for thirteen years. The agreement contains an option to extend the lease for two additional five year periods at market rates. The Company intends to relocate its corporate administrative headquarters, along with certain laboratory, research and development and warehouse space, to the Aliso Facility. The Company currently intends to maintain its manufacturing facilities at its San Clemente location for the foreseeable future. The Company’s remaining U.S.-based and foreign subsidiaries’ leased office space totals less than 14,000 square feet. The following table presents the lease balances within the condensed consolidated balance sheets: Leases June 30, (in thousands) Classification 2019 Assets Operating Operating lease right-of-use asset $ 12,369 Finance Finance lease right-of-use asset 53,935 Total lease assets $ 66,304 Liabilities Current Operating Accrued liabilities $ 1,481 Noncurrent Operating Operating lease liability 11,657 Finance Finance lease liability 68,209 Total lease liabilities $ 81,347 Note: As the implicit rates in the Company’s leases are not readily available, the incremental borrowing rate was determined based on the information available at commencement date in determining the present value of lease payments. For the three and six month periods ended June 30, 2019, the components of operating and finance lease expenses were as follows: Three Months Ended Six Months Ended Lease Cost June 30, June 30, (in thousands) Classification 2019 2019 Fixed operating lease cost Selling, general and administrative expenses $ 587 (a) $ 1,174 (a) Finance lease cost Amortization of right-of-use asset included in Selling, General and Administrative Expenses $ 593 $ 593 Finance lease cost Interest on lease liability $ 1,013 $ 1,013 (a) Includes short-term leases, which are immaterial. The following table presents the maturity of the Company’s operating and finance lease liabilities as of June 30, 2019: Maturity of Lease Liabilities Operating Finance (in thousands) Leases (a) Leases (b) Remainder of 2019 $ 1,072 $ — 2020 1,930 1,547 2021 1,715 4,744 2022 1,622 4,887 2023 1,943 5,033 Thereafter 8,286 123,545 Total lease payments $ 16,568 $ 139,756 Less: imputed interest 3,430 71,547 Total lease liabilities $ 13,138 $ 68,209 (a) Operating lease payments include $12.0 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $75.8 million related to options to extend lease terms that are reasonably certain of being exercised. The weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating and finance leases as of June 30, 2019 were: Lease Term and Discount Rate 2019 Weighted-average remaining lease term (years) Operating leases 8.0 Finance leases 22.8 Weighted-average discount rate Operating leases 5.5 % Finance leases 6.0 % Supplemental cash flow information related to the Company’s operating and finance leases was as follows: Three Months Ended Six Months Ended Other Information June 30, June 30, (in thousands) 2019 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 409 $ 940 Right-of-use asset obtained in exchange for lease obligations: Operating lease $ — $ 13,172 Finance lease 54,528 54,528 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Intangible Assets | |
Intangible Assets | Note 6. Intangible Assets GMP Vision Solutions intangible asset In January 2007, the Company entered into an agreement (the Original GMP Agreement) with GMP Vision Solutions, Inc. (GMP) to acquire certain IPR&D in exchange for periodic royalty payments equal to a single-digit percentage of revenues received for royalty-bearing products and periodic royalty payments at a higher royalty rate applied to all amounts received in connection with the grant of licenses or sub-licenses of the related intellectual property. In November 2013, the Company entered into an amended agreement with GMP in which remaining royalties payable to GMP (the Buyout Agreement) were canceled in exchange for the issuance of $17.5 million in promissory notes payable to GMP and a party related to GMP. The Company concluded that the $17.5 million transaction represented the purchase of an intangible asset. The Company estimated a useful life of five years over which the intangible asset is being amortized to cost of sales in the accompanying statements of operations, which amortization period was determined after consideration of the projected outgoing royalty payment stream had the Buyout Agreement not occurred, and the remaining life of the patents obtained in the Original GMP Agreement. After determining that the pattern of future cash flows associated with this intangible asset could not be reliably estimated with a high level of precision, the Company concluded that the intangible asset would be amortized on a straight-line basis over the estimated useful life. The Company recorded amortization expense of $0.9 million and $1.8 million related to this intangible asset in cost of sales for the three and six months ended June 30, 2018 , |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | Note 7. Revenue from Contracts with Customers The Company’s net sales are generated primarily from sales of iStent Disaggregation of revenue The Company’s disaggregation of revenue is consistent with its operating segments disclosed in Note 11 , Business Segment Information Contract balances Amounts are recorded as accounts receivable when the Company’s right to consideration becomes unconditional. As payment terms on invoiced amounts are typically 30 days, the Company does not consider any significant financing components in customer contracts given the expected time between transfer of the promised products and the payment of the associated consideration is less than one year. As of June 30, 2019 and December 31, 2018, all amounts included in accounts receivable, net on the condensed consolidated balance sheets are related to contracts with customers. The Company does not have any contract assets given that the Company does not have any unbilled receivables and sales commissions are expensed within selling, general and administrative expenses within the condensed consolidated statement of operations when incurred as any incremental cost of obtaining contracts with customers would have an amortization period of less than one year . Contract liabilities reflect consideration received from customers’ purchases allocated to the Company’s performance obligation to issue a rebate to customers who may be eligible for a rebate at the conclusion of their contract term. This performance obligation is transferred over time and the Company’s method of measuring progress is the output method, whereby the progress is measured by the estimated rebate earned to date over the total rebate estimated to be earned over the contract period. The Company’s rebate allowance is included in accrued liabilities in the condensed consolidated balance sheets and estimated rebates accrued were not material during the periods presented. During the three and six months ended June 30, 2019 and June 30, 2018, the Company did not recognize any revenue related to changes in transaction prices regarding its contracts with customers and did not recognize any material changes in revenue related to amounts included in contract liabilities at the beginning of the period. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation. | |
Stock-Based Compensation | Note 8. Stock-Based Compensation The Company has four stock-based compensation plans (collectively, the Stock Plans)—the 2001 Stock Option Plan (the 2001 Stock Plan), the 2011 Stock Plan (the 2011 Stock Plan), the 2015 Omnibus Incentive Compensation Plan (the 2015 Stock Plan) and the ESPP. The 2015 Stock Plan permits grants of RSU awards. The purpose of these plans is to provide incentives to employees, directors and nonemployee consultants. The Company no longer grants any awards under the 2001 Stock Plan or the 2011 Stock Plan. The maximum term of any stock options granted under the Stock Plans is 10 years. For employees and nonemployees, stock options generally vest 25% on the first anniversary of the original vesting date, with the balance vesting monthly or annually over the remaining three years. Stock options are granted at exercise prices at least equal to the fair value of the underlying stock at the date of the grant. For employees and nonemployees, generally, RSU awards vest 25% on each of the first, second, third and fourth anniversaries of the grant date and in certain cases, vest one year after grant date. In 2019, the Compensation Committee approved the grant of performance-based equity awards (PBEAs) to the Company’s named executive officers and certain other employees pursuant to the 2015 Stock Plan. These PBEAs will only vest upon the Compensation Committee’s confirmation of the satisfaction of a pre-determined Company operational goal. The goal must be reached within three years of the grant date or the PBEA grants will lapse and be forfeited for no consideration. The ESPP permits eligible employees to purchase shares of the Company’s common stock, using contributions via payroll deductions of up to 15% of their earnings, at a price per share equal to 85% of the lower of the stock’s fair market value on the offering date or purchase date. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Stock Options The following table summarizes stock option activity under the 2001 Stock Plan, 2011 Stock Plan and 2015 Stock Plan during the six months ended June 30, 2019 (in thousands): Weighted- Number of Average Shares Weighted- Remaining Aggregate Underlying Average Contractual Intrinsic Value Options Exercise Price Life (in years) (in thousands) Outstanding at December 31, 2018 6,307 $ 23.69 6.7 $ 204,896 Granted 110 69.30 Exercised (384) 23.68 $ 17,888 Canceled/forfeited/expired (11) 38.94 Outstanding at June 30, 2019 6,022 $ 24.51 6.4 $ 306,469 Vested and expected to vest at June 30, 2019 5,855 $ 24.21 6.3 $ 299,714 Exercisable at June 30, 2019 4,190 $ 18.97 5.7 $ 236,428 Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that had exercise prices that were lower than the fair value per share of the common stock on the date of exercise. The weighted average estimated grant date fair value per share of stock options granted during the three months ended June 30, 2019 and June 30, 2018 was $33.02 and $16.91, respectively. The weighted average estimated grant date fair value per share of stock options granted during the six months ended June 30, 2019 and June 30, 2018 was $33.02 and $15.08, respectively. The total fair value of stock options that vested during the three months ended June 30, 2019 and June 30, 2018 was $4.8 million and $6.4 million, respectively. The total fair value of stock options that vested during the six months ended June 30, 2019 and June 30, 2018 was $11.1 million and $15.7 million, respectively. The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model applying the assumptions noted in the following table. The weighted average assumptions used to estimate the fair value of options granted to employees and non-employees were as follows: Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Risk-free interest rate 2.56 % 2.65 % 2.56 % 2.67 % Expected dividend yield 0.00 % 0.0 % 0.0 % 0.0 % Expected volatility 46.7 % 44.8 % 46.7 % 44.9 % Expected term (in years) 6.01 6.10 6.01 6.10 Restricted Stock Units The following table summarizes the activity of unvested RSUs (including PBEAs) under the Stock Plans during the six months ended June 30, 2019: Weighted- Number of average shares grant date (in thousands) fair value Unvested at December 31, 2018 532 $ 35.17 Granted 293 70.25 Vested (177) 33.36 Canceled/forfeited (6) 44.87 Unvested at June 30, 2019 642 $ 51.45 The total fair value of RSUs made to employees and nonemployees is equal to the closing market price of the Company’s common stock on the grant date. The total fair value of RSUs that vested during the three and six months ended June 30, 2019 was $5.6 million and $5.9 million, respectively. The total fair value of RSUs that vested during each of the three and six months ended June 30, 2018 was $1.1 million. All share-based compensation arrangements The following table summarizes the allocation of stock-based compensation related to stock options and RSUs in the accompanying condensed consolidated statements of operations (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Cost of sales $ 270 $ 177 $ 493 $ 351 Selling, general and administrative 6,340 4,864 11,837 8,880 Research and development 1,637 1,420 3,046 2,632 Total $ 8,247 $ 6,461 $ 15,376 $ 11,863 At June 30, 2019, the total unamortized stock-based compensation expense was approximately $59.8 million. Of the approximately $59.8 million in unamortized stock-based compensation expense, $31.1 million was attributable to stock options and is to be recognized over the stock options’ remaining vesting terms of approximately 4.0 years (2.1 years on a weighted average basis). The remaining $28.7 million was attributable to RSUs and is to be recognized over the restricted stock units’ vesting terms of approximately 4.0 years (2.9 years on a weighted-average basis). The total stock-based compensation cost capitalized in inventory was not material for the three and six month periods ended June 30, 2019 and June 30, 2018. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Taxes | |
Income Taxes | Note 9. Income Taxes The provision for income taxes is determined using an estimated annual effective tax rate. For the three and six months ended June 30, 2019, the Company’s effective tax rate of (1.1)% and (2.6)%, respectively was lower than the U.S. federal statutory rate primarily due to the generation of U.S. net operating loss carryforwards for which no benefit has been recognized due to the Company’s full valuation allowance, as well as state and foreign income taxes. The effective tax rate may be subject to fluctuations during the year as new information is obtained which may affect the assumptions used to estimate the annual effective tax rate, including factors such as expected utilization of net operating loss carryforwards, changes in or the interpretation of tax laws in jurisdictions where the Company conducts business, the Company’s expansion into new states or foreign countries, and the amount of valuation allowances against deferred tax assets. For the three and six months ended June 30, 2019, the Company recorded a provision for income taxes of $0.1 million and $0.2 million, respectively, which was primarily comprised of state and foreign income taxes. For the three and six month periods ended June 30, 2018, the Company recorded a provision for income taxes of $11,000 and $16,000, respectively, which was primarily comprised of state income taxes. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities along with net operating loss and tax credit carryforwards. The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. For the three and six months ended June 30, 2019, the Company has established a valuation allowance for all deferred tax assets. Additionally, the Company follows an accounting standard addressing the accounting for uncertainty in income taxes that prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. As of June 30, 2019 and June 30, 2018, the Company has gross unrecognized tax benefits of $13.6 million and $7.2 million, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Litigation On April 14, 2018, the Company filed a patent infringement lawsuit against Ivantis, Inc. (Ivantis) in the U.S. District Court for the Central District of California, Southern Division (the Court), alleging that Ivantis’ Hydrus ® iStent inject Secured letter of credit The Company had a bank issue a letter of credit in the amount of $8.8 million that is related to its Aliso Facility. The letter of credit is secured with an amount of cash held in a restricted account equal to its face value, or $8.8 million as of June 30, 2019. Beginning as of the first day of the thirty-seventh month of the lease term, and on each twelve month anniversary thereafter, the letter of credit will be reduced by 20% until the letter of credit amount has been reduced to $2.0 million. Regents of the University of California On December 30, 2014, the Company executed an agreement (the UC Agreement) with the Regents of the University of California (the University) to correct inventorship in connection with a group of the Company’s U.S. patents (the Patent Rights) and to obtain from the University a covenant that it did not and would not claim any right or title to the Patent Rights and will not challenge or assist any others in challenging the Patent Rights. In connection with the UC Agreement, Glaukos agreed to pay to the University a low single-digit percentage of worldwide net sales of certain current and future products, including the Company’s iStent Executive Deferred Compensation Plan Pursuant to the Company’s deferred compensation plan (the Deferred Compensation Plan) eligible senior level employees are permitted to make elective deferrals of compensation to which he or she will become entitled in the future. The Company has also established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The investments of the rabbi trust consist of company-owned life insurance policies (COLIs). The fair value of the Deferred Compensation Plan liability, included in other liabilities on the condensed consolidated balance sheets, was approximately Global enterprise systems implementation Beginning in the first quarter of 2019, the Company is implementing improved enterprise systems and other technology optimizations and facilities infrastructure globally. As of June 30, 2019, the Company has firm purchase commitments related to these implementations of approximately $7.4 million. |
Business Segment Information
Business Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Business Segment Information | |
Business Segment Information | Note 11. Business Segment Information Operating segments are identified as components of an enterprise about which segment discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. The Company operates its business on the basis of one reportable segment—ophthalmic medical devices. Three months ended Six months ended June 30, June 30, Geographic Net Sales Information (in thousands) 2019 2018 2019 2018 United States $ 48,088 $ 36,311 $ 92,305 $ 69,924 International 10,512 6,850 20,321 13,370 Total net sales $ 58,600 $ 43,161 $ 112,626 $ 83,294 |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Event | |
Subsequent Event | Note 12. Subsequent Event On August 7, 2019, the Company entered into an Agreement and Plan of Merger by and among the Company, Atlantic Merger Sub Inc. (Merger Sub) and Avedro, Inc. (Avedro) in which Merger Sub will merge with and into Avedro, with Avedro continuing as the surviving corporation and a wholly-owned subsidiary of the Company. Upon closing of the transaction, Avedro shareholders will have the right to receive The consummation of the transaction contemplated by the Agreement and Plan of Merger is subject to the satisfaction or waiver of certain customary closing conditions, including but not limited to, the adoption of the Agreement and Plan of Merger by a majority of Avedro’s shareholders and the expiration or termination of any applicable waiting period (or extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. This acquisition is expected to close in the fourth quarter of 2019. However, there can be no assurance that the transaction will be completed at all or, if completed, that it will be completed in the fourth quarter of 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Use of estimates | Use of estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these condensed consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. The most significant estimates in the accompanying condensed consolidated financial statements relate to revenue recognition and stock-based compensation expense. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, this process may result in actual results differing materially from those estimated amounts used in the preparation of the condensed consolidated financial statements. |
Foreign currency translation | Foreign currency translation The accompanying condensed consolidated financial statements are presented in United States (U.S.) dollars. The Company considers the local currency to be the functional currency for its international subsidiaries. Accordingly, their assets and liabilities are translated into U.S. dollars using the exchange rate in effect on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing throughout the periods presented. As a result, currency translation adjustments arising from period to period are charged or credited to accumulated other comprehensive income in stockholders’ equity. For the three and six months ended June 30, 2019, the Company reported a foreign currency translation loss of approximately $0.2 million. For the three and six months ended June 30, 2018, the Company reported a foreign currency translation gain of approximately $1.5 million and $1.0 million, respectively. Unrealized gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency, primarily gains and losses on intercompany loans, are included in the condensed consolidated statements of operations as a component of other income (expense), net. For the three and six months ended June 30, 2019 the Company reported net unrealized foreign currency transaction gains of $0.3 million and $0.2 million, respectively. For the three and six months ended June 30, 2018, the Company reported net unrealized foreign currency transaction losses of $1.7 million and $1.2 million, respectively. |
Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments The Company invests its excess cash in marketable securities, including money market funds, money market securities, bank certificates of deposits, corporate bonds, corporate commercial paper, U.S. government bonds and U.S. government agency bonds. For financial reporting purposes, liquid investment instruments purchased with an original maturity of three months or less are considered to be cash equivalents. Cash and cash equivalents are recorded at face value or cost, which approximates fair market value. The Company maintains cash balances in excess of amounts insured by the Federal Deposit Insurance Commission. Investments are stated at fair value as determined by quoted market prices. Investments are considered available-for-sale and, accordingly, unrealized gains and losses are included in accumulated other comprehensive income within stockholders’ equity. The Company’s entire investment portfolio, except for restricted cash, is considered to be available for use in current operations and, accordingly, all such investments are stated at fair value using quoted market prices and classified as current assets, although the stated maturity of individual investments may be one year or more beyond the balance sheet date. The Company did not have any trading securities or restricted investments at June 30, 2019 or December 31, 2018. Realized gains and losses and declines in value, if any, judged to be other-than-temporary on available-for-sale securities are reported in other income (expense), net. When securities are sold, any associated unrealized gain or loss previously reported as a separate component of stockholders’ equity is reclassified out of stockholders’ equity and recorded in the statements of operations in the period sold using the specific identification method. Accrued interest and dividends from investments are included in other income (expense), net. The Company periodically reviews its available-for-sale securities for other-than-temporary declines in fair value below the cost basis, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
Restricted cash | Restricted cash The Company had a bank issue a letter of credit in the amount of $8.8 million related to its Aliso Viejo, California office building lease, which commenced on April 1, 2019. The letter of credit is secured with an amount of cash held in a restricted account equal to its face value, or $8.8 million as of June 30, 2019 and December 31, 2018. Beginning as of the first day of the thirty-seventh month of the lease term, and on each twelve month anniversary thereafter, the letter of credit will be reduced by 20% until the letter of credit amount has been reduced to $2.0 million. See Note 10, Commitments and Contingencies The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statement of cash flows as of the beginning and end of the six month period ended June 30, 2019 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 39,992 $ 29,821 Restricted cash 8,848 8,775 Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 48,840 $ 38,596 |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. The valuation of assets and liabilities is subject to fair value measurements using a three-tiered approach and fair value measurements are classified and disclosed by the Company in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). |
Leases | Leases In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842) Consistent with historical guidance, a lessee’s recognition, measurement, and presentation of expenses and cash flows arising from a lease will continue to depend primarily on its classification. ASC 842 was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted the requirements of ASC 842 effective January 1, 2019 and elected the modified retrospective method for all lease arrangements at the beginning of the period of adoption. Results for reporting periods beginning on or after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, Leases. For leases that commenced before the effective date of ASC 842, the Company elected the transition package of three practical expedients permitted within ASC 842, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. The Company did not elect the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of right-of-use assets. Further, the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. As a result of adopting ASC 842 as of January 1, 2019, the Company recorded an operating lease right-of-use asset of $12.8 million and related operating lease liability of $13.4 million, respectively, primarily related to facilities and certain equipment, based on the present value of the future lease payments on the date of adoption . Leases The Company determines if an arrangement is a lease at inception. As a lessee, right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company does not have any outstanding debt or committed credit facilities, the Company estimates the incremental borrowing rate based on prevailing financial market conditions, peer company credit analyses, and management judgment. Operating lease right-of-use assets also include any lease payments made at or before lease commencement and exclude any lease incentives received. The lease terms used to calculate the right-of-use asset and related lease liability include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while the expense for finance leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. As of April 1, 2019, the Company recorded a finance lease right-of-use asset of $54.5 million and related finance lease liability of $67.2 million with respect to the commencement of its lease in Aliso Viejo, California based on the present value of the future lease payments on the date of commencement. As of June 30, 2019, the finance lease right-of-use asset excludes lease incentives totaling $12.6 million, comprised of $10.9 million included in prepaid expenses and other current assets and $1.7 million included in deposits and other assets on the condensed consolidated balance sheets. |
Revenue recognition | Revenue recognition The Company accounts for revenue in accordance with ASC 606, Revenue Recognition – Revenue from Contracts with Customers and its related amendments contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company derives its revenue from sales of its products in the United States and internationally. Customers are primarily comprised of ambulatory surgery centers and hospitals, with distributors being used in certain international locations where the Company does not have a direct commercial presence. The Company concluded that one performance obligation exists for the majority of its contracts with customers which is to deliver products in accordance with the Company’s normal delivery times. Revenue is recognized when this performance obligation is satisfied, which is the point in time when the Company considers control of a product to have transferred to the customer. Revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The Company has determined the transaction price to be the invoice price, net of adjustments, which includes estimates of variable consideration for product returns. The Company offers volume-based rebate agreements to certain customers and, in these instances, the Company provides a rebate (in the form of a credit memo) at the contract’s conclusion, if earned by the customer. In such cases, the transaction price is allocated between the Company’s delivery of product and the issuance of a rebate at the contract’s conclusion for the customer to utilize on prospective purchases. The performance obligation to issue a customer’s rebate, if earned, is transferred over time and the Company’s method of measuring progress is the output method, whereby the progress is measured by the estimated rebate earned to date over the total rebate estimated to be earned over the contract period. The provision for volume-based rebates is estimated based on customers' contracted rebate programs and the customers’ projected sales levels. The Company periodically monitors its customer rebate programs to ensure the rebate allowance is fairly stated. The Company’s rebate allowance is included in accrued liabilities in the condensed consolidated balance sheets and estimated rebates accrued were not material during the periods presented. Customers are not granted specific rights of return; however, the Company may permit returns of product from customers if such product is returned in a timely manner and in good condition. The Company provides a warranty on its products for one year from the date of shipment, and any product found to be defective or out of specification will be replaced at no charge during the warranty period. Estimated allowances for sales returns and warranty replacements are recorded at the time of sale of the product and are estimated based upon the historical patterns of product returns matched against sales, and an evaluation of specific factors that may increase the risk of product returns. Product returns and warranty replacements to date have been consistent with amounts reserved or accrued and have not been significant. |
Research and development expenses | Research and development expenses Major components of research and development expense include personnel costs, preclinical studies, clinical trials and related clinical product manufacturing, materials and supplies, and fees paid to consultants. Research and development costs are expensed as goods are received or services are rendered. Costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use are also expensed as incurred as in-process research and development. At each financial reporting date, the Company accrues the estimated unpaid costs of clinical study activities performed during a period by third party clinical sites with whom the Company has agreements that provide for fees based upon the quantities of subjects enrolled and clinical evaluation visits that occur over the life of the study. The cost estimates are determined based upon a review of the agreements and data collected by internal and external clinical personnel as to the status of enrollment and subject visits, and are based upon the facts and circumstances known to the Company at each financial reporting date. If the actual performance of activities varies from the assumptions used in the cost estimates, the accruals are adjusted accordingly. There have been no material adjustments to the Company’s prior period accrued estimates for clinical trial activities during the three and six months ended June 30, 2019. |
Stock-based compensation | Stock-based compensation The Company recognizes compensation expense for all stock-based awards granted to employees and nonemployees, including members of its board of directors. The fair value of stock option awards is estimated at the grant date using the Black-Scholes option pricing model, and the portion that is ultimately expected to vest is recognized as compensation cost over the requisite service period using the straight-line method. The determination of the fair value-based measurement of stock options on the date of grant using an option pricing model is affected by the determination of the fair value of the underlying stock as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s stock price volatility over the expected term of the grants, and actual and projected stock option exercise behaviors. In the future, as additional empirical evidence regarding these estimates becomes available, the Company may change or refine its approach of deriving them, and these changes could impact the fair value-based measurement of stock options granted in the future. Changes in the fair value-based measurement of stock awards could materially impact the Company’s operating results. The fair value of restricted stock unit (RSU) awards is equal to the closing market price of the Company’s common stock on the grant date. |
Software Costs | Software costs The Company currently expenses software service costs along with any associated implementation costs as services are provided and implementation costs are incurred. |
Comprehensive loss | Comprehensive loss All components of comprehensive loss, including net loss, are reported in the condensed consolidated financial statements in the period in which they are recognized. Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on marketable securities and foreign currency translation adjustments. |
Net loss per share | Net loss per share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares that were outstanding for the period, without consideration for common stock equivalents. For periods when the Company realizes a net loss, no common stock equivalents are included in the calculation of weighted average number of dilutive common stock equivalents as the effect of applying the treasury stock method is considered anti-dilutive. For periods when the Company realizes net income, diluted net income per share is calculated by dividing the net income by the weighted average number of common shares plus the sum of the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury stock method. Common stock equivalents are comprised of stock options, RSUs outstanding under the Company’s stock option plans and shares issuable under the Company’s Employee Stock Purchase Plan (ESPP). Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive were as follows (in common stock equivalent shares, in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Stock options outstanding 3,750 5,819 3,648 5,937 Unvested restricted stock units 380 141 363 333 Employee stock purchase plan 20 31 18 27 4,150 5,991 4,029 6,297 |
Recently adopted and issued accounting pronouncements | Recently adopted accounting pronouncements In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered, or the service has been rendered, and any other conditions necessary to earn the right to benefit from the instruments have been satisfied. The accounting standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company adopted the guidance effective January 1, 2019 and the guidance did not have a material impact to the Company’s condensed consolidated financial statements. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification See above under “ Leases Recently issued accounting pronouncements not yet adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Codification Improvements to Topic 326, Financial Instruments—Credit Losses In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company has not yet completed its assessment of the impact of ASU 2018-14 on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-15 , Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of cash and cash equivalents and restricted cash | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that equate to the amount reported in the condensed consolidated statement of cash flows as of the beginning and end of the six month period ended June 30, 2019 (in thousands): June 30, December 31, 2019 2018 Cash and cash equivalents $ 39,992 $ 29,821 Restricted cash 8,848 8,775 Cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows $ 48,840 $ 38,596 |
Schedule of potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders | Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive were as follows (in common stock equivalent shares, in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Stock options outstanding 3,750 5,819 3,648 5,937 Unvested restricted stock units 380 141 363 333 Employee stock purchase plan 20 31 18 27 4,150 5,991 4,029 6,297 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Balance Sheet Details | |
Schedule of short-term investments | Short-term investments consisted of the following (in thousands): At June 30, 2019 Maturity Amortized cost Unrealized Unrealized Estimated (in years) or cost gains losses fair value U.S. government agency bonds less than 1 1,999 - (2) 1,997 Bank certificates of deposit less than 2 9,000 20 - 9,020 Commercial paper less than 1 8,423 12 (1) 8,434 Corporate notes less than 3 64,624 293 (11) 64,906 Asset-backed securities less than 2 25,935 122 (12) 26,045 Total $ 109,981 $ 447 $ (26) $ 110,402 At December 31, 2018 Maturity Amortized cost Unrealized Unrealized Estimated (in years) or cost gains losses fair value U.S. government bonds less than 1 $ 1,300 $ - $ (3) $ 1,297 U.S. government agency bonds less than 1 1,994 - (12) 1,982 Bank certificates of deposit less than 2 15,201 2 (3) 15,200 Commercial paper less than 1 9,597 1 (5) 9,593 Corporate notes less than 3 60,923 24 (194) 60,753 Asset-backed securities less than 3 21,918 18 (94) 21,842 Total $ 110,933 $ 45 $ (311) $ 110,667 |
Schedule of accounts receivable, net | Accounts receivable consisted of the following (in thousands): June 30, December 31, 2019 2018 Accounts receivable $ 22,789 $ 19,333 Allowance for doubtful accounts (748) (660) $ 22,041 $ 18,673 |
Schedule of inventory | Inventory consisted of the following (in thousands): June 30, December 31, 2019 2018 Finished goods $ 6,055 $ 4,256 Work in process 3,999 3,197 Raw material 3,984 5,829 $ 14,038 $ 13,282 |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): June 30, December 31, 2019 2018 Accrued bonuses $ 5,446 $ 8,604 Accrued vacation benefits 2,742 2,446 Accrued legal expenses 3,260 2,466 Accrued Employee Stock Purchase Plan liability 2,458 1,154 Other accrued liabilities 12,043 9,294 $ 25,949 $ 23,964 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Measurements | |
Schedule of the Company's financial assets and financial liabilities measured at fair value on a recurring basis | The following tables present information about the Company's financial assets measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands). The Company did not have any financial liabilities measured at fair value on a recurring basis as of June 30, 2019 and December 31, 2018. At June 30, 2019 Quoted prices Significant in active other Significant markets for observable unobservable June 30, identical assets inputs inputs 2019 (Level 1) (Level 2) (Level 3) Assets Money market funds (i) $ 2,001 $ 2,001 $ - $ - U.S. government agency bonds (ii) 1,997 - 1,997 - Bank certificates of deposit (ii) (iii) 10,520 - 10,520 - Commercial paper (ii) 8,434 - 8,434 - Corporate notes (ii) 64,906 - 64,906 - Asset-backed securities (ii) 26,045 - 26,045 - $ 113,903 $ 2,001 $ 111,902 $ - At December 31, 2018 Quoted prices Significant in active other Significant markets for observable unobservable December 31, identical assets inputs inputs 2018 (Level 1) (Level 2) (Level 3) Assets Money market funds (i) $ 1,156 $ 1,156 $ - $ - U.S. government agency bonds (ii) 1,982 - 1,982 - U.S. government bonds (ii) 1,297 - 1,297 - Bank certificates of deposit (ii) 15,201 - 15,201 - Commercial paper (ii) 9,593 - 9,593 - Corporate notes (ii) (iv) 61,752 - 61,752 - Asset-backed securities (ii) 21,842 - 21,842 - $ 112,823 $ 1,156 $ 111,667 $ - (i) Included in cash and cash equivalents with a maturity of three months or less from date of purchase on the condensed consolidated balance sheets. (ii) Included in short-term investments on the condensed consolidated balance sheets. (iii) As of June 30, 2019, a bank certificate of deposit investment totaling $1,500 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets. (iv) As of December 31, 2018, a corporate note investment totaling $1,000 (in thousands) is included in cash and cash equivalents on the condensed consolidated balance sheets, as the investment has a maturity of three months or less from the date of purchase on the condensed consolidated balance sheets. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Schedule of operating lease balance sheet information | Leases June 30, (in thousands) Classification 2019 Assets Operating Operating lease right-of-use asset $ 12,369 Finance Finance lease right-of-use asset 53,935 Total lease assets $ 66,304 Liabilities Current Operating Accrued liabilities $ 1,481 Noncurrent Operating Operating lease liability 11,657 Finance Finance lease liability 68,209 Total lease liabilities $ 81,347 |
Schedule of component of operating lease expense | Three Months Ended Six Months Ended Lease Cost June 30, June 30, (in thousands) Classification 2019 2019 Fixed operating lease cost Selling, general and administrative expenses $ 587 (a) $ 1,174 (a) Finance lease cost Amortization of right-of-use asset included in Selling, General and Administrative Expenses $ 593 $ 593 Finance lease cost Interest on lease liability $ 1,013 $ 1,013 (a) Includes short-term leases, which are immaterial. |
Schedule of maturity of lease liability | Maturity of Lease Liabilities Operating Finance (in thousands) Leases (a) Leases (b) Remainder of 2019 $ 1,072 $ — 2020 1,930 1,547 2021 1,715 4,744 2022 1,622 4,887 2023 1,943 5,033 Thereafter 8,286 123,545 Total lease payments $ 16,568 $ 139,756 Less: imputed interest 3,430 71,547 Total lease liabilities $ 13,138 $ 68,209 (a) Operating lease payments include $12.0 million related to options to extend lease terms that are reasonably certain of being exercised. (b) Finance lease payments include $75.8 million related to options to extend lease terms that are reasonably certain of being exercised. |
Schedule of operating lease weighted average lease term and discount rate | Lease Term and Discount Rate 2019 Weighted-average remaining lease term (years) Operating leases 8.0 Finance leases 22.8 Weighted-average discount rate Operating leases 5.5 % Finance leases 6.0 % |
Schedule of operating lease supplemental cash flow information | Three Months Ended Six Months Ended Other Information June 30, June 30, (in thousands) 2019 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 409 $ 940 Right-of-use asset obtained in exchange for lease obligations: Operating lease $ — $ 13,172 Finance lease 54,528 54,528 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Stock-Based Compensation. | |
Schedule summarizing stock option activity under the 2001 Stock Plan, 2011 Stock Plan and 2015 Stock Plan | The following table summarizes stock option activity under the 2001 Stock Plan, 2011 Stock Plan and 2015 Stock Plan during the six months ended June 30, 2019 (in thousands): Weighted- Number of Average Shares Weighted- Remaining Aggregate Underlying Average Contractual Intrinsic Value Options Exercise Price Life (in years) (in thousands) Outstanding at December 31, 2018 6,307 $ 23.69 6.7 $ 204,896 Granted 110 69.30 Exercised (384) 23.68 $ 17,888 Canceled/forfeited/expired (11) 38.94 Outstanding at June 30, 2019 6,022 $ 24.51 6.4 $ 306,469 Vested and expected to vest at June 30, 2019 5,855 $ 24.21 6.3 $ 299,714 Exercisable at June 30, 2019 4,190 $ 18.97 5.7 $ 236,428 |
Schedule of the weighted-average assumptions used to estimate the fair value of options granted to employees | Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Risk-free interest rate 2.56 % 2.65 % 2.56 % 2.67 % Expected dividend yield 0.00 % 0.0 % 0.0 % 0.0 % Expected volatility 46.7 % 44.8 % 46.7 % 44.9 % Expected term (in years) 6.01 6.10 6.01 6.10 |
Schedule summarizing restricted stock unit activity | Weighted- Number of average shares grant date (in thousands) fair value Unvested at December 31, 2018 532 $ 35.17 Granted 293 70.25 Vested (177) 33.36 Canceled/forfeited (6) 44.87 Unvested at June 30, 2019 642 $ 51.45 |
Schedule summarizing the allocation of stock-based compensation | The following table summarizes the allocation of stock-based compensation related to stock options and RSUs in the accompanying condensed consolidated statements of operations (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Cost of sales $ 270 $ 177 $ 493 $ 351 Selling, general and administrative 6,340 4,864 11,837 8,880 Research and development 1,637 1,420 3,046 2,632 Total $ 8,247 $ 6,461 $ 15,376 $ 11,863 |
Business Segment Information (T
Business Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Segment Information | |
Schedule of Geographic Net Sales Information | Three months ended Six months ended June 30, June 30, Geographic Net Sales Information (in thousands) 2019 2018 2019 2018 United States $ 48,088 $ 36,311 $ 92,305 $ 69,924 International 10,512 6,850 20,321 13,370 Total net sales $ 58,600 $ 43,161 $ 112,626 $ 83,294 |
Organization and Basis of Pre_2
Organization and Basis of Presentation - DOSE Medical (Details) - DOSE Medical Corporation - USD ($) $ in Thousands | Jun. 27, 2019 | Jun. 19, 2019 |
Acquisition of certain DOSE Medical Corporation Assets | ||
Potential cash payments for the acquisition of certain assets of related party | $ 2,500 | |
Period for U.S. Food and Drug Administration (FDA) approval for additional consideration | 10 years | |
Period for EU European Medicines Agency approval for additional consideration | 10 years | |
Quarterly royalty rate (as a percent) | 5.00% | |
Period for the quarterly royalty rate payments | 10 years | |
Cash payments for the acquisition of certain assets of related party | $ 2,500 | |
In-process research and development expense | 2,200 | |
Capitalized property and equipment | $ 300 | |
Minimum | ||
Acquisition of certain DOSE Medical Corporation Assets | ||
Additional future consideration for U.S. Food and Drug Administration (FDA) approval | $ 5,000 | |
Additional future consideration for European Medicines Agency approval | 1,250 | |
Additional future consideration for certain net sales milestones | 7,500 | |
Buyout of additional consideration amount | 10,000 | |
Maximum | ||
Acquisition of certain DOSE Medical Corporation Assets | ||
Additional future consideration for U.S. Food and Drug Administration (FDA) approval | 22,500 | |
Additional future consideration for European Medicines Agency approval | 2,500 | |
Additional future consideration for certain net sales milestones | 20,000 | |
Buyout of additional consideration amount | $ 55,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($)item$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Jun. 30, 2019USD ($)item$ / sharesshares | Jun. 30, 2018USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Foreign Currency Translation | ||||||
Foreign currency translation (loss) gain | $ (230,000) | $ 1,541,000 | $ (166,000) | $ 1,047,000 | ||
Foreign currency transaction unrealized gains (losses) | 300,000 | (1,700,000) | 204,000 | (1,185,000) | ||
Trading Securities | ||||||
Trading securities | 0 | 0 | $ 0 | |||
Restricted cash | ||||||
Letter of Credit outstanding | 8,800,000 | 8,800,000 | 8,800,000 | |||
Cash and cash equivalents | 39,992,000 | 39,992,000 | 29,821,000 | |||
Restricted cash | 8,848,000 | 8,848,000 | 8,775,000 | |||
cash, cash equivalents and restricted cash in the condensed consolidated statements of cash flows | $ 48,840,000 | 24,941,000 | $ 48,840,000 | 24,941,000 | $ 38,596,000 | $ 24,508,000 |
Number of Months from start of lease for adjustments to Letter of Credit | item | 37 | 37 | ||||
Frequency of adjustment to Letter of Credit | 12 months | |||||
Adjustment rate of Letter of Credit (as a percent) | 20.00% | |||||
Amount of Letter of Credit outstanding after adjustments | $ 2,000,000 | $ 2,000,000 | ||||
Revenue Recognition | ||||||
Number of performance obligations that exist for majority of the contracts with customers | item | 1 | |||||
Warranty period from date of shipment | 1 year | |||||
Numerator: | ||||||
Net loss - basic and diluted | $ (6,309,000) | $ (5,398,000) | $ (7,651,000) | $ (8,109,000) | ||
Denominator: | ||||||
Weighted average number of common shares outstanding - basic | shares | 36,470 | 34,942 | 36,338 | 34,778 | ||
Weighted average number of common shares outstanding - diluted | shares | 36,470 | 34,942 | 36,338 | 34,778 | ||
Basic net loss per share (in dollars per share) | $ / shares | $ (0.17) | $ (0.15) | $ (0.21) | $ (0.23) | ||
Diluted net loss per share (in dollars per share) | $ / shares | $ (0.17) | $ (0.15) | $ (0.21) | $ (0.23) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from computation of earnings per share | 4,150 | 5,991 | 4,029 | 6,297 |
Stock options | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from computation of earnings per share | 3,750 | 5,819 | 3,648 | 5,937 |
RSU | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from computation of earnings per share | 380 | 141 | 363 | 333 |
ESPP | ||||
Anti-dilutive securities | ||||
Anti-dilutive securities excluded from computation of earnings per share | 20 | 31 | 18 | 27 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Leases (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2019 | Apr. 01, 2019 | Jan. 01, 2019 | |
Recent Accounting Pronouncements | |||
Operating lease right-of-use asset | $ 12,369 | ||
Operating lease liability | $ 13,138 | ||
Practical Expedients, Package | true | ||
Practical Expedient, Use of Hindsight | false | ||
Finance lease right-of-use asset | $ 53,935 | ||
Total Finance lease liabilities | 68,209 | ||
Aliso Facility | |||
Recent Accounting Pronouncements | |||
Finance lease right-of-use asset | $ 54,500 | ||
Total Finance lease liabilities | $ 67,200 | ||
Finance lease incentive assets, current | 12,600 | ||
Prepaid expenses and other current assets | Aliso Facility | |||
Recent Accounting Pronouncements | |||
Finance lease incentive assets, current | 10,900 | ||
Deposits and other assets | Aliso Facility | |||
Recent Accounting Pronouncements | |||
Finance lease incentive assets, non-current | $ 1,700 | ||
ASU No 2016-02 Leases | Adjustment | |||
Recent Accounting Pronouncements | |||
Operating lease right-of-use asset | $ 12,800 | ||
Operating lease liability | $ 13,400 |
Balance Sheet Details - Short-T
Balance Sheet Details - Short-Term Investments (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Short-term investments | ||
Amortized cost | $ 109,981 | $ 110,933 |
Unrealized gains | 447 | 45 |
Unrealized losses | (26) | (311) |
Estimated fair value | 110,402 | 110,667 |
U.S. Government bonds | ||
Short-term investments | ||
Amortized cost | 1,300 | |
Unrealized losses | (3) | |
Estimated fair value | $ 1,297 | |
U.S. Government bonds | Maximum | ||
Short-term investments | ||
Maturity | 1 year | |
U.S. Government agency bonds | ||
Short-term investments | ||
Amortized cost | 1,999 | $ 1,994 |
Unrealized losses | (2) | (12) |
Estimated fair value | $ 1,997 | $ 1,982 |
U.S. Government agency bonds | Maximum | ||
Short-term investments | ||
Maturity | 1 year | 1 year |
Bank certificates of deposit | ||
Short-term investments | ||
Amortized cost | $ 9,000 | $ 15,201 |
Unrealized gains | 20 | 2 |
Unrealized losses | (3) | |
Estimated fair value | $ 9,020 | $ 15,200 |
Bank certificates of deposit | Maximum | ||
Short-term investments | ||
Maturity | 2 years | 2 years |
Commercial paper | ||
Short-term investments | ||
Amortized cost | $ 8,423 | $ 9,597 |
Unrealized gains | 12 | 1 |
Unrealized losses | (1) | (5) |
Estimated fair value | $ 8,434 | $ 9,593 |
Commercial paper | Maximum | ||
Short-term investments | ||
Maturity | 1 year | 1 year |
Corporate notes | ||
Short-term investments | ||
Amortized cost | $ 64,624 | $ 60,923 |
Unrealized gains | 293 | 24 |
Unrealized losses | (11) | (194) |
Estimated fair value | $ 64,906 | $ 60,753 |
Corporate notes | Maximum | ||
Short-term investments | ||
Maturity | 3 years | 3 years |
Asset-backed securities | ||
Short-term investments | ||
Amortized cost | $ 25,935 | $ 21,918 |
Unrealized gains | 122 | 18 |
Unrealized losses | (12) | (94) |
Estimated fair value | $ 26,045 | $ 21,842 |
Asset-backed securities | Maximum | ||
Short-term investments | ||
Maturity | 2 years | 3 years |
Balance Sheet Details - Other (
Balance Sheet Details - Other (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable, Net | ||
Accounts receivable | $ 22,789 | $ 19,333 |
Allowance for doubtful accounts | (748) | (660) |
Accounts receivable, net | 22,041 | 18,673 |
Inventory | ||
Finished goods | 6,055 | 4,256 |
Work in process | 3,999 | 3,197 |
Raw materials | 3,984 | 5,829 |
Total inventory | 14,038 | 13,282 |
Accrued Liabilities | ||
Accrued bonuses | 5,446 | 8,604 |
Accrued vacation benefits | 2,742 | 2,446 |
Accrued legal expenses | 3,260 | 2,466 |
Accrued Employee Stock Purchase Plan liability | 2,458 | 1,154 |
Other accrued liabilities | 12,043 | 9,294 |
Total accrued liabilities | $ 25,949 | $ 23,964 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Total assets | $ 113,903 | $ 112,823 |
Fair Value, Inputs, Level 1 | ||
Assets | ||
Total assets | 2,001 | 1,156 |
Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 111,902 | 111,667 |
Fair Value, Measurements, Recurring | ||
Liabilities | ||
Total liabilities | 0 | 0 |
Money market funds | ||
Assets | ||
Total assets | 2,001 | 1,156 |
Money market funds | Fair Value, Inputs, Level 1 | ||
Assets | ||
Total assets | 2,001 | 1,156 |
U.S. Government agency bonds | ||
Assets | ||
Total assets | 1,997 | 1,982 |
U.S. Government agency bonds | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 1,997 | 1,982 |
U.S. Government bonds | ||
Assets | ||
Total assets | 1,297 | |
U.S. Government bonds | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 1,297 | |
Bank certificates of deposit | ||
Assets | ||
Cash equivalents | 1,500 | |
Total assets | 10,520 | 15,201 |
Bank certificates of deposit | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 10,520 | 15,201 |
Commercial paper. | ||
Assets | ||
Total assets | 8,434 | 9,593 |
Commercial paper. | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 8,434 | 9,593 |
Corporate notes | ||
Assets | ||
Cash equivalents | 1,000 | |
Total assets | 64,906 | 61,752 |
Corporate notes | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | 64,906 | 61,752 |
Asset-backed securities | ||
Assets | ||
Total assets | 26,045 | 21,842 |
Asset-backed securities | Fair Value, Inputs, Level 2 | ||
Assets | ||
Total assets | $ 26,045 | $ 21,842 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Jun. 30, 2018 |
Fair Value Measurements | ||
Amount of transfers of assets and liabilities measured on a recurring basis between Levels 1, 2 and 3 of the fair value hierarchy | $ 0 | $ 0 |
Leases - Terms (Details)
Leases - Terms (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Leases | |
Operating Lease Existence of Option to Extend | true |
Optional lease extension term | 10 years |
Operating Lease Existence of Option to Terminate | true |
Operating lease period for lease termination | 1 year |
Minimum | |
Leases | |
Operating lease remaining lease term | 1 year |
Maximum | |
Leases | |
Operating lease remaining lease term | 13 years |
Leases - Leases Details (Detail
Leases - Leases Details (Details) $ in Millions | Nov. 14, 2018ft²item | Dec. 31, 2018USD ($)item | Jun. 30, 2019ft²item |
Operating Leases | |||
Optional lease extension term | 10 years | ||
Domestic Office Leases | |||
Operating Leases | |||
The number of adjacent facilities rented | 2 | ||
Extended lease term | 3 years | ||
Number of lease renewal periods | 1 | ||
Optional lease extension term | 3 years | ||
Area of leased space | ft² | 98,000 | ||
Domestic Office Leases | Maximum | |||
Operating Leases | |||
Tenant improvement allowance | $ | $ 0.3 | ||
Foreign Subsidiaries Office Leases | |||
Operating Leases | |||
Area of leased space | ft² | 14,000 | ||
Aliso Facility | |||
Operating Leases | |||
Number of properties leased | 1 | ||
Number of buildings leased | 3 | ||
Number of lease renewal periods | 2 | ||
Optional lease extension term | 5 years | ||
Area of leased space | ft² | 160,000 | ||
Term of lease | 13 years |
Leases - Balance Sheet and Expe
Leases - Balance Sheet and Expense (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases | ||
Assets Operating | $ 12,369 | $ 12,369 |
Assets Finance | 53,935 | 53,935 |
Total lease assets | 66,304 | 66,304 |
Liabilities Current Operating | 1,481 | 1,481 |
Liabilities Noncurrent Operating | 11,657 | 11,657 |
Liabilities Noncurrent Finance | 68,209 | 68,209 |
Total lease liabilities | 81,347 | 81,347 |
Fixed operating lease cost | 587 | 1,174 |
Finance lease cost - amortization of right-of-use asset | 593 | 593 |
Finance lease cost - interest on lease liability | $ 1,013 | $ 1,013 |
Leases - Maturity (Details)
Leases - Maturity (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Leases | |
Existence of option to extend | true |
Operating Leases | |
Remainder of 2019 | $ 1,072 |
2020 | 1,930 |
2021 | 1,715 |
2022 | 1,622 |
2023 | 1,943 |
Thereafter | 8,286 |
Total Operating lease payments | 16,568 |
Less: imputed interest | 3,430 |
Total Operating lease liabilities | 13,138 |
Amount of operating leases with option to extend commitment | 12,000 |
Finance Leases | |
2020 | 1,547 |
2021 | 4,744 |
2022 | 4,887 |
2023 | 5,033 |
Thereafter | 123,545 |
Total Finance lease payments | 139,756 |
Less: imputed interest | 71,547 |
Total Finance lease liabilities | 68,209 |
Amount of financing leases with option to extend commitment | $ 75,800 |
Leases - Lease Term And Discoun
Leases - Lease Term And Discount Rate And Cash Flow Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases | ||
Weighted average remaining lease term - operating leases | 8 years | 8 years |
Weighted average remaining lease term - finance leases | 22 years 9 months 18 days | 22 years 9 months 18 days |
Weighted average discount rate - operating leases (as a percent) | 5.50% | 5.50% |
Weighted average discount rate - finance leases (as a percent) | 6.00% | 6.00% |
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows from operating leases | $ 409 | $ 940 |
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows from finance leases | 1,013 | 1,013 |
Right-of-use asset obtained in exchange for lease obligations: Operating leases | 13,172 | |
Right-of-use asset obtained in exchange for lease obligations: Finance leases | $ 54,528 | $ 54,528 |
Intangible Assets - Summary and
Intangible Assets - Summary and Other (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended |
Nov. 30, 2013 | Jun. 30, 2018 | Jun. 30, 2018 | |
Composition of intangible assets | |||
Amortization expense | $ 0.9 | $ 1.8 | |
GMP royalty buyout | |||
Composition of intangible assets | |||
Intangible asset purchase amount | $ 17.5 | ||
Buy-out Agreement with GMP | GMP royalty buyout | |||
Composition of intangible assets | |||
Useful life/amortization period | 5 years | ||
Notes Payable | Buy-out Agreement with GMP | GMP Note Parties | |||
Composition of intangible assets | |||
Face amount at time of issuance | $ 17.5 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contracts with Customers | |
Typical payment terms on invoiced amounts | 30 days |
Practical expedient financing component | true |
Practical expedient cost of obtaining contract | true |
Stock-Based Compensation - Plan
Stock-Based Compensation - Plan Information (Details) | 6 Months Ended |
Jun. 30, 2019item | |
Stock-based compensation | |
Number of stock plans | 4 |
Expiration period | 10 years |
Vesting percentage on first anniversary of grant date | 25.00% |
Remaining vesting period | 3 years |
Employee Stock Purchase Plan 2015 | |
Stock-based compensation | |
Maximum employee contributions as a percentage of earnings under the ESPP | 15.00% |
Purchase price per share expressed as a percentage of the lower of the stock's fair market value on the offering date or purchase date under the ESPP | 85.00% |
First anniversary | RSU | |
Stock-based compensation | |
Vesting (as a percent) | 25.00% |
Second anniversary | RSU | |
Stock-based compensation | |
Vesting (as a percent) | 25.00% |
Third anniversary | RSU | |
Stock-based compensation | |
Vesting (as a percent) | 25.00% |
Fourth anniversary | RSU | |
Stock-based compensation | |
Vesting (as a percent) | 25.00% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Number of Shares Underlying Options | |||||
Outstanding at beginning of period (in shares) | 6,307 | ||||
Granted (in shares) | 110 | ||||
Exercised (in shares) | (384) | ||||
Canceled/forfeited/expired (in shares) | (11) | ||||
Outstanding at end of period (in shares) | 6,022 | 6,022 | 6,307 | ||
Vested and expected to vest at end of period (in shares) | 5,855 | 5,855 | |||
Exercisable at end of period (in shares) | 4,190 | 4,190 | |||
Weighted Average Exercise Price | |||||
Outstanding at beginning of period (in dollars per share) | $ 23.69 | ||||
Granted (in dollars per share) | 69.30 | ||||
Exercised (in dollars per share) | 23.68 | ||||
Canceled/forfeited/expired (in dollars per share) | 38.94 | ||||
Outstanding at end of period (in dollars per share) | $ 24.51 | 24.51 | $ 23.69 | ||
Vested and expected to vest at end of period (in dollars per share) | 24.21 | 24.21 | |||
Exercisable at end of period (in dollars per share) | $ 18.97 | $ 18.97 | |||
Additional disclosures | |||||
Weighted Average Remaining Contractual Life | 6 years 4 months 24 days | 6 years 8 months 12 days | |||
Weighted Average Remaining Contractual Life, Vested and expected to vest at end of period | 6 years 3 months 18 days | ||||
Weighted Average Remaining Contractual Life, Exercisable at end of period | 5 years 8 months 12 days | ||||
Aggregate Intrinsic Value for outstanding options | $ 306,469 | $ 306,469 | $ 204,896 | ||
Exercised, Aggregate Intrinsic Value | 17,888 | ||||
Vested and expected to vest, Aggregate Intrinsic Value | 299,714 | 299,714 | |||
Exercisable, Aggregate Intrinsic Value | $ 236,428 | $ 236,428 | |||
Weighted average estimated grant date fair value of options granted (in dollars per share) | $ 33.02 | $ 16.91 | $ 33.02 | $ 15.08 | |
Fair value of stock options vested | $ 4,800 | $ 6,400 | $ 11,100 | $ 15,700 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair Value Assumptions (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based compensation | ||||
Unamortized stock-based compensation expense not yet recognized | $ 59.8 | $ 59.8 | ||
RSU | ||||
Stock-based compensation | ||||
Unamortized stock-based compensation expense not yet recognized | 28.7 | $ 28.7 | ||
Options remaining vesting period | 4 years | |||
Weighted average period of recognition | 2 years 10 months 24 days | |||
Stock options | ||||
Stock-based compensation | ||||
Unamortized stock-based compensation expense not yet recognized | $ 31.1 | $ 31.1 | ||
Options remaining vesting period | 4 years | |||
Weighted average period of recognition | 2 years 1 month 6 days | |||
Stock-based awards - weighted average assumptions used to estimate fair value of options granted | ||||
Risk-free interest rate (as a percent) | 2.56% | 2.65% | 2.56% | 2.67% |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Expected volatility rate (as a percent) | 46.70% | 44.80% | 46.70% | 44.90% |
Expected term | 6 years 3 days | 6 years 1 month 6 days | 6 years 3 days | 6 years 1 month 6 days |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - RSU - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock-based compensation | ||||
Total fair value of units vested | $ 5.6 | $ 1.1 | $ 5.9 | $ 1.1 |
Number of shares | ||||
Unvested at beginning of period (in shares) | 532 | |||
Granted (in shares) | 293 | |||
Vested (in shares) | (177) | |||
Canceled/forfeited (in shares) | (6) | |||
Unvested at end of period (in shares) | 642 | 642 | ||
Weighted average grant date fair value | ||||
Unvested at beginning of period (in dollar per share) | $ 35.17 | |||
Granted (in dollar per share) | 70.25 | |||
Vested (in dollar per share) | 33.36 | |||
Canceled/forfeited (in dollar per share) | 44.87 | |||
Unvested at end of period (in dollar per share) | $ 51.45 | $ 51.45 |
Stock-Based Compensation - Allo
Stock-Based Compensation - Allocation of Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Allocation of stock-based compensation | ||||
Stock-based compensation expense | $ 8,247 | $ 6,461 | $ 15,376 | $ 11,863 |
Cost of sales | ||||
Allocation of stock-based compensation | ||||
Stock-based compensation expense | 270 | 177 | 493 | 351 |
Selling, general and administrative | ||||
Allocation of stock-based compensation | ||||
Stock-based compensation expense | 6,340 | 4,864 | 11,837 | 8,880 |
Research and development | ||||
Allocation of stock-based compensation | ||||
Stock-based compensation expense | $ 1,637 | $ 1,420 | $ 3,046 | $ 2,632 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Taxes | ||||
Effective tax rate (as a percent) | (1.10%) | (2.60%) | ||
Provision for income taxes | $ 72,000 | $ 11,000 | $ 194,000 | $ 16,000 |
Unrecognized tax benefits | $ 13,600,000 | $ 7,200,000 | $ 13,600,000 | $ 7,200,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2018USD ($)item | Aug. 31, 2018item | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)item | Jun. 30, 2018USD ($) | |
Other commitments | ||||||
Number of patent infringements | item | 3 | |||||
Number of new new petitions filed | item | 2 | |||||
Accrual for loss contingency | $ 0 | $ 0 | ||||
Letter of Credit outstanding | $ 8,800,000 | 8,800,000 | 8,800,000 | |||
Restricted cash | 8,775,000 | $ 8,848,000 | $ 8,848,000 | |||
Number of Months from start of lease for adjustments to Letter of Credit | item | 37 | 37 | ||||
Frequency of adjustment to Letter of Credit | 12 months | |||||
Adjustment rate of Letter of Credit (as a percent) | 20.00% | |||||
Amount of Letter of Credit outstanding after adjustments | $ 2,000,000 | $ 2,000,000 | ||||
Deferred compensation plan liability | 2,000,000 | 3,000,000 | 3,000,000 | |||
Deferred compensation plan assets | $ 1,900,000 | 2,900,000 | 2,900,000 | |||
Purchase commitment obligation | 7,400,000 | 7,400,000 | ||||
Agreement with the Regents | ||||||
Other commitments | ||||||
Minimum required annual payment of the commitment obligation, based on net sales of current and future products | 500,000 | 500,000 | ||||
Cost of sales | Agreement with the Regents | ||||||
Other commitments | ||||||
Commitment obligation payments | $ 1,500,000 | $ 1,100,000 | $ 2,800,000 | $ 2,100,000 |
Business Segment Information (D
Business Segment Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | |
Business Segment Information | ||||
Number of Reportable Segments | segment | 1 | |||
Total net sales | $ 58,600 | $ 43,161 | $ 112,626 | $ 83,294 |
United States | ||||
Business Segment Information | ||||
Total net sales | 48,088 | 36,311 | 92,305 | 69,924 |
International | ||||
Business Segment Information | ||||
Total net sales | $ 10,512 | $ 6,850 | $ 20,321 | $ 13,370 |
Subsequent Events (Details)
Subsequent Events (Details) | Aug. 07, 2019shares |
Atlantic Merger Sub, Inc. | Forecast | Subsequent Events | |
Subsequent Events | |
Number of shares received in connection with Merger for each share of company owned stock | 0.365 |