Gi Dynamics (GIDYL) 10-Q 13 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Trading Symbol	GIDYL
Entity Registrant Name	GI DYNAMICS, INC.
Entity Central Index Key	1,245,791
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		9,484,671

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 32,819	$ 51,191
Accounts receivable, net	283	470
Inventory	3,225	5,488
Prepaid expenses and other current assets	1,005	1,165
Total current assets	37,332	58,314
Property and equipment, net	954	1,089
Other long-term assets	97	97
Total assets	38,383	59,500
Liabilities and stockholders' equity
Accounts payable	1,194	882
Accrued expenses	5,574	7,674
Deferred revenue	116	412
Other current liabilities	179	175
Total current liabilities	7,063	9,143
Deferred rent, net of current portion	86	166
Other liabilities	5	4
Warrants to purchase common stock	$ 19	$ 9
Commitments (Note 10)
Stockholders' equity:
Preferred stock, $0.01 par value - 500,000 shares authorized; no shares issued and outstanding at June 30, 2015 and December 31, 2014
Common stock	$ 95	$ 95
Additional paid-in capital	251,624	250,009
Accumulated deficit	(220,509)	(199,926)
Total stockholders' equity	31,210	50,178
Total liabilities and stockholders' equity	$ 38,383	$ 59,500

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	13,000,000	13,000,000
Common stock, shares issued	9,484,671	9,483,671
Common stock, shares outstanding	9,481,171	9,480,171
Class B common stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000	1,000,000
Common stock, shares issued	0	0
Common stock, shares outstanding	0	0

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue	$ 310	$ 840	$ 926	$ 1,746
Cost of revenue	2,012	550	2,898	1,453
Gross (loss) profit	(1,702)	290	(1,972)	293
Operating expenses:
Research and development	4,631	7,516	10,277	12,860
Sales and marketing	1,482	3,074	3,142	5,562
General and administrative	2,437	2,341	4,731	4,606
Total operating expenses	8,550	12,931	18,150	23,028
Loss from operations	(10,252)	(12,641)	(20,122)	(22,735)
Other income (expense):
Interest income	24	124	54	176
Interest expense				(1)
Foreign exchange gain (loss)	28	224	(465)	427
Remeasurement of warrant liability	(8)	15	(10)	195
Other income (expense), net	44	363	(421)	797
Loss before income tax expense	(10,208)	(12,278)	(20,543)	(21,938)
Income tax expense	26	22	40	43
Net loss	$ (10,234)	$ (12,300)	$ (20,583)	$ (21,981)
Basic and diluted net loss per common share	$ (1.08)	$ (1.38)	$ (2.17)	$ (2.58)
Weighted-average number of common shares used in basic and diluted net loss per common share	9,481,171	8,921,886	9,481,099	8,511,467
Comprehensive loss	$ (10,234)	$ (12,300)	$ (20,583)	$ (21,981)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Net loss	$ (20,583)	$ (21,981)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	312	320
Stock-based compensation expense	1,613	2,208
Remeasurement of warrant liability	10	(195)
Change in inventory reserve	1,487	(105)
Changes in operating assets and liabilities:
Accounts receivable	187	(214)
Prepaid expenses and other current assets	160	103
Inventory	776	(62)
Accounts payable	312	272
Accrued expenses	(2,111)	1,468
Deferred revenue	(296)	27
Deferred rent	(71)	127
Net cash used in operating activities	(18,204)	(18,032)
Investing activities
Purchases of property and equipment	(169)	(182)
Net cash used in investing activities	(169)	(182)
Financing activities
Proceeds from exercise of stock options	2	522
Net proceeds from issuance of common stock		30,782
Payments on capital lease	(1)
Payments on long-term debt		(39)
Net cash provided by financing activities	1	31,265
Net decrease in cash and cash equivalents	(18,372)	13,051
Cash and cash equivalents at beginning of period	51,191	58,616
Cash and cash equivalents at end of period	32,819	71,667
Supplemental cash flow disclosures
Cash paid for interest		1
Income taxes paid	52	$ 24
Equipment acquired under capital lease	$ 8

Nature of Business

Nature of Business	6 Months Ended
	Jun. 30, 2015
Nature of Business	1. Nature of Business GI Dynamics, Inc. (the “Company”) was incorporated on March 24, 2003, as a Delaware corporation, with operations based in Lexington, Massachusetts. The Company is dedicated to restoring health and improving quality of life, through the design and application of device and management solutions for treatment of metabolic disease. The Company’s near-term goal is to establish EndoBarrier Therapy as a valued treatment option for patients suffering from type 2 diabetes and obesity by restoring more manageable blood sugar levels and reducing body weight. The Company is the developer of EndoBarrier, the first endoscopically-delivered device therapy approved for the treatment of obese type 2 diabetes with BMI > 2 > 2 > 2 In 2011, the Company began commercial sales of EndoBarrier, which is currently sold in select markets in Europe, South America, the Asia Pacific region and the Middle East. In the U.S., the Company received approval from the Food and Drug Administration (“FDA”), to commence its pivotal trial of EndoBarrier Therapy (the “ENDO Trial”), which the Company began in 2013. The multi-center, randomized, double-blinded study planned to enroll 500 patients with uncontrolled type 2 diabetes and obesity at 25 sites in the U.S. The primary endpoint was improvement in diabetes control as measured by HbA1c levels. On March 5, 2015, the Company announced that the FDA recommended discontinuing placement of any additional devices in the ENDO Trial as a result of, at that date, four cases of hepatic abscess among the 325 subjects then enrolled in the ENDO Trial. Hepatic abscess, a bacterial infection of the liver, is a known event related to the use of EndoBarrier. As a result, the Company halted enrollment in the ENDO Trial, although monitoring and data collection of patients then enrolled in the ENDO Trial continued. On July 30, 2015, the Company announced its decision to discontinue the ENDO Trial. The decision followed discussions with the FDA regarding resumption of ENDO Trial enrollment, which despite collaborative efforts by both parties were unable to yield a feasible path forward for the mitigation of a higher than anticipated incidence of hepatic abscess. The Company concluded that terminating the ENDO Trial, effective immediately, was in the best interest of all stakeholders. The Company is subject to a number of risks similar to other medical device companies, including, but not limited to, market acceptance of the Company’s products, development by its competitors of new technological innovations, safety and efficacy of the products in clinical trials, the regulatory approval process governing medical devices and protection of proprietary technology. In addition, the Company will require additional funding to support its long-term operations. Any such financing may or may not be similar to transactions in which it has engaged in the past and there can be no assurance that any such financing opportunities will also be available on acceptable terms, if at all. The Company has incurred operating losses since inception and at June 30, 2015, had an accumulated deficit of approximately $220.5 million. Based on the Company’s decision to conclude the ENDO Trial, it has begun efforts to evaluate which markets are appropriate to continue pursuing reimbursement, market awareness and general market development efforts, and initiated efforts to restructure its business and costs, establish new priorities, continue limited market development and research, and evaluate strategic options. As a result, the Company expects to incur significant operating losses for the next several years. At June 30, 2015, the Company had approximately $32.8 million in cash and cash equivalents, which it believes is sufficient to fund its operations through September 2016. The Company does not expect its current cash balances will be sufficient to enable it to complete development of an improved EndoBarrier for its current use and potential new indications. The Company will need to raise additional funding in order to continue to fund its operations beyond September 2016. The Company may seek to raise additional funds through a combination of collaborative arrangements, strategic alliances, and additional equity and debt financings or from other sources. There can be no assurance that any such financing opportunities will also be available on acceptable terms, if at all. If the Company is unable to raise capital when needed, it could be forced to significantly delay, scale back or discontinue research and development activities and further commercialization of EndoBarrier. In September 2011, the Company completed its initial public offering (“IPO”) of common stock in the form of CHESS Depositary Interests (“CDIs”) in Australia. As a result of the IPO and simultaneous private placement in the U.S., the Company raised a total of approximately $72.5 million in proceeds, net of expenses and repayment of $6.0 million of the Company’s Convertible Term Promissory Notes. Additionally, in July and August 2013, the Company sold CDIs on the Australian Securities Exchange (“ASX”) through a private placement and Share Purchase Plan (“SPP”), which raised a total of approximately $52.5 million, net of expenses. In May 2014, the Company raised an additional approximately $30.8 million, net of expenses, when it sold CDIs on the ASX through a private placement.

Summary of Significant Accounti

Summary of Significant Accounting Policies and Basis of Presentation	6 Months Ended
	Jun. 30, 2015
Summary of Significant Accounting Policies and Basis of Presentation	2. Summary of Significant Accounting Policies and Basis of Presentation The accompanying condensed consolidated financial statements and the related disclosures as of June 30, 2015 and for the three and six months ended June 30, 2015 and 2014 are unaudited and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K (“Form 10-K”). The December 31, 2014 condensed consolidated balance sheet included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to present fairly the Company’s financial position as of June 30, 2015, results of its operations for the three and six months ended June 30, 2015 and 2014, and its cash flows for the six months ended June 30, 2015 and 2014. The interim results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The Company’s significant accounting policies are as described in Note 2, Summary of Significant Accounting Policies and Basis of Presentation Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of GI Dynamics, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, the Company’s management evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, inventory valuation including reserves for excess and obsolete inventory, impairment of long-lived assets, income taxes including the valuation allowance for deferred tax assets, research and development, contingencies, and stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Guarantees The Company has identified the guarantees described below as disclosable, in accordance with ASC 460, Guarantees As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid. The Company is a party to a number of agreements entered into in the ordinary course of business that contain typical provisions that obligate the Company to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. The Company leases office space under several non-cancelable operating leases. The Company has standard indemnification arrangements under these leases that require it to indemnify its landlords against all costs, expenses, fines, suits, claims, demands, liabilities, and actions directly resulting from any breach, violation, or nonperformance of any covenant or condition of the respective lease. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. As of June 30, 2015 and December 31, 2014, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible. As a result, no related reserves have been established. Reverse Stock Split In November 2014, the Company’s stockholders approved a one-for-ten reverse stock split of the Company’s common stock that was effective April 9, 2015. All share and per share amounts in the condensed consolidated financial statements and notes thereto have been retroactively adjusted, where necessary, to reflect this reverse stock split. Because the par value of the Company’s shares of common stock remain unchanged after the date of the split, the total stated par value and additional paid-in capital changed by offsetting amounts. The stated par value was reduced to one-tenth of the amount before the split and the additional paid-in capital was increased the same amount. Subsequent Events The Company evaluates events occurring after the date of its condensed consolidated balance sheet for potential recognition or disclosure in its condensed consolidated financial statements. There have been no subsequent events that have occurred through the date the Company issued its condensed consolidated financial statements that require disclosure in or adjustment to its condensed consolidated financial statements. Reclassifications Certain reclassifications related to the presentation of the change in inventory in the condensed consolidated statements of cash flows have been made to prior year amounts to conform with current year presentation. New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory

Net Loss per Common Share

Net Loss per Common Share	6 Months Ended
	Jun. 30, 2015
Net Loss per Common Share	3. Net Loss per Common Share Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Potential common stock equivalents are determined using the treasury stock method. For diluted net loss per share purposes, the Company excludes stock options and other stock-based awards, including shares issued as a result of option exercises but which are subject to repurchase by the Company, whose effect would be anti-dilutive from the calculation. During the three and six months ended June 30, 2015 and 2014, common stock equivalents were excluded from the calculation of diluted net loss per common share, as their effect was anti-dilutive due to the net loss incurred. Therefore, basic and diluted net loss per share was the same in all periods presented. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of June 30, 2015 and 2014, as they would be anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Warrants to purchase common stock 50,000 50,000 50,000 50,000 Options to purchase common stock and other stock-based awards 1,506,880 1,027,202 1,506,880 1,027,202 1,556,880 1,077,202 1,556,880 1,077,202

Common Stock Warrants

Common Stock Warrants	6 Months Ended
	Jun. 30, 2015
Common Stock Warrants	4. Common Stock Warrants In connection with the Company’s IPO in September 2011, the Company issued warrants in an aggregate amount of 50,000 shares of common stock at an exercise price of A$55.00 per share to the lead manager of the IPO and certain other investors. The warrants will expire on the fifth anniversary of their date of grant. The warrants may be converted on a cashless basis at the option of the holder. The Company has reserved 50,000 shares of common stock related to these warrants. The Company accounts for the warrants under Accounting Standards Codification 815, Derivatives and Hedging

Fair Value of Financial Instrum

Fair Value of Financial Instruments	6 Months Ended
	Jun. 30, 2015
Fair Value of Financial Instruments	5. Fair Value of Financial Instruments The tables below present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value. In general, fair values determined by Level 1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are either directly or indirectly observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, requiring the Company to develop its own assumptions for the asset or liability. The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using Description June 30, 2015 Quoted Prices in Active Markets for Significant Other Significant Assets Money market funds (included in cash and cash equivalents) $ 24,215 $ 24,215 $ — $ — Total assets $ 24,215 $ 24,215 $ — $ — Liabilities Warrants to purchase common stock $ 19 $ — $ — $ 19 Total liabilities $ 19 $ — $ — $ 19 Fair Value Measurements at Reporting Date Using Description December 31, Quoted Prices in Significant Other Significant Assets Money market funds (included in cash and cash equivalents) $ 38,454 $ 38,454 $ — $ — Total assets $ 38,454 $ 38,454 $ — $ — Liabilities Warrants to purchase common stock $ 9 $ — $ — $ 9 Total liabilities $ 9 $ — $ — $ 9 The assumptions used in the Black-Scholes option pricing model to determine the fair value of the common stock warrants at June 30, 2015 and December 31, 2014 were as follows: June 30, 2015 December 31, 2014 Exercise price (A$55.00 at current exchange rate) $ 42.24 $ 45.10 Fair value of common stock $ 5.76 $ 9.80 Expected volatility 113.9 % 62.2 % Expected term (in years) 1.2 1.7 Risk-free interest rate 0.3 % 0.5 % Expected dividend yield — % — % The following table rolls forward the fair value of the warrants, where fair value is determined by Level 3 inputs (in thousands): Balance at December 31, 2014 $ 9 Increase in fair value of warrants upon remeasurement included in other income (expense) 10 Balance at June 30, 2015 $ 19 Cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and other current liabilities at June 30, 2015 and December 31, 2014 are carried at amounts that approximate fair value due to their short-term maturities and highly liquid nature of these instruments.

Concentrations of Credit Risk,

Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account	6 Months Ended
	Jun. 30, 2015
Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account	6. Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalent balances with high quality financial institutions, and consequently, the Company believes that such funds are subject to minimal credit risk. The Company’s short-term investments potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policy that limits the amounts the Company may invest in any one type of investment and requires all investments held by the Company to have a rating of not less than A, thereby reducing credit risk concentration. Accounts receivable primarily consist of amounts due from customers, including distributors and health care providers in different countries. In light of the current economic state of many foreign countries, the Company continues to monitor the creditworthiness of its customers. At June 30, 2015 and December 31, 2014, one distributor accounted for approximately 18% and 32%, respectively, of the Company’s accounts receivable. No other customer accounted for greater than 10% of the Company’s accounts receivable at June 30, 2015 and December 31, 2014. The Company grants credit to customers in the normal course of business but generally does not require collateral or any other security to support its receivables. The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not individually reviewed. To date, the Company has not had any write-offs of bad debt; however, as of June 30, 2015, the Company had approximately $0.1 million of accounts receivable where collection is deemed to be doubtful, and as such, the Company has established an allowance for doubtful accounts. At December 31, 2014, the Company had an allowance for doubtful accounts of approximately $41,000. In certain circumstances the Company allows customers to return defective or nonconforming products for credit or replacement products. Defective or nonconforming products typically consist of those products that resulted in an unsuccessful implant procedure. The Company records an estimate for product returns based upon historical trends. The associated reserve for product returns is recorded as a reduction of the Company’s accounts receivable. The following table shows the components of the Company’s accounts receivable at June 30, 2015 and December 31, 2014 (in thousands): June 30, 2015 December 31, 2014 Accounts receivable $ 433 $ 555 Less: allowance for doubtful accounts (114 ) (41 ) Less: allowance for sales returns (36 ) (44 ) Total $ 283 $ 470

Inventory

Inventory	6 Months Ended
	Jun. 30, 2015
Inventory	7. Inventory The Company states inventory at the lower of first-in, first-out cost or market. The Company records a provision for excess, expired, and obsolete inventory based primarily on estimates of forecasted revenues. A significant change in the timing or level of demand for products as compared to forecasted amounts may result in recording additional provisions for excess, expired, and obsolete inventory in the future. When capitalizing inventory, the Company considers factors such as status of regulatory approval, alternative use of inventory, and anticipated commercial use of the product. The determination of obsolete or excess inventory requires the Company to estimate the future demand for its products within appropriate time horizons. The estimated future demand is compared to inventory levels to determine the amount, if any, of obsolete and excess inventory. The demand forecast includes the Company’s estimates of market growth and various internal estimates, and is based on assumptions that are consistent with the plans and estimates the Company is using to manage its underlying business and short-term manufacturing plans. Forecasting demand for EndoBarrier in a market in which there are few, if any, comparable approved devices and for which reimbursement from third-party payers is limited has been difficult. To the extent the Company’s demand forecast is less than its inventory on-hand, the Company could be required to record reserves for excess inventory. In June of 2015, the Company performed an analysis of its inventory on hand and due to current evidence that the utility of certain amounts of the raw material sleeve inventory as it was expected to be used will be less than its cost, recorded an approximately $1.4 million charge for excess inventory. Factors contributing to the inventory write-down included: the effect that the ENDO Trial enrollment hold and related uncertainty around the timing and success of the Company’s ENDO Trial had on commercial activity and the Company’s inventory levels, the expected timing of third-party payer reimbursement in its commercial markets, its conclusion that certain inventory will not be used for sales inside or outside the U.S. and the historical accuracy of its demand forecasts. As of June 30, 2015, the Company has a reserve totaling approximately $3.0 million for raw material sleeve inventory. The Company continues to review any evidence that may indicate that the utility of additional amounts of the raw material sleeve inventory, as it was expected to be used, will be less than cost. Inventory at June 30, 2015 and December 31, 2014 was as follows (in thousands): June 30, 2015 December 31, 2014 Finished goods $ 609 $ 733 Work-in-process 1,681 2,401 Raw materials 935 2,354 Total $ 3,225 $ 5,488 The Company has entered into consignment arrangements in which the Company delivers product to the customer but retains title to the product until it is implanted or otherwise consumed. At June 30, 2015 and December 31, 2014, approximately 8% and 4%, respectively, of the finished goods inventory was at customer locations pursuant to these arrangements.

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 30, 2015
Property and Equipment	8. Property and Equipment Property and equipment consisted of the following (in thousands): June 30, 2015 December 31, 2014 Laboratory equipment and manufacturing equipment $ 545 $ 545 Computer equipment and software 1,119 1,125 Office furniture and equipment 229 221 Construction in process 217 48 Leasehold improvements 921 921 3,031 2,860 Less accumulated depreciation and amortization (2,077 ) (1,771 ) Total $ 954 $ 1,089 In January 2015, the Company entered into a capital lease for certain office equipment. As of June 30, 2015, the Company had approximately $8,000 of assets under capital leases with a minimal accumulated amortization balance. Depreciation and amortization expense of property and equipment, including equipment recorded under capital leases, was approximately $0.1 million for the three months ended June 30, 2015 and approximately $0.2 million for the three months ended June 30, 2014. Depreciation and amortization expense of property and equipment, including equipment recorded under capital leases, was approximately $0.3 million for each of the six months ended June 30, 2015 and 2014.

Accrued Expenses

Accrued Expenses	6 Months Ended
	Jun. 30, 2015
Accrued Expenses	9. Accrued Expenses Accrued expenses consisted of the following (in thousands): June 30, 2015 December 31, 2014 Clinical trials $ 2,869 $ 3,906 Payroll and related liabilities 1,374 2,629 Professional fees 686 634 Deferred rent, current portion 160 151 Current portion of capital lease obligation 2 — Other 483 354 Total $ 5,574 $ 7,674 Included in payroll and related liabilities at June 30, 2015, is a total of approximately $0.4 million of separation expenses which will be paid out through March 2016.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2015
Commitments and Contingencies	10. Commitments and Contingencies Lease Commitments In June 2013, the Company entered into a noncancelable agreement to sublease 33,339 square feet of office, laboratory and manufacturing space in Lexington, Massachusetts. The sublease commenced in June 2013 and expires in December 2016, subject to earlier termination under certain conditions. Base rent during the initial rent period is approximately $0.6 million per year and increases annually by approximately $17,000. The space was delivered to the Company in June 2013 and rent payments commenced in May 2014. The rent expense, inclusive of the escalating rent payments and free rent period, is recognized on a straight-line basis over the term of the sublease agreement. In accordance with the terms of the sublease agreement, the Company maintains an unsecured letter of credit of approximately $0.2 million securing its obligations under the sublease agreement. In March 2012, the Company’s subsidiary, GID Germany GmbH, entered into a noncancelable operating lease for office space in Dusseldorf, Germany. The lease was renewed in September 2013 and again in January 2015 and was extended through April 2016. The agreement was extended under substantially the same terms as the original agreement and is subject to earlier termination based on certain terms and conditions. The rent expense, inclusive of the free rent periods, is recognized on a straight-line basis over the term of the current lease agreement. In July 2013, the Company’s subsidiary, GI Dynamics Australia Pty Ltd, entered into a noncancelable operating lease for office space in Baulkham Hills, Australia. The initial term of the lease was for twelve months, which expired in July 2014. The Company exercised its option to renew the lease and extended the term through July 2015. In July 2015 the Company vacated this office space. Rent expense on noncancelable operating leases was approximately $0.1 million for each of the three-month periods ended June 30, 2015 and 2014, respectively. Rent expense on noncancelable operating leases was approximately $0.3 million for each of the six-month periods ended June 30, 2015 and 2014, respectively. In March 2015, the Company entered into a capital lease for certain office equipment totaling approximately $8,000. The capital lease has a three-year term and an interest rate of 14.1%. Future minimum lease payments under all noncancelable lease arrangements at June 30, 2015, are as follows (in thousands): Year Ending December 31, 2015 $ 319 2016 626 2017 3 2018 1 Total $ 949

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2015
Stockholders' Equity	11. Stockholders’ Equity On April 9, 2015, the Company amended its certificate of incorporation to reflect the one-for-ten reverse stock split approved by its shareholders. After giving effect to the reverse stock split, the authorized capital stock of the Company now consists of 14,500,000 shares, of which 13,000,000 shares are designated as common stock, 1,000,000 shares are designated as Class B common stock, and 500,000 shares are designated as preferred stock. Common Stock The Company authorized Class B common stock in order meet the Listing Rules of the ASX so far as they apply to escrowed securities. In the event that holders of common stock, who were subject to ASX-imposed escrow, breached the terms of their escrow agreement or the Listing Rules as they apply to escrowed securities, their common stock would have been automatically converted into Class B common stock until the earlier to occur of the expiration of the escrow period or the breach being rectified. The Class B common stock is identical to and ranks equally with the common stock except that Class B common stock has no voting rights and is not entitled to any dividends. No shares of common stock are currently subject to such an escrow.

Stock Plans

Stock Plans	6 Months Ended
	Jun. 30, 2015
Stock Plans	12. Stock Plans The Company has two stock-based compensation plans under which stock options, restricted and unrestricted stock awards, restricted stock units, and other share-based awards are available for grant to employees, directors and consultants of the Company. At June 30, 2015, there were 480,632 shares available for future grant under both plans. The 2011 Employee, Director and Consultant Equity Incentive Plan (the “2011 Plan”, together with the 2003 Omnibus Stock Plan, the “Plans”) allows for an annual increase in the number of shares available for issue under the 2011 Plan commencing on the first day of each fiscal year during the period beginning in fiscal year 2012 and ending in fiscal year 2020. The annual increase in the number of shares shall be equal to the lowest of: • 500,000 shares; • 4% of the number of common shares outstanding as of such date; and • an amount determined by the Board of Directors or the Company’s compensation committee. Accordingly, during the six months ended June 30, 2015, 379,346 shares were added to the 2011 Plan. Stock-Based Compensation Stock-based compensation is reflected in the condensed consolidated statements of comprehensive loss as follows for the three and six months ended June 30, 2015 and 2014 (in thousands): Three Months Ended Six Months Ended June 30, 2015 2014 2015 2014 Cost of revenue $ 25 $ 32 $ 47 $ 60 Research and development 162 333 348 640 Sales and marketing 111 413 256 826 General and administrative 621 368 962 682 $ 919 $ 1,146 $ 1,613 $ 2,208 During the six months ended June 30, 2015, the Company modified the post-employment exercise period of stock awards previously granted to the Company’s former chief financial officer in relation to his separation from the Company. The modification extended the exercise period to December 8, 2015. The modification resulted in an approximately $19,000 increase in stock-based compensation for the six months ended June 30, 2015. The Company accounted for the modification of these stock awards in accordance with the provisions of ASC 718, Stock Compensation In calculating stock-based compensation costs, the Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of short-lived, exchange-traded options that have no vesting restrictions and are fully transferable. The Company estimates the number of awards that will be forfeited in calculating compensation costs. Such costs are then recognized over the requisite service period of the awards on a straight-line basis. Determining the fair value of stock-based awards using the Black-Scholes option-pricing model requires the use of highly subjective assumptions, including the expected term of the award and expected stock price volatility. The weighted-average assumptions used to estimate the fair value of employee stock options using the Black-Scholes option-pricing model were as follows for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Expected volatility 56.8 % 62.0 % 56.8 % 62.8 % Expected term (in years) 6.04 6.05 6.04 6.05 Risk-free interest rate 1.6 % 1.9 % 1.6 % 2.0 % Expected dividend yield — % — % — % — % The Company uses historical data to estimate forfeiture rates. The Company’s estimated forfeiture rates were 10% and 5% at June 30, 2015 and 2014, respectively. Stock Options The following table summarizes share-based activity under the Company’s stock option plans: Shares of Weighted- Weighted- Aggregate (in years) (in thousands) Outstanding at December 31, 2014 1,201,496 $ 26.36 6.41 $ 1,406 Granted 246,604 $ 5.42 Exercised (1,000 ) $ 1.50 Cancelled (252,027 ) $ 30.89 Outstanding at June 30, 2015 1,195,073 $ 21.11 6.88 $ 374 Vested or expected to vest at June 30, 2015 1,126,526 $ 21.17 6.76 $ 367 Exercisable at June 30, 2015 509,536 $ 22.41 4.24 $ 302 As of June 30, 2015, there was approximately $5.7 million of unrecognized stock-based compensation, net of estimated forfeitures, related to unvested stock option grants having service-based vesting under the Plans which is expected to be recognized over a weighted-average period of 2.75 years. The total unrecognized stock-based compensation cost will be adjusted for future changes in estimated forfeitures. The weighted-average grant date fair value of options granted during the three months ended June 30, 2015 and 2014 was $2.89 and $13.25, respectively, and $2.91 and $20.40 for the six months ended June 30, 2015 and 2014, respectively. The total intrinsic value of options exercised during the three months ended June 30, 2015 and 2014 was none and $0.2 million, respectively, and approximately $10,000 and $4.3 million for the six months ended June 30, 2015 and 2014, respectively. The intrinsic value represents the difference between the fair value of the Company’s common stock on the date of exercise and the exercise price of the stock option. Cash received from option exercises during the three months ended June 30, 2015 and 2014 was none and approximately $37,000, respectively. Cash received from option exercises during the six months ended June 30, 2015 and 2014 was approximately $1,500 and $0.5 million, respectively. No tax benefits were realized from options and other stock-based payment arrangements during these periods. The stock-based compensation plans provide that grantees may have the right to exercise an option prior to vesting. Shares purchased upon the exercise of unvested options will be subject to the same vesting schedule as the underlying options, and are subject to repurchase at the original exercise price by the Company should the grantee discontinue providing services to the Company for any reason, prior to becoming fully vested in such shares. At June 30, 2015 and December 31, 2014, there were 3,500 shares of common stock issued pursuant to the exercise of unvested options that remain unvested and subject to repurchase by the Company. The exercise of these shares is not substantive and as a result, the cash paid of approximately $0.1 million for the exercise price is considered a deposit or prepayment of the exercise price and is recorded as a liability. Additionally, while the shares of common stock subject to repurchase are included in the legally issued shares, they are excluded from the calculation of outstanding shares. Restricted Stock Units Each restricted stock unit (“RSU”) represents a contingent right to receive one share of the Company’s common stock. The RSUs outstanding as of June 30, 2015 vest on the first anniversary of the issuance date, vest on a pro-rata basis on each anniversary of the issuance date over four years or vest upon the achievement of certain product revenue, regulatory and reimbursement milestones. There is no consideration payable on the vesting of RSUs issued under the Plans. Upon vesting, the RSUs are exercised automatically and settled in shares of the Company’s common stock. The following table summarizes information related to the RSUs and activity during the six months ended June 30, 2015: Number of Units Weighted- Aggregate (in years) (in thousands) Outstanding at December 31, 2014 205,740 5.43 $ 2,016 Granted 143,506 Vested/Exercised — Cancelled (40,939 ) Outstanding at June 30, 2015 308,307 5.07 $ 1,776 The aggregate intrinsic value at June 30, 2015 noted in the table above represents the closing price of the Company’s common stock multiplied by the number of RSUs outstanding. The fair value of each RSU award equals the closing price of the Company’s common stock on the date of grant. The weighted average grant date fair value per share of RSUs granted during the three and six months ended June 30, 2015 was $5.39. The weighted average grant date fair value per share of RSUs granted during the six months ended June 30, 2014 was $37.79. No RSUs were granted in the three months ended June 30, 2014. At June 30, 2015, 218,763 of the RSUs outstanding are subject to performance-based vesting criteria as described above. For these awards, the vesting will occur upon the achievement of certain product revenue, regulatory and reimbursement milestones. When achievement of the milestone is deemed probable, the Company expenses the compensation of the respective stock award over the implicit service period. During the three months ended June 30, 2015 the Company did not recognize any stock-based compensation for RSUs subject to performance-based vesting criteria. During the six months ended June 30, 2015 the Company determined that a milestone previously deemed probable was now not probable of being achieved prior to the expiration of the award. This change in estimate was recognized through a cumulative adjustment in the first six months of 2015, resulting in a reduction of stock-based compensation of approximately $0.3 million. In the three and six months ended June 30, 2014, stock-based compensation expense associated with RSUs subject to performance-based vesting criteria was approximately $67,000 and $0.1 million, respectively, as certain milestones were deemed probable of achievement at that time. Stock-based compensation for RSUs that have service-based vesting was approximately $0.1 million and $0.2 million for the three and six months ended June 30, 2015, respectively. There was no stock-based compensation for RSUs that have service-based vesting in the three and six months ended June 30, 2014. As of June 30, 2015, there was approximately $1.2 million of unrecognized stock-based compensation expense, net of estimated forfeitures, related to non-vested RSU awards that have service-based vesting. This expense is expected to be recognized over a weighted average period of 3.2 years. At June 30, 2015, no RSUs that have performance-based vesting criteria are considered probable of achievement and there remains approximately $3.0 million of unrecognized stock-based compensation, including the amount of the cumulative adjustment above.

Segment Reporting

Segment Reporting	6 Months Ended
	Jun. 30, 2015
Segment Reporting	13. Segment Reporting Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company has one reportable segment which designs, develops, manufactures and markets medical devices for non-surgical approaches to treating type 2 diabetes and obesity. Geographic Reporting All the Company’s revenue is attributable to customers outside the U.S. The Company is dependent on favorable economic and regulatory environments for its products. Products are sold to customers located in Europe, the Middle East, the Asia Pacific region and South America and sales are attributed to a country or region based on the location of the customer to whom the products are sold. At June 30, 2015, long-lived assets, comprised of property and equipment, of approximately $1.0 million are primarily held in the U.S. Total long-lived assets held outside of the U.S. represent less than 1% of total long-lived assets. Product sales by geographic location for the three and six months ended June 30, 2015 and 2014 are listed in the table below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Europe $ 242 $ 527 $ 683 $ 1,048 Middle East 17 20 118 228 South America 5 134 34 221 Asia Pacific 46 159 91 249 Total Revenue $ 310 $ 840 $ 926 $ 1,746 Major Customers In the three months ended June 30, 2015, one distributor and one health care provider each accounted for approximately 10% of the Company’s revenue. In the three months ended June 30, 2014, one distributor accounted for approximately 16% of the Company’s revenue, and one health care provider accounted for approximately 11% of the Company’s revenue. No other customer accounted for greater than 10% of the Company’s revenue during the three months ended June 30, 2015 and 2014. In the six months ended June 30, 2015, one distributor accounted for approximately 18% of the Company’s revenue. In the six months ended June 30, 2014, one distributor accounted for approximately 13% of the Company’s revenue and one health care provider accounted for approximately 12% of the Company’s revenue. No other customer accounted for greater than 10% of the Company’s revenue during the six months ended June 30, 2015 and 2014.

Summary of Significant Accoun19

Summary of Significant Accounting Policies and Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2015
Principles of Consolidation	Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of GI Dynamics, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in accordance with GAAP requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, the Company’s management evaluates its estimates, including those related to revenue recognition, allowance for doubtful accounts, inventory valuation including reserves for excess and obsolete inventory, impairment of long-lived assets, income taxes including the valuation allowance for deferred tax assets, research and development, contingencies, and stock-based compensation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known.
Guarantees	Guarantees The Company has identified the guarantees described below as disclosable, in accordance with ASC 460, Guarantees As permitted under Delaware law, the Company indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company has directors’ and officers’ insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid. The Company is a party to a number of agreements entered into in the ordinary course of business that contain typical provisions that obligate the Company to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. The Company leases office space under several non-cancelable operating leases. The Company has standard indemnification arrangements under these leases that require it to indemnify its landlords against all costs, expenses, fines, suits, claims, demands, liabilities, and actions directly resulting from any breach, violation, or nonperformance of any covenant or condition of the respective lease. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. As of June 30, 2015 and December 31, 2014, the Company had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible. As a result, no related reserves have been established.
Reverse Stock Split	Reverse Stock Split In November 2014, the Company’s stockholders approved a one-for-ten reverse stock split of the Company’s common stock that was effective April 9, 2015. All share and per share amounts in the condensed consolidated financial statements and notes thereto have been retroactively adjusted, where necessary, to reflect this reverse stock split. Because the par value of the Company’s shares of common stock remain unchanged after the date of the split, the total stated par value and additional paid-in capital changed by offsetting amounts. The stated par value was reduced to one-tenth of the amount before the split and the additional paid-in capital was increased the same amount.
Subsequent Events	Subsequent Events The Company evaluates events occurring after the date of its condensed consolidated balance sheet for potential recognition or disclosure in its condensed consolidated financial statements. There have been no subsequent events that have occurred through the date the Company issued its condensed consolidated financial statements that require disclosure in or adjustment to its condensed consolidated financial statements.
Reclassifications	Reclassifications Certain reclassifications related to the presentation of the change in inventory in the condensed consolidated statements of cash flows have been made to prior year amounts to conform with current year presentation.
New Accounting Pronouncements	New Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the effect of recently issued standards that are not yet effective will not have a material effect on its consolidated financial position or results of operations upon adoption. In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, the FASB issued ASU No. 2015-05, Intangibles – Goodwill and Other – Internal-Use Software In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory

Net Loss per Common Share (Tabl

Net Loss per Common Share (Tables)	6 Months Ended
	Jun. 30, 2015
Potentially Dilutive Securities Excluded from Computation of Diluted Weighted Average Shares	The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of June 30, 2015 and 2014, as they would be anti-dilutive: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Warrants to purchase common stock 50,000 50,000 50,000 50,000 Options to purchase common stock and other stock-based awards 1,506,880 1,027,202 1,506,880 1,027,202 1,556,880 1,077,202 1,556,880 1,077,202

Fair Value of Financial Instr21

Fair Value of Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value of Assets and Liabilities Measured on Recurring Basis	The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands): Fair Value Measurements at Reporting Date Using Description June 30, 2015 Quoted Prices in Active Markets for Significant Other Significant Assets Money market funds (included in cash and cash equivalents) $ 24,215 $ 24,215 $ — $ — Total assets $ 24,215 $ 24,215 $ — $ — Liabilities Warrants to purchase common stock $ 19 $ — $ — $ 19 Total liabilities $ 19 $ — $ — $ 19 Fair Value Measurements at Reporting Date Using Description December 31, Quoted Prices in Significant Other Significant Assets Money market funds (included in cash and cash equivalents) $ 38,454 $ 38,454 $ — $ — Total assets $ 38,454 $ 38,454 $ — $ — Liabilities Warrants to purchase common stock $ 9 $ — $ — $ 9 Total liabilities $ 9 $ — $ — $ 9
Assumptions Used in the Black-Scholes Option Pricing Model to Determine the Fair Value of the Common Stock Warrants	The assumptions used in the Black-Scholes option pricing model to determine the fair value of the common stock warrants at June 30, 2015 and December 31, 2014 were as follows: June 30, 2015 December 31, 2014 Exercise price (A$55.00 at current exchange rate) $ 42.24 $ 45.10 Fair value of common stock $ 5.76 $ 9.80 Expected volatility 113.9 % 62.2 % Expected term (in years) 1.2 1.7 Risk-free interest rate 0.3 % 0.5 % Expected dividend yield — % — %
Rollforward of Fair Value of Warrants	The following table rolls forward the fair value of the warrants, where fair value is determined by Level 3 inputs (in thousands): Balance at December 31, 2014 $ 9 Increase in fair value of warrants upon remeasurement included in other income (expense) 10 Balance at June 30, 2015 $ 19

Concentrations of Credit Risk22

Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account (Tables)	6 Months Ended
	Jun. 30, 2015
Components of Company's Accounts Receivable	The following table shows the components of the Company’s accounts receivable at June 30, 2015 and December 31, 2014 (in thousands): June 30, 2015 December 31, 2014 Accounts receivable $ 433 $ 555 Less: allowance for doubtful accounts (114 ) (41 ) Less: allowance for sales returns (36 ) (44 ) Total $ 283 $ 470

Inventory (Tables)

Inventory (Tables)	6 Months Ended
	Jun. 30, 2015
Inventory	Inventory at June 30, 2015 and December 31, 2014 was as follows (in thousands): June 30, 2015 December 31, 2014 Finished goods $ 609 $ 733 Work-in-process 1,681 2,401 Raw materials 935 2,354 Total $ 3,225 $ 5,488

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2015
Property and Equipment	Property and equipment consisted of the following (in thousands): June 30, 2015 December 31, 2014 Laboratory equipment and manufacturing equipment $ 545 $ 545 Computer equipment and software 1,119 1,125 Office furniture and equipment 229 221 Construction in process 217 48 Leasehold improvements 921 921 3,031 2,860 Less accumulated depreciation and amortization (2,077 ) (1,771 ) Total $ 954 $ 1,089

Accrued Expenses (Tables)

Accrued Expenses (Tables)	6 Months Ended
	Jun. 30, 2015
Accrued Expenses	Accrued expenses consisted of the following (in thousands): June 30, 2015 December 31, 2014 Clinical trials $ 2,869 $ 3,906 Payroll and related liabilities 1,374 2,629 Professional fees 686 634 Deferred rent, current portion 160 151 Current portion of capital lease obligation 2 — Other 483 354 Total $ 5,574 $ 7,674

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2015
Future Minimum Lease Payments under All Noncancelable Lease Arrangements	Future minimum lease payments under all noncancelable lease arrangements at June 30, 2015, are as follows (in thousands): Year Ending December 31, 2015 $ 319 2016 626 2017 3 2018 1 Total $ 949

Stock Plans (Tables)

Stock Plans (Tables)	6 Months Ended
	Jun. 30, 2015
Stock-Based Compensation	Stock-based compensation is reflected in the condensed consolidated statements of comprehensive loss as follows for the three and six months ended June 30, 2015 and 2014 (in thousands): Three Months Ended Six Months Ended June 30, 2015 2014 2015 2014 Cost of revenue $ 25 $ 32 $ 47 $ 60 Research and development 162 333 348 640 Sales and marketing 111 413 256 826 General and administrative 621 368 962 682 $ 919 $ 1,146 $ 1,613 $ 2,208
Weighted-average Assumptions used to Estimate Fair Value of Stock Options	The weighted-average assumptions used to estimate the fair value of employee stock options using the Black-Scholes option-pricing model were as follows for the three and six months ended June 30, 2015 and 2014: Three Months Ended Six Months Ended 2015 2014 2015 2014 Expected volatility 56.8 % 62.0 % 56.8 % 62.8 % Expected term (in years) 6.04 6.05 6.04 6.05 Risk-free interest rate 1.6 % 1.9 % 1.6 % 2.0 % Expected dividend yield — % — % — % — %
Share-Based Activity	The following table summarizes share-based activity under the Company’s stock option plans: Shares of Weighted- Weighted- Aggregate (in years) (in thousands) Outstanding at December 31, 2014 1,201,496 $ 26.36 6.41 $ 1,406 Granted 246,604 $ 5.42 Exercised (1,000 ) $ 1.50 Cancelled (252,027 ) $ 30.89 Outstanding at June 30, 2015 1,195,073 $ 21.11 6.88 $ 374 Vested or expected to vest at June 30, 2015 1,126,526 $ 21.17 6.76 $ 367 Exercisable at June 30, 2015 509,536 $ 22.41 4.24 $ 302
Restricted Stock Units and Activity	The following table summarizes information related to the RSUs and activity during the six months ended June 30, 2015: Number of Units Weighted- Aggregate (in years) (in thousands) Outstanding at December 31, 2014 205,740 5.43 $ 2,016 Granted 143,506 Vested/Exercised — Cancelled (40,939 ) Outstanding at June 30, 2015 308,307 5.07 $ 1,776

Segment Reporting (Tables)

Segment Reporting (Tables)	6 Months Ended
	Jun. 30, 2015
Product Sales by Geographic Location	Product sales by geographic location for the three and six months ended June 30, 2015 and 2014 are listed in the table below (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Europe $ 242 $ 527 $ 683 $ 1,048 Middle East 17 20 118 228 South America 5 134 34 221 Asia Pacific 46 159 91 249 Total Revenue $ 310 $ 840 $ 926 $ 1,746

Nature of Business - Additional

Nature of Business - Additional Information (Detail) $ in Thousands	1 Months Ended		2 Months Ended	6 Months Ended
	May. 31, 2014USD ($)	Sep. 30, 2011USD ($)	Aug. 31, 2013USD ($)	Jun. 30, 2015USD ($)SegmentPatient	Dec. 31, 2014USD ($)	Jun. 30, 2014USD ($)	Dec. 31, 2013USD ($)
Nature Of Operations [Line Items]
Number of reportable segments | Segment				1
Number of patients to enroll under double-blinded study plan with uncontrolled type 2 diabetes and obesity | Patient				500
Accumulated deficit				$ (220,509)	$ (199,926)
Cash and cash equivalents				$ 32,819	$ 51,191	$ 71,667	$ 58,616
Issuance of shares, value	$ 30,800	$ 72,500	$ 52,500
Repayment of convertible term promissory notes		$ 6,000

Summary of Significant Accoun30

Summary of Significant Accounting Policies and Basis of Presentations - Additional Information (Detail)	Apr. 09, 2015	Nov. 30, 2014	Jun. 30, 2015
Summary Of Significant Accounting Policies [Line Items]
Reverse stock split ratio	0.1	0.1
Reverse stock split ratio, description	On April 9, 2015, the Company amended its certificate of incorporation to reflect the one-for-ten reverse stock split approved by its shareholders.		In November 2014, the Company's stockholders approved a one-for-ten reverse stock split of the Company's common stock that was effective April 9, 2015.

Potentially Dilutive Securities

Potentially Dilutive Securities Excluded from Computation of Diluted Weighted Average Shares (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	1,556,880	1,077,202	1,556,880	1,077,202
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	50,000	50,000	50,000	50,000
Options to purchase common stock and other stock-based awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	1,506,880	1,027,202	1,506,880	1,027,202

Common Stock Warrants - Additio

Common Stock Warrants - Additional Information (Detail) - Sep. 30, 2011 - AUD / shares	Total
Class of Warrant or Right [Line Items]
Common stock warrants, shares issued in connection with IPO	50,000
Common stock warrant, exercise price	AUD 55
Common stock warrant, share reserved	50,000

Fair Value of Assets and Liabil

Fair Value of Assets and Liabilities Measured on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrants to purchase common stock	$ 19	$ 9
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	24,215	38,454
Warrants to purchase common stock	19	9
Total liabilities	19	9
Fair Value, Measurements, Recurring | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	24,215	38,454
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	24,215	38,454
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	24,215	38,454
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Warrants to purchase common stock	19	9
Total liabilities	$ 19	$ 9

Assumptions used in Black-Schol

Assumptions used in Black-Scholes Option Pricing Model to Determine the Fair Value of Common Stock Warrants (Detail) - Warrant	6 Months Ended	12 Months Ended
	Jun. 30, 2015AUD / shares	Dec. 31, 2014AUD / shares	Jun. 30, 2015$ / shares	Dec. 31, 2014$ / shares
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Exercise price | (per share)	AUD 55	AUD 55	$ 42.24	$ 45.10
Fair value of common stock			$ 5.76	$ 9.80
Expected volatility	113.90%	62.20%
Expected term	1 year 2 months 12 days	1 year 8 months 12 days
Risk-free interest rate	0.30%	0.50%
Expected dividend yield	0.00%	0.00%

Assumptions used in Black-Sch35

Assumptions used in Black-Scholes Option Pricing Model to Determine the Fair Value of Common Stock Warrants (Parenthetical) (Detail)	Jun. 30, 2015AUD / shares	Jun. 30, 2015$ / shares	Dec. 31, 2014AUD / shares	Dec. 31, 2014$ / shares
Warrant
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Exercise price | (per share)	AUD 55	$ 42.24	AUD 55	$ 45.10

Rollforward of Fair Value of Wa

Rollforward of Fair Value of Warrants (Detail) - Warrant $ in Thousands	6 Months Ended
	Jun. 30, 2015USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 9
Increase in fair value of warrants upon remeasurement included in other income (expense)	10
Ending balance	$ 19

Concentrations of Credit Risk37

Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account - Additional Information (Detail) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015USD ($)CustomerDistributor	Dec. 31, 2014USD ($)CustomerDistributor
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for doubtful accounts | $	$ 114	$ 41
Accounts Receivable | Credit Concentration Risk | Distributors
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of customers | Distributor	1	1
Accounts Receivable | Credit Concentration Risk | Distributor One
Accounts, Notes, Loans and Financing Receivable [Line Items]
Concentration risk percentage	18.00%	32.00%
Accounts Receivable | Credit Concentration Risk | Other Customer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of customers	0	0

Components of Company's Account

Components of Company's Accounts Receivable (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Valuation and Qualifying Accounts Disclosure [Line Items]
Accounts receivable	$ 433	$ 555
Less: allowance for doubtful accounts	(114)	(41)
Less: allowance for sales returns	(36)	(44)
Total	$ 283	$ 470

Inventory - Additional Informat

Inventory - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Inventory [Line Items]
Change in inventory reserves	$ 1,487	$ (105)
Raw material inventory reserve	$ 3,000
Percentage of consignment inventories	8.00%		4.00%

Inventory (Detail)

Inventory (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventory [Line Items]
Finished goods	$ 609	$ 733
Work-in-process	1,681	2,401
Raw materials	935	2,354
Total	$ 3,225	$ 5,488

Property and Equipment (Detail)

Property and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	$ 3,031	$ 2,860
Less: accumulated depreciation and amortization	(2,077)	(1,771)
Total	954	1,089
Laboratory equipment and manufacturing equipment
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	545	545
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	1,119	1,125
Office furniture and equipment
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	229	221
Construction in process
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	217	48
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property Plant and equipment gross	$ 921	$ 921

Property and Equipment - Additi

Property and Equipment - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Mar. 31, 2015
Property, Plant and Equipment [Line Items]
Assets under capital leases	$ 8,000		$ 8,000		$ 8,000
Depreciation and amortization	$ 100,000	$ 200,000	$ 312,000	$ 320,000

Accrued Expenses (Detail)

Accrued Expenses (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Accrued Liabilities [Line Items]
Clinical trials	$ 2,869	$ 3,906
Payroll and related liabilities	1,374	2,629
Professional fees	686	634
Deferred rent, current portion	160	151
Current portion of capital lease obligation	2
Other	483	354
Total	$ 5,574	$ 7,674

Accrued Expenses - Additional i

Accrued Expenses - Additional information (Detail) $ in Millions	Jun. 30, 2015USD ($)
Accrued Liabilities [Line Items]
Payroll and related liabilities	$ 0.4

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Detail)	1 Months Ended		3 Months Ended		6 Months Ended
	Mar. 31, 2015USD ($)	Jun. 30, 2013USD ($)ft²	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)	Jun. 30, 2015USD ($)	Jun. 30, 2014USD ($)
Loss Contingencies [Line Items]
Rentable area of leased premises | ft²		33,339
Annual base rent under lease		$ 600,000
Annual increase to base rent		17,000
Letter of credit		$ 200,000
Initial term of the operating lease for office space					12 months
Initial term of the operating lease expiration date					2014-07
Rent expense			$ 100,000	$ 100,000	$ 300,000	$ 300,000
Assets under capital leases	$ 8,000		$ 8,000		$ 8,000
Capital lease term	3 years
Capital lease interest rate	14.10%

Future Minimum Lease Payments U

Future Minimum Lease Payments Under All Noncancelable Lease Arrangements (Detail) $ in Thousands	Jun. 30, 2015USD ($)
Operating Leased Assets [Line Items]
2,015	$ 319
2,016	626
2,017	3
2,018	1
Total	$ 949

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Detail)	Apr. 09, 2015shares	Nov. 30, 2014	Jun. 30, 2015shares	Dec. 31, 2014shares
Class of Stock [Line Items]
Capital stock, shares authorized	14,500,000
Common stock, shares authorized			13,000,000	13,000,000
Preferred stock, shares authorized	500,000		500,000	500,000
Reverse stock split ratio	0.1	0.1
Reverse stock split ratio, description	On April 9, 2015, the Company amended its certificate of incorporation to reflect the one-for-ten reverse stock split approved by its shareholders.		In November 2014, the Company's stockholders approved a one-for-ten reverse stock split of the Company's common stock that was effective April 9, 2015.
Class B common stock
Class of Stock [Line Items]
Common stock, shares authorized	1,000,000		1,000,000	1,000,000
Common stock
Class of Stock [Line Items]
Common stock, shares authorized	13,000,000

Stock Plans - Additional Inform

Stock Plans - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)CompensationPlan$ / sharesshares	Jun. 30, 2014USD ($)$ / shares	Jun. 30, 2015USD ($)CompensationPlan$ / sharesshares	Jun. 30, 2014USD ($)$ / shares	Dec. 31, 2014shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based compensation plans | CompensationPlan	2		2
Shares available for future grants | shares	480,632		480,632
Number of shares available for issue, additional shares | shares			379,346
Expense associated with modification and vesting of options granted			$ 19,000
Estimated forfeiture rates			10.00%	5.00%
Unrecognized stock-based compensation	$ 5,700,000		$ 5,700,000
Weighted-average grant date fair value of options granted | $ / shares	$ 2.89	$ 13.25	$ 2.91	$ 20.40
Option exercised total intrinsic value	$ 0	$ 200,000	$ 10,000	$ 4,300,000
Proceeds from exercise of stock options	0	37,000	2,000	522,000
Tax benefits realized from options and other stock-based payment	$ 0		$ 0
Shares of common stock issued pursuant to exercise of unvested options | shares	3,500		3,500		3,500
Cash paid for the exercise price			$ 100,000
Stock-based compensation expense	$ 919,000	$ 1,146,000	$ 1,613,000	$ 2,208,000
The annual increase in the number of shares, scenario one
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase in number of shares available for grant | shares			500,000
The annual increase in the number of shares, scenario two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of common shares outstanding			4.00%
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units outstanding | shares	218,763		218,763
Unrecognized stock based compensation	$ 3,000,000		$ 3,000,000
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized weighted-average period years			2 years 9 months
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized weighted-average period years			3 years 2 months 12 days
Number of shares of common stock to be received, per restricted stock unit	1		1
Award vesting period			4 years
Weighted average grant date fair value per share | $ / shares	$ 5.39	$ 0	$ 5.39	$ 37.79
Restricted stock units outstanding | shares	308,307		308,307		205,740
Stock-based compensation expense			$ (300,000)
Share-based compensation expense	$ 0	$ 67,000		$ 100,000
Unrecognized stock based compensation	1,200,000		1,200,000
Restricted Stock Units (RSUs) Having Service-Based Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 100,000	$ 0	$ 200,000	$ 0

Stock-Based compensation Reflec

Stock-Based compensation Reflected in Consolidated Statements of Comprehensive Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 919	$ 1,146	$ 1,613	$ 2,208
Cost of revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	25	32	47	60
Research and Development Expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	162	333	348	640
Sales and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	111	413	256	826
General and Administrative Expense
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 621	$ 368	$ 962	$ 682

Weighted-average Assumptions us

Weighted-average Assumptions used to Estimate Fair Value of Stock Options (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	56.80%	62.00%	56.80%	62.80%
Expected term (in years)	6 years 15 days	6 years 18 days	6 years 15 days	6 years 18 days
Risk-free interest rate	1.60%	1.90%	1.60%	2.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

Share-Based Activity (Detail)

Share-Based Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Options
Outstanding, beginning balance	1,201,496
Granted	246,604
Exercised	(1,000)
Cancelled	(252,027)
Outstanding, ending balance	1,195,073	1,201,496
Vested or expected to vest at June 30, 2015	1,126,526
Exercisable at June 30, 2015	509,536
Weighted Average Exercise Price
Outstanding, beginning balance	$ 26.36
Granted	5.42
Exercised	1.50
Cancelled	30.89
Outstanding, ending balance	21.11	$ 26.36
Vested or expected to vest at June 30, 2015	21.17
Exercisable at June 30, 2015	$ 22.41
Weighted Average Contractual Life (in Years)
Outstanding at end of period	6 years 10 months 17 days	6 years 4 months 28 days
Vested or expected to vest at June 30, 2015	6 years 9 months 4 days
Exercisable at June 30, 2015	4 years 2 months 27 days
Aggregate Intrinsic Value
Outstanding at end of period	$ 374	$ 1,406
Vested or expected to vest at June 30, 2015	367
Exercisable at June 30, 2015	$ 302

Restricted Stock Units and Acti

Restricted Stock Units and Activity (Detail) - Restricted Stock Units (RSUs) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Number of Units
Outstanding, beginning balance	205,740
Granted	143,506
Vested/Exercised	0
Cancelled	(40,939)
Outstanding, ending balance	308,307	205,740
Weighted Average Contractual Life (in years)
Outstanding at end of period	5 years 26 days	5 years 5 months 5 days
Aggregate Intrinsic Value
Outstanding, beginning balance	$ 2,016
Outstanding, ending balance	$ 1,776	$ 2,016

Segment Reporting - Additional

Segment Reporting - Additional Information (Detail) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015USD ($)Customer	Jun. 30, 2014Customer	Jun. 30, 2015USD ($)CustomerSegment	Jun. 30, 2014Customer
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of reportable segments | Segment			1
Long-lived assets | $	$ 1		$ 1
Sales Revenue, Net | Product Concentration Risk | Health Care Providers
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of customers	1	1		1
Concentration risk percentage	10.00%	11.00%		12.00%
Sales Revenue, Net | Product Concentration Risk | Distributors
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of customers	1	1	1	1
Sales Revenue, Net | Product Concentration Risk | Distributor One
Revenues from External Customers and Long-Lived Assets [Line Items]
Concentration risk percentage	10.00%	16.00%	18.00%	13.00%
Sales Revenue, Net | Product Concentration Risk | Other Customer
Revenues from External Customers and Long-Lived Assets [Line Items]
Number of customers	0	0	0	0
Maximum
Revenues from External Customers and Long-Lived Assets [Line Items]
Total long-lived assets held outside of the U.S	1.00%		1.00%

Product Sales by Geographic Loc

Product Sales by Geographic Location (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 310	$ 840	$ 926	$ 1,746
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	242	527	683	1,048
Middle East
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	17	20	118	228
South America
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	5	134	34	221
Asia Pacific
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 46	$ 159	$ 91	$ 249