Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation |
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Additionally, GTx operates in one business segment. |
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Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual amounts and results could differ from those estimates. |
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Cash and Cash Equivalents | Cash and Cash Equivalents |
The Company considers highly liquid investments with initial maturities of three months or less to be cash equivalents. |
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Short-term Investments | Short-term Investments |
At December 31, 2014 and 2013, short-term investments consisted of Federal Deposit Insurance Corporation ("FDIC") insured certificates of deposit with original maturities of greater than three months and less than one year. |
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Property and Equipment | Property and Equipment |
Property and equipment is stated at cost. Amortization of leasehold improvements is recognized over the shorter of the estimated useful life of the leasehold improvement or the lease term. Depreciation is computed using the straight-line method over the estimated useful lives as follows: |
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| Laboratory and office equipment | | 3 to 5 years | | |
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Leasehold improvements | 3 to 7 years |
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Furniture and fixtures | 5 years |
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Computer equipment and software | 3 years |
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Warrant Liability | Warrant Liability |
On November 14, 2014, the Company issued warrants to purchase 64,311,112 shares of its common stock. The Company classifies the warrants as a liability on its balance sheet since the warrants contain certain terms that could require the Company (or its successor) to purchase the warrants for cash in an amount equal to the value (as calculated utilizing a contractually-agreed Black-Scholes option pricing formula) of the unexercised portion of the warrants in connection with certain change of control transactions occurring on or prior to December 31, 2016, with such cash payment capped at an amount equal to $0.125 per unexercised share underlying each warrant. In addition, each warrant is subject to net cash settlement if, at the time of any exercise, there are then an insufficient number of authorized and reserved shares of common stock to effect a share settlement of the warrant. As of December 31, 2014, the Company did not have a sufficient number of authorized and reserved shares of common stock to effect the share settlement of all of these warrants; however, these warrants were not exercisable at December 31, 2014. |
As a result of the foregoing provisions, the Company is required to account for these warrants as a liability at fair value and the estimated warrant liability is required to be revalued at each balance sheet date until the earlier of the exercise of the warrants or, assuming stockholder approval is obtained for the authorization of additional common stock, the expiration of the provision on December 31, 2016 that could require cash settlement upon certain change of control transactions. Upon the exercise of the warrants or, assuming stockholder approval is obtained for the authorization of additional common stock, the expiration of the provision on December 31, 2016 that could require cash settlement upon certain change of control transactions, the fair value of the warrants will be reclassified from a liability to stockholders' equity on the Company's balance sheets and no further adjustment to the fair value would be made in subsequent periods. See Note 6, Stockholders' Equity, for further information regarding these warrants and the Company's valuation of the warrant liability. |
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Fair Value of Financial Instruments and Warrant Liability | Fair Value of Financial Instruments and Warrant Liability |
The carrying amounts of the Company's financial instruments (which include cash, cash equivalents, short-term investments, and accounts payable) and its warrant liability approximate their fair values. The fair value of the warrant liability is estimated using the Black-Scholes-Merton pricing valuation model. See Note 6, Stockholders' Equity, for additional disclosure on the valuation methodology and significant assumptions. The Company's financial assets and liabilities are classified within a three-level fair value hierarchy that prioritizes the inputs used to measure fair value, which is defined as follows: |
Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date |
Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly |
Level 3 — Inputs that are unobservable for the asset or liability |
Asset and liabilities measured at fair value on a recurring basis as of December 31, 2014 included only the Company's warrant liability of $30,430, which was classified within Level 3 of the hierarchy. As of December 31, 2013, the Company had no assets or liabilities measured at fair value on a recurring basis within Level 3 of the hierarchy. A loss of $8,804 related to the change in the fair value of the warrant liability was recognized during the year ended December 31, 2014 as a non-cash loss in the Company's statement of operations. |
As the Company has the positive intent and ability to hold its certificates of deposit classified as short-term investments until maturity, these investments have been classified as held to maturity investments and are stated at cost, which approximates fair value. The Company considers these to be Level 2 investments as the fair values of these investments are determined using third-party pricing sources, which generally utilize observable inputs, such as interest rates and maturities of similar assets. |
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Concentration of Risk | Concentration of Risk |
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents and short-term investments. The Company has established guidelines relating to diversification and maturities of its cash equivalents and short-term investments which are designed to manage risk. The Company's cash and cash equivalents consist of bank deposits, certificates of deposit, and money market mutual funds. Bank deposits may at times be in excess of FDIC insurance limits. The Company's short-term investments consist of FDIC insured certificates of deposit with original maturities of greater than three months and less than one year. |
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Research and Development Expenses | Research and Development Expenses |
Research and development expenses include, but are not limited to, the Company's expenses for personnel, supplies, and facilities associated with research activities, screening and identification of product candidates, formulation and synthesis activities, manufacturing, preclinical studies, toxicology studies, clinical trials, regulatory and medical affairs activities, quality assurance activities and license fees. The Company expenses these costs in the period in which they are incurred. The Company estimates its liabilities for research and development expenses in order to match the recognition of expenses to the period in which the actual services are received. As such, accrued liabilities related to third party research and development activities are recognized based upon the Company's estimate of services received and degree of completion of the services in accordance with the specific third party contract. |
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Patent Costs | Patent Costs |
The Company expenses patent costs, including legal expenses, in the period in which they are incurred. Patent expenses are included in general and administrative expenses in the Company's statements of operations. |
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Income Taxes | Income Taxes |
The Company accounts for deferred taxes by recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Accordingly, at December 31, 2014 and December 31, 2013, net of the valuation allowance, the net deferred tax assets were reduced to zero. See Note 9, Income Taxes, for further discussion. |
The Company has recognized the tax effect of discontinued operations in the statement of operations for the year ended December 31, 2012 in accordance with the intra-period accounting rules. An offsetting tax benefit was recorded in continuing operations for the year ended December 31, 2012 in relation to the tax expense that was recognized for discontinued operations. |
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Share-Based Compensation | Share-Based Compensation |
The Company has stock option and equity incentive plans that provide for the purchase or acquisition of the Company's common stock by certain of the Company's employees and non-employees. The Company recognizes compensation expense for its share-based payments based on the fair value of the awards over the period during which an employee or non-employee is required to provide service in exchange for the award. See Note 3, Share-Based Compensation, for further discussion. |
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Other Income (Expense), Net | Other Income (Expense), Net |
Other income (expense), net consists of foreign currency transaction gains and losses, interest earned on the Company's cash, cash equivalents and short-term investments, interest expense, and other non-operating income or expense. Other income (expense), net for the year ended December 31, 2014 also included expenses related to the private placement of common stock and warrants completed in November 2014 as the warrants issued were accounted for as a liability. Other income (expense), net for the year ended December 31, 2013 also included a gain of $1,366 from the sale of research and development property and equipment sold subsequent to the workforce reduction that occurred in October 2013. See Note 4, Property and Equipment, Net, for further discussion. |
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Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share |
Basic and diluted net loss per share attributable to common stockholders is calculated based on the weighted average number of common shares outstanding during the period. Diluted net loss per share gives effect to the dilutive potential of common stock consisting of stock options, common stock warrants, and unvested restricted stock units ("RSUs"). |
Weighted average potential shares of common stock of 24,628,775, 6,773,394, and 5,574,915 were excluded from the calculation of diluted net loss per share for the years ended December 31, 2014, 2013 and 2012, respectively, as inclusion of the potential shares would have had an anti-dilutive effect on the net loss per share for the periods. The increase in the weighted average potential shares of common stock excluded from the calculation of diluted net loss per share increased from the prior year due to the issuance of warrants under the two financing transactions that occurred during the year ended December 31, 2014. See Note 6, Stockholders' Equity, for further discussion. At December 31, 2014, the Company had outstanding 140,325,643 shares of common stock. |
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Comprehensive Loss | Comprehensive Loss |
For all periods presented, there were no differences between net loss and comprehensive loss. |
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Discontinued Operations | Discontinued Operations |
Effective September 30, 2012, the Company entered into an asset purchase agreement (the "FARESTON® Purchase Agreement") with Strakan International S.á r.l., an affiliate of ProStrakan Group plc ("ProStrakan") pursuant to which the Company agreed to transfer, sell and assign to ProStrakan all of the Company's rights and certain assets related to FARESTON® for a total cash purchase price of $21,671. The Company recognized a gain of $18,831 on the sale of FARESTON® for the year ended December 31, 2012. The gain represents the gross proceeds received from the sale reduced by a contract termination fee of $1,000 due to Orion (as discussed further in Note 7, Collaboration and License Agreements), a financial advisory fee related to the transaction of $1,712, and other transaction expenses of approximately $128. The Company has accounted for FARESTON® as a discontinued operation. As a result, revenue of $5,284, cost of goods sold of $784, and operating expenses of $655 related to FARESTON® were excluded from the respective captions in the statement of operations and were included in discontinued operations for the years ended December 31, 2012. Under the FARESTON® Purchase Agreement, the Company remains liable for future product returns relating to sales of FARESTON® made by the Company prior to September 30, 2012. For the year ended December 31, 2014, the Company recorded a benefit of $576 as general and administrative expenses in the statement of operations for adjustments to the Company's accrual for product returns related to the closure of the return period for a portion of the previously sold inventory. |
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FARESTON Revenue Recognition | FARESTON® Revenue Recognition |
Revenue from product sales of FARESTON®, which is included in income from discontinued operations before income taxes for the year ended December 31, 2012, was recognized less deductions for estimated sales discounts and sales returns. Revenue from product sales was recognized when persuasive evidence of an arrangement existed, title passed, the price was fixed or determinable, and collectability was reasonably assured. The Company accounted for rebates to certain governmental agencies as a reduction of product sales. The Company allows customers to return product within a specified time period prior to and subsequent to the product's labeled expiration date. Although the Company sold its rights and certain assets related to FARESTON® effective September 30, 2012, the Company retains the liability for future product returns relating to sales of FARESTON® made by the Company prior to September 30, 2012. Therefore, the Company estimates an accrual for product returns based on factors which include historical product returns and estimated product in the distribution channel which is expected to exceed its expiration date. At December 31, 2014 and December 31, 2013, the Company's accrual for product returns, was $141 and $918, respectively. Of these amounts, $30 and $332 have been included in "Other long-term liabilities" in the Company's balance sheet at December 31, 2014 and December 31, 2013, respectively, and represents the portion of the Company's product returns accrual estimated to be payable after one year. |
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Restructuring | Restructuring |
In October 2013, the Company implemented a reduction in its workforce following the announced results from its two Phase 3 clinical trials evaluating enobosarm 3 mg for the prevention and treatment of muscle wasting in patients with advanced NSCLC. The reduction in force was effective immediately and represented approximately 60% of the Company's total workforce. |
As a result of the workforce reduction, the Company incurred severance related cash expenses of $1,306, of which $351 was included in general and administrative expenses and $955 was included in research and development expenses for the year ended December 31, 2013. All of these expenses were paid as of December 31, 2013. Additionally, the Company recognized a net benefit of approximately $370 resulting from the reversal of share-based compensation expense related to the modification of certain stock option provisions for the severed employees. Of this amount, $81 was included as a benefit to general and administrative expenses and $289 was included as a benefit to research and development expenses for the year ended December 31, 2013. |
As a result of the October 2013 reduction in its workforce, the Company is no longer conducting in-house drug discovery activities. During the fourth quarter of 2013, the Company cancelled its sublease for the laboratory facilities and office space utilized for drug discovery. Additionally, the Company sold its related property and equipment for a gain of $1,366, which was included in other income (expense), net for the year ended December 31, 2013. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In August 2014, the Financial Accounting Standards Board issued Accounting Standard Update 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. The new guidance is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern within one year of the date the financial statements are issued and to provide related footnote disclosure. This new guidance is effective for the first annual period ending after December 15, 2016 and interim periods thereafter. |
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Subsequent Events | Subsequent Events |
The Company has evaluated all events or transactions that occurred after December 31, 2014 up through the date the financial statements were issued. There were no material recognizable or nonrecognizable subsequent events during the period evaluated. |
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