Agile Therapeutics (AGXRW) 10-Q 7 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 04, 2016
Document and Entity Information
Entity Registrant Name	AGILE THERAPEUTICS INC
Entity Central Index Key	1,261,249
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		28,757,719
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 51,670	$ 34,395
Prepaid expenses	3,094	3,690
Total current assets	54,764	38,085
Property and equipment, net	12,330	12,318
Other assets	18	18
Total assets	67,112	50,421
Current liabilities:
Accounts payable	2,889	2,387
Accrued expenses	1,755	2,653
Loan payable, current portion	3,486	2,336
Warrant liability	238	406
Total current liabilities	8,368	7,782
Loan payable, long-term	12,077	12,896
Commitments and contingencies
Stockholders' equity:
Common stock, $.0001 par value, authorized 150,000,000 shares; 28,757,719 shares issued and outstanding as of September 30, 2016 and 22,315,612 shares issued and outstanding as of December 31, 2015;	3	2
Additional paid-in capital	234,931	194,468
Accumulated deficit	(188,267)	(164,727)
Total stockholders' equity	46,667	29,743
Total liabilities and stockholders' equity	$ 67,112	$ 50,421

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Balance Sheets
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, authorized (in shares)	150,000,000	150,000,000
Common stock, issued (in shares)	28,757,719	22,315,612
Common stock, outstanding (in shares)	28,757,719	22,315,612

Statements of Operations

Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Operating expenses:
Research and development	$ 4,911	$ 7,162	$ 15,415	$ 18,709
General and administrative	2,180	1,803	6,497	5,215
Total operating expenses	7,091	8,965	21,912	23,924
Loss from operations	(7,091)	(8,965)	(21,912)	(23,924)
Other income (expense)
Interest expense	(784)	(551)	(1,879)	(1,525)
Interest income	33	1	83	4
Change in fair value of warrants	38	104	168	45
Loss on extinguishment of debt				(1,036)
Loss before benefit from income taxes	(7,804)	(9,411)	(23,540)	(26,436)
Net loss	$ (7,804)	$ (9,411)	$ (23,540)	$ (26,436)
Net loss per share - basic and diluted (in dollars per share)	$ (0.27)	$ (0.42)	$ (0.84)	$ (1.21)
Weighted-average shares outstanding - basic and diluted (in shares)	28,754,458	22,272,777	28,110,587	21,923,070

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net loss	$ (23,540)	$ (26,436)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	14	14
Noncash stock based compensation	2,607	2,129
Noncash interest	759	417
Loss on extinguishment of debt		1,036
Change in fair value of warrants	(168)	(45)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	595	(530)
Accounts payable and accrued expenses	(648)	3,005
Net cash used in operating activities	(20,381)	(20,410)
Cash flows from investing activities
Acquisition of property and equipment	(25)	(288)
Net cash used in investing activities	(25)	(288)
Cash flows from financing activities
Proceeds from issuance of long-term debt		16,265
Repayment of term loan		(15,784)
Principal payments of long-term debt	(985)
Return of principal payments of long-term debt	985
Cash paid for debt financing costs	(175)	(423)
Proceeds from the issuance of common stock, net	37,527	19,330
Proceeds from exercise of stock options	329	532
Net cash provided by financing activities	37,681	19,920
Net increase (decrease) in cash and cash equivalents	17,275	(778)
Cash and cash equivalents, beginning of period	34,395	40,182
Cash and cash equivalents, end of period	51,670	39,404
Supplemental disclosure of noncash financing activities
Fair value of common stock warrants issued		1,184
Supplemental cash flow information
Interest paid	$ 1,125	$ 1,098

Organization and Description of

Organization and Description of Business	9 Months Ended
	Sep. 30, 2016
Organization and Description of Business
Organization and Description of Business	1. Organization and Description of Business Nature of Operations Agile Therapeutics, Inc. (“Agile” or the “Company”) was incorporated in Delaware on December 22, 1997. Agile is a women’s health specialty pharmaceutical company focused on the research, development and commercialization of new prescription contraceptive products. The Company’s activities since inception have consisted principally of raising capital and performing research and development. The Company is headquartered in Princeton, New Jersey. The Company is devoting substantially all of its efforts toward research and development of its transdermal patch for use in contraception, and raising capital. The Company has not generated product revenue to date and is subject to a number of risks similar to those of other early stage companies, including dependence on key individuals, the difficulties inherent in the development of commercially usable products, the potential need to obtain additional capital necessary to fund the development of its products, and competition from larger companies. The Company has incurred losses each year since inception. As of September 30, 2016, the Company had an accumulated deficit of approximately $188.3 million. The Company has financed its operations to date primarily through the issuance and sale of its common stock in both public and private offerings (see Note 7), private placements of its convertible preferred stock, venture loans, and non-dilutive grant funding. The Company expects to continue to incur net losses into the foreseeable future. As of September 30, 2016, the Company had cash and cash equivalents of $51.7 million. Although the Company has incurred recurring losses in each year since inception, the Company expects its cash and cash equivalents will be sufficient to fund operations for at least the next twelve months. Basis of Presentation The accompanying unaudited interim condensed financial statements have been prepared by the Company, without audit, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These interim condensed financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2015 filed with the SEC. In the opinion of management, the unaudited interim condensed financial statements reflects all adjustments, which are normal recurring adjustments, necessary for the fair presentation of the financial information for the interim periods have been made. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results for the full fiscal year or any future period.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies The Company’s complete listing of significant accounting policies are described in Note 2 to the Company’s audited financial statements as of December 31, 2015 included in its annual report on Form 10-K filed with the SEC. Use of Estimates The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for common stock warrants, stock-based compensation, income taxes, and accounting for research and development costs. Actual results could differ from those estimates. Fair Value of Financial Instruments In accordance with ASC 825, Financial Instruments , disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Cash and cash equivalents are carried at fair value (see Note 3). Financial instruments, including accounts payable and accrued liabilities, are carried at cost, which approximates fair value given their short-term nature. Warrants The Company accounts for its warrants to purchase redeemable convertible stock in accordance with ASC 480, Distinguishing Liabilities from Equity . ASC 480 requires that a financial instrument, other than outstanding share, that, at inception, is indexed to an obligation to repurchase the issuer’s equity shares, regardless of the timing or the probability of the redemption feature, and may require the issuer to settle the obligation by transferring assets be classified as a liability. The Company measures the fair value of its warrant liability using an option pricing model with changes in fair value recognized as increases or reductions to other income (expense) in the statement of operations. In connection with the completion of the Company’s initial public offering in May 2014, the warrants to purchase shares of Series A-1 and Series A-2 preferred stock expired unexercised and the warrants to purchase shares of Series C preferred stock automatically converted into warrants to purchase shares of common stock. Warrants with non-standard anti-dilution provisions (referred to as down round protection) are classified as liabilities and re-measured each reporting period. As of September 30, 2016, there were outstanding 62,505 warrants to purchase common stock at $6.00 per share. These warrants expire on December 14, 2019. The warrants issued in connection with the Company’s debt financing completed in February 2015 (see Note 6) are classified as a component of stockholders’ equity. The value of such warrants was determined using the Black-Scholes option-pricing model. Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation . The Company grants stock options for a fixed number of shares to employees and non-employees with an exercise price equal to the fair value of the shares at grant date. Compensation cost is recognized for all share-based payments granted and is based on the grant-date fair value estimated using the weighted-average assumption of the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility and expected term. The equity instrument is not considered to be issued until the instrument vests. As a result, compensation cost is recognized over the requisite service period with an offsetting credit to additional paid-in capital. The Company also awards restricted stock units (“RSUs”) to employees. RSUs are generally subject to forfeiture if employment terminates prior to the completion of the vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. Awards for consultants are accounted for under ASC 505-50, Equity Based Payments to Non-Employees . Any compensation expense related to consultants is marked-to-market over the applicable vesting period as they vest. Net Loss Per Share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period determined using the treasury-stock and if-converted methods. For purposes of diluted net loss per share calculation, common stock warrants, unvested RSUs and stock options are considered to be potentially dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2016 and 2015 because to do so would be anti-dilutive are as follows (in common equivalent shares): September 30, 2016 2015 Common stock warrants Common stock options Unvested restricted stock units — Total Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The new standard is effective for the annual period ending after December 15, 2016, and for interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2-14-15 to have a material impact on its financial statements. In April 2015, the FASB issued an amendment to U.S. GAAP to simplify the balance sheet presentation of the costs for issuing debt. The changes were adopted in Accounting Standards Update (ASU) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issue Costs , or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The Company adopted the provisions of ASU 2015-03 on January 1, 2016 and prior period balances have been reclassified to conform to the current period presentation. As of December 31, 2015, $152 of debt issuance costs were reclassified in the balance sheet from “deferred financing costs, net” to “loan payable, current portion” and $139 was reclassified from “deferred financing costs, net” to “loan payable, long-term”. The adoption of ASU 2015-03 did not have an impact on the Company’s operations or cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company will be evaluating the impact of the pending adoption of the new standard on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-9. This new standard provides guidance on employee share-based payment accounting requiring all tax effects related to share-based payments at settlement or expiration to be recorded through the statement of operations and be reported as operating activities on the statement of cash flows. Further, under the new guidance, entities are permitted to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards; whereas forfeitures can be estimated, as required today, or recognized when they occur. The guidance is effective for public business entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the impact this guidance will have on its financial statements.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Fair Value Measurements	3. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures , describes the fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:  Level 1 — Quotes prices in active markets for identical assets and liabilities. The Company’s Level 1 assets consist of cash and cash equivalents. The Company has no Level 1 liabilities.  Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. The Company has no Level 2 assets or liabilities.  Level 3 — Unobservable inputs that are supported by little or no market data and which require internal development of assumptions about how market participant price the fair value of the assets or liabilities. The Company’s Level 3 liabilities consist of the warrant liability. The Company is required to mark the value of its warrant liability to market and recognize the change in valuation in its statements of operations each reporting period. The following table sets forth the Company’s financial instruments measured at fair value by level within the fair value hierarchy as of September 30, 2016 and December 31, 2015. Level 1 Level 2 Level 3 September 30, 2016 Assets: Cash equivalents $ $ — $ — Total assets at fair value $ $ — $ — Liabilities: Common stock warrants — — Total liabilities at fair value $ — $ — $ The significant assumptions used in preparing the option pricing model for valuing the Company’s warrants as of September 30, 2016 include (i) volatility (75.0%), (ii) risk free interest rate of 0.88% (estimated using treasury bonds with a 3.25 year life), (iii) strike price ($6.00) for the common stock warrants, (iv) fair value of common stock ($6.98) and (v) expected life (3.25 years). The following is a rollforward of the fair value of Level 3 warrants: Beginning balance at December 31, 2015 $ Change in fair value ) Ending balance at September 30, 2016 $ Level 1 Level 2 Level 3 December 31, 2015 Assets: Cash equivalents $ $ — $ — Total assets at fair value $ $ — $ — Liabilities: Common stock warrants — — Total liabilities at fair value $ — $ — $ The significant assumptions used in preparing the option pricing model for valuing the Company’s warrants as of December 31, 2015 include (i) volatility (75.0%), (ii) risk free interest rate of 1.54% (estimated using treasury bonds with a 4 year life), (iii) strike price ($6.00) for the common stock warrants, (iv) fair value of common stock ($9.76) and (v) expected life (four years). There were no transfers between Level 1, 2 or 3 during 2016 or 2015. If the Company’s estimates regarding the fair value of its warrants are inaccurate, a future adjustment to these estimated fair values may be required. Additionally, these estimated fair values could change significantly.

Prepaid Expenses

Prepaid Expenses	9 Months Ended
	Sep. 30, 2016
Prepaid Expenses
Prepaid Expenses	4. Prepaid Expenses Prepaid expenses consist of the following: September 30, December 31, Prepaid clinical trial expense $ $ Prepaid insurance Other Total prepaid expenses $ $

Accrued Liabilities

Accrued Liabilities	9 Months Ended
	Sep. 30, 2016
Accrued Liabilities
Accrued Liabilities	5. Accrued Liabilities Accrued liabilities consist of the following: September 30, December 31, Employee bonuses $ $ Accrued clinical trial costs Other Total accrued liabilities $ $

Loan and Security Agreements

Loan and Security Agreements	9 Months Ended
	Sep. 30, 2016
Loan and Security Agreements
Loan and Security Agreements	6. Loan and Security Agreements Oxford Finance LLC In December 2012, the Company entered into a Loan and Security Agreement (the “Oxford Loan”) with Oxford Finance LLC (“Oxford”) pursuant to which the Company borrowed a total of $15.0 million from Oxford. The Oxford Loan accrued interest at a fixed annual rate equal to 9.20% (Three-month U.S. Libor rate of 0.47% plus 8.73%). Interest on the Oxford Loan was payable monthly and principal was due in 30 equal consecutive monthly installments beginning on February 1, 2015 and ending on July 1, 2017. In addition, the Company was required to make a final payment of $675 on the maturity date of the Oxford Loan (July 1, 2017). In connection with the Oxford Loan, the Company issued Oxford warrants to purchase 62,505 shares of common stock at an exercise price of $6.00 per share. These warrants expire on December 14, 2019. In February 2015, the Company terminated and repaid all amounts outstanding under the Oxford Loan and recorded a loss on the extinguishment of the Oxford Loan (see further discussion below). Hercules Capital, Inc. In February 2015, the Company entered into a loan and security agreement (the “Hercules Loan”) with Hercules Capital, Inc. (“Hercules”) for a term loan of up to $25.0 million. In August 2016, the Company entered into the First Amendment to Loan and Security Agreement (the “First Amendment”) with Hercules which amends certain terms of the Hercules Loan. A first tranche of $16.5 million was funded upon execution of the Hercules Loan, approximately $15.5 million of which was used to repay the Company’s existing term loan with Oxford. The First Amendment extends the Company’s option to draw down the second tranche of $8.5 million (the “Second Term Loan Advance”) of the term loan facility provided under the Hercules Loan (the “Term Loan”) until March 31, 2017, and makes the Second Term Loan Advance subject to the consent of Hercules, among other customary conditions. The First Amendment also extends the interest-only payments until January 31, 2017, in connection with the first tranche of $16.5 million (the “First Term Loan Advance” and together with the Second Term Loan Advance, the “Term Loan Advances”). The First Amendment also provides the Company the ability to extend further the interest-only payments for two successive periods as follows: (i) until April 30, 2017, subject to the Company successfully completing its SECURE clinical trial, and the Company receiving data that supports the filing of a response to the U.S. Food and Drug Administration’s complete response letter relating to the new drug application filed by the Company (“First Interest Only Period Extension”) and (ii) until July 31, 2017, provided that (x) the Company has received the First Interest Only Period Extension and (y) the Company has received unrestricted gross cash proceeds in an aggregate amount greater than or equal to $40.0 million from the issuance and sale by the Company of its equity securities (“Second Interest Only Period Extension”). The First Amendment provides the Term Loan will mature on December 1, 2018; provided, however, that if the First Interest Only Period Extension occurs on or prior to January 31, 2017, the Term Loan will mature on March 1, 2019; and provided further, however that if both (a) the First Interest Only Period Extension occurs on or prior to January 31, 2017, and (b) the Second Interest Only Period Extension occurs on or prior to April 30, 2017, the Term Loan will mature on June 1, 2019. As a result of the First Amendment, and in connection with the extension of the interest-only period from the First Term Loan Advance, Hercules returned to the Company the principal payments paid by the Company in July and August 2016, which such returned payments will once again constitute outstanding Term Loan Advances under the Hercules Loan. In connection with the execution of the First Amendment, the Company paid Hercules a facility fee of $0.165 million. The Hercules Loan accrues interest at a rate of the greater of 9.0% or 9.0% plus Prime minus 4.25% and is payable monthly. Principal is due in 23 equal consecutive monthly installments beginning on February 1, 2017 and ending on December 1, 2018. In addition, the Company is required to make a final payment of $610.5 on the maturity date of the Hercules Loan (December 1, 2018). The final payment is being accrued and recorded to interest expense over the life of the loan. The Company may prepay all, but not less than all, of the Hercules Loan subject to a prepayment premium of 2.0% of the outstanding principal if prepaid during the second year (through February 24, 2017) and 1.0% of the outstanding principal if prepaid after February 24, 2017. The obligations of the Company under the Hercules Loan are secured by a perfected first position lien on all of the assets of the Company, excluding intellectual property assets. In connection with the Hercules Loan, the Company issued Hercules a warrant to purchase 180,274 shares of the Company’s common stock at an exercise price of $5.89 per share which expires on February 24, 2020 and granted Hercules the right to participate in future equity financings in an amount up to $2.0 million while the loan and warrant are outstanding. The Company allocated the proceeds of $16.5 million in accordance with ASC 470 based on the relative fair values. The relative fair value of the warrants of approximately $1.2 million at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt. The significant assumptions used in preparing the option pricing model for valuing the Company’s warrant issued to Hercules include (i) volatility (75.0%), (ii) risk free interest rate of 1.22% (estimated using treasury bonds with a 4 year life), (iii) strike price ($5.89) for the common stock warrant, (iv) fair value of common stock ($9.82) and (v) expected life (four years). The discount on the debt is being amortized to interest expense over the term of the debt. As a result of the repayment of the Oxford Loan, the Company recorded a loss on the extinguishment of debt of approximately $1.0 million on the Company’s statement of operations for the nine months ended September 30, 2015, representing a prepayment premium, the unamortized discount of the Oxford Loan and the write off of deferred financing costs.

Stockholders' Equity

Stockholders' Equity	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Stockholders' Equity	7. Stockholders’ Equity 2015 Private Placement of Common Stock In January 2015, the Company completed a private placement of 3,418,804 shares of common stock at $5.85 per share. Proceeds from the Company’s private placement, net of commissions and other offering costs, were approximately $19.3 million. Two of the Company’s stockholders, who are also affiliated with members of the Company’s Board of Directors, purchased a total of 1,623,932 shares of common stock for approximately $9.5 million in the private placement. Shelf Registration Statement On June 19, 2015, the Company filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate amount of $150.0 million (the “2015 Shelf Registration Statement”). On July 1, 2015, the 2015 Shelf Registration Statement was declared effective by the SEC. The Company completed an offering of common stock in February 2016 utilizing the 2015 Shelf Registration Statement (see below). In the future, the Company may also periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered. At the time any of the securities covered by the 2015 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering. 2016 Public Offering of Common Stock In January 2016, the Company completed an underwritten public offering of 5,511,812 shares of its common stock at a public offering price of $6.35 per share. In February 2016, the underwriters of the public offering of common stock exercised in full their option to purchase an additional 826,771 shares of common stock at the public offering price of $6.35 per share, less underwriting discounts and commissions. A total of 6,338,583 shares of common stock were sold in the public offering resulting in total net proceeds of approximately $37.5 million. One of the Company’s stockholders, who is also affiliated with an individual that was at the time a member of the Company’s Board of Directors, purchased 393,700 shares of common stock for approximately $2.5 million in the public offering. Stock-Based Compensation Expense Stock-based compensation expense was allocated as follows: Three Months Ended 2016 2015 Research and development $ $ General and administrative Total stock-based compensation expense $ $ Nine Months Ended 2016 2015 Research and development $ $ General and administrative Total stock-based compensation expense $ $

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2016
Related Party Transactions
Related Party Transactions	8. Related Party Transactions Between March 17, 2014 and July 6, 2016, one of the Managing Partners of SmartPharma LLC, or SmartPharma, an entity which provides commercial and business development consulting services to the Company, served as Chief Commercial Officer of the Company. In connection with the appointment of this individual as Chief Commercial Officer, the Company amended its consulting agreement with SmartPharma to remove this individual from the list of persons providing service under the consulting agreement. SmartPharma invoiced the Company $0.6 and $3.3 of fees for the three and nine months ended September 30, 2016, respectively and $18 and $62 of fees for the three and nine months ended September 30, 2015. In connection with the resignation of our Chief Commercial Officer on July 6, 016, the Company appointed a new Chief Commercial Officer.

Summary of Significant Accoun14

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Use of Estimates	Use of Estimates The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and various other assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s balance sheets and the amounts of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting for common stock warrants, stock-based compensation, income taxes, and accounting for research and development costs. Actual results could differ from those estimates.
Fair Value of Financial Instruments	Fair Value of Financial Instruments In accordance with ASC 825, Financial Instruments , disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Cash and cash equivalents are carried at fair value (see Note 3). Financial instruments, including accounts payable and accrued liabilities, are carried at cost, which approximates fair value given their short-term nature.
Warrants	Warrants The Company accounts for its warrants to purchase redeemable convertible stock in accordance with ASC 480, Distinguishing Liabilities from Equity . ASC 480 requires that a financial instrument, other than outstanding share, that, at inception, is indexed to an obligation to repurchase the issuer’s equity shares, regardless of the timing or the probability of the redemption feature, and may require the issuer to settle the obligation by transferring assets be classified as a liability. The Company measures the fair value of its warrant liability using an option pricing model with changes in fair value recognized as increases or reductions to other income (expense) in the statement of operations. In connection with the completion of the Company’s initial public offering in May 2014, the warrants to purchase shares of Series A-1 and Series A-2 preferred stock expired unexercised and the warrants to purchase shares of Series C preferred stock automatically converted into warrants to purchase shares of common stock. Warrants with non-standard anti-dilution provisions (referred to as down round protection) are classified as liabilities and re-measured each reporting period. As of September 30, 2016, there were outstanding 62,505 warrants to purchase common stock at $6.00 per share. These warrants expire on December 14, 2019. The warrants issued in connection with the Company’s debt financing completed in February 2015 (see Note 6) are classified as a component of stockholders’ equity. The value of such warrants was determined using the Black-Scholes option-pricing model.
Stock-Based Compensation	Stock-Based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation-Stock Compensation . The Company grants stock options for a fixed number of shares to employees and non-employees with an exercise price equal to the fair value of the shares at grant date. Compensation cost is recognized for all share-based payments granted and is based on the grant-date fair value estimated using the weighted-average assumption of the Black-Scholes option pricing model based on key assumptions such as stock price, expected volatility and expected term. The equity instrument is not considered to be issued until the instrument vests. As a result, compensation cost is recognized over the requisite service period with an offsetting credit to additional paid-in capital. The Company also awards restricted stock units (“RSUs”) to employees. RSUs are generally subject to forfeiture if employment terminates prior to the completion of the vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse. Awards for consultants are accounted for under ASC 505-50, Equity Based Payments to Non-Employees . Any compensation expense related to consultants is marked-to-market over the applicable vesting period as they vest.
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period determined using the treasury-stock and if-converted methods. For purposes of diluted net loss per share calculation, common stock warrants, unvested RSUs and stock options are considered to be potentially dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2016 and 2015 because to do so would be anti-dilutive are as follows (in common equivalent shares): September 30, 2016 2015 Common stock warrants Common stock options Unvested restricted stock units — Total
Recent Accounting Pronouncements	Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-15, Presentation of Financial Statements — Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which defines management’s responsibility to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures if there is substantial doubt about its ability to continue as a going concern. The new standard is effective for the annual period ending after December 15, 2016, and for interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASU 2-14-15 to have a material impact on its financial statements. In April 2015, the FASB issued an amendment to U.S. GAAP to simplify the balance sheet presentation of the costs for issuing debt. The changes were adopted in Accounting Standards Update (ASU) No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issue Costs , or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were required to be presented as an asset in the balance sheet. The Company adopted the provisions of ASU 2015-03 on January 1, 2016 and prior period balances have been reclassified to conform to the current period presentation. As of December 31, 2015, $152 of debt issuance costs were reclassified in the balance sheet from “deferred financing costs, net” to “loan payable, current portion” and $139 was reclassified from “deferred financing costs, net” to “loan payable, long-term”. The adoption of ASU 2015-03 did not have an impact on the Company’s operations or cash flows. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company will be evaluating the impact of the pending adoption of the new standard on the Company’s financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-9. This new standard provides guidance on employee share-based payment accounting requiring all tax effects related to share-based payments at settlement or expiration to be recorded through the statement of operations and be reported as operating activities on the statement of cash flows. Further, under the new guidance, entities are permitted to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards; whereas forfeitures can be estimated, as required today, or recognized when they occur. The guidance is effective for public business entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the impact this guidance will have on its financial statements.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2016
Summary of Significant Accounting Policies
Schedule of potentially dilutive securities excluded from calculation of diluted net loss per share	Potentially dilutive securities that have been excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2016 and 2015 because to do so would be anti-dilutive are as follows (in common equivalent shares): September 30, 2016 2015 Common stock warrants Common stock options Unvested restricted stock units — Total

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Measurements
Schedule of financial instruments measured at fair value by level within fair value hierarchy	Level 1 Level 2 Level 3 September 30, 2016 Assets: Cash equivalents $ $ — $ — Total assets at fair value $ $ — $ — Liabilities: Common stock warrants — — Total liabilities at fair value $ — $ — $ Level 1 Level 2 Level 3 December 31, 2015 Assets: Cash equivalents $ $ — $ — Total assets at fair value $ $ — $ — Liabilities: Common stock warrants — — Total liabilities at fair value $ — $ — $
Rollforward of fair value of Level 3 warrants	Beginning balance at December 31, 2015 $ Change in fair value ) Ending balance at September 30, 2016 $

Prepaid Expenses (Tables)

Prepaid Expenses (Tables)	9 Months Ended
	Sep. 30, 2016
Prepaid Expenses
Schedule of components of prepaid expenses	September 30, December 31, Prepaid clinical trial expense $ $ Prepaid insurance Other Total prepaid expenses $ $

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
	Sep. 30, 2016
Accrued Liabilities
Schedule of components of accrued liabilities	September 30, December 31, Employee bonuses $ $ Accrued clinical trial costs Other Total accrued liabilities $ $

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2016
Stockholders' Equity
Schedule of allocation of stock-based compensation expense	Three Months Ended 2016 2015 Research and development $ $ General and administrative Total stock-based compensation expense $ $ Nine Months Ended 2016 2015 Research and development $ $ General and administrative Total stock-based compensation expense $ $

Organization and Description 20

Organization and Description of Business (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Organization and Description of Business
Product revenue	$ 0
Accumulated deficit	(188,267)	$ (164,727)
Cash and cash equivalents
Cash and cash equivalents	$ 51,670	$ 34,395	$ 39,404	$ 40,182

Summary of Significant Accoun21

Summary of Significant Accounting Policies - Warrants (Details) - Warrants - Common stock warrants	Sep. 30, 2016$ / sharesshares
Warrants
Common stock that can be purchased with warrants (in shares) | shares	62,505
Exercise price of warrants (in dollars per share) | $ / shares	$ 6

Summary of Significant Accoun22

Summary of Significant Accounting Policies - Outstanding Potentially Dilutive Securities that are Anti-Dilutive (Details) - shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Anti-dilutive securities
Anti-dilutive securities excluded from the calculation of diluted net loss per share (in shares)	3,106,052	2,435,437
Common stock warrants
Anti-dilutive securities
Anti-dilutive securities excluded from the calculation of diluted net loss per share (in shares)	242,779	242,779
Stock options
Anti-dilutive securities
Anti-dilutive securities excluded from the calculation of diluted net loss per share (in shares)	2,829,939	2,192,658
Restricted stock units
Anti-dilutive securities
Anti-dilutive securities excluded from the calculation of diluted net loss per share (in shares)	33,334

Summary of Significant Accoun23

Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Recent Accounting Pronouncements
Loan payable, current portion	$ 3,486	$ 2,336
Loan payable, long-term	$ 12,077	12,896
Accounting Standards Update 2015-03 | Adjustment
Recent Accounting Pronouncements
Deferred financing costs, net, reclassified to loan payable, current portion		(152)
Deferred financing costs, net, reclassified to loan payable, long-term		(139)
Loan payable, current portion		152
Loan payable, long-term		$ 139

Fair Value Measurements - Finan

Fair Value Measurements - Financial Instruments Measured at Fair Value by Hierarchy Level and Significant Assumptions Used for Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Liabilities:
Common stock warrants	$ 238	$ 406
Recurring | Level 1
Assets:
Total assets at fair value	51,609	34,324
Recurring | Level 1 | Cash equivalents
Assets:
Cash and cash equivalents	51,609	34,324
Recurring | Level 3
Liabilities:
Total liabilities at fair value	238	406
Recurring | Level 3 | Warrants | Common stock warrants
Liabilities:
Common stock warrants	$ 238	$ 406
Recurring | Level 3 | Warrants | Common stock warrants | Option pricing model
Significant assumptions used in preparing the option pricing model for valuing the Company's warrants
Volatility (as a percent)	75.00%	75.00%
Risk free interest rate (as a percent)	0.88%	1.54%
Life of treasury bonds	3 years 3 months	4 years
Strike price (in dollars per share)	$ 6	$ 6
Fair value of stock (in dollars per share)	$ 6.98	$ 9.76
Expected life	3 years 3 months	4 years

Fair Value Measurements - Rollf

Fair Value Measurements - Rollforward of Fair Value of Level 3 Warrants and Transfers Between Levels (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair value measurements
Asset transfers out of Level 1 into Level 2	$ 0	$ 0
Asset transfers out of Level 2 into Level 1	0	0
Asset transfers into (out of) Level 3	0	0
Liability transfers out of Level 1 into Level 2	0	0
Liability transfers out of Level 2 into Level 1	0	0
Liability transfers into (out of) Level 3	0	0
Liabilities | Warrants
Rollforward of the fair value of Level 3 warrants
Beginning balance	406,000
Change in fair value	(168,000)
Ending balance	$ 238,000	$ 406,000

Prepaid Expenses (Details)

Prepaid Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Prepaid Expenses
Prepaid clinical trial expense	$ 1,989	$ 2,803
Prepaid insurance	951	780
Other	154	107
Total prepaid expenses	$ 3,094	$ 3,690

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accrued Liabilities
Employee bonuses	$ 740	$ 938
Accrued clinical trial costs	407	1,507
Other	608	208
Total accrued liabilities	$ 1,755	$ 2,653

Loan and Security Agreements -

Loan and Security Agreements - Oxford Loan and Hercules Loan (Details)	1 Months Ended		2 Months Ended	9 Months Ended
	Feb. 28, 2015USD ($)$ / sharesshares	Dec. 31, 2012USD ($)installment$ / sharesshares	Sep. 30, 2016USD ($)period$ / sharesshares	Sep. 30, 2016USD ($)installment$ / sharesshares	Sep. 30, 2015USD ($)	Aug. 31, 2016USD ($)
Significant assumptions used in preparing the option pricing model for valuing the Company's warrants
Loss on extinguishment of debt					$ 1,036,000
Warrants | Common stock warrants | Hercules Capital, Inc.
Loan and Security Agreements
Common stock that can be purchased with warrants (in shares) | shares	180,274
Exercise price of warrants (in dollars per share) | $ / shares	$ 5.89
Significant assumptions used in preparing the option pricing model for valuing the Company's warrants
Volatility (as a percent)	75.00%
Risk free interest rate (as a percent)	1.22%
Life of treasury bonds	4 years
Strike price (in dollars per share) | $ / shares	$ 5.89
Fair value of stock (in dollars per share) | $ / shares	$ 9.82
Expected life	4 years
Additional Paid-in Capital | Hercules Capital, Inc.
Loan and Security Agreements
Fair value of common stock warrant issued with debt financing	$ 1,200,000
Warrants | Common stock warrants
Loan and Security Agreements
Common stock that can be purchased with warrants (in shares) | shares			62,505	62,505
Exercise price of warrants (in dollars per share) | $ / shares			$ 6	$ 6
Warrants | Common stock warrants | Oxford Finance LLC
Loan and Security Agreements
Common stock that can be purchased with warrants (in shares) | shares		62,505
Exercise price of warrants (in dollars per share) | $ / shares		$ 6
Secured debt | Hercules Capital, Inc.
Loan and Security Agreements
Discount on debt	1,200,000
Secured debt | Oxford Loan
Loan and Security Agreements
Amount borrowed		$ 15,000,000
Repayment of existing debt	15,500,000
Number of consecutive monthly principal installments | installment		30
Final payment		$ 675,000
Secured debt | Hercules Loan
Loan and Security Agreements
Maximum borrowing capacity	25,000,000
Number of periods interest-only payment may be extended | period			2
Facility Fee						$ 165,000
Fixed interest rate (as a percent)			9.00%	9.00%
Number of consecutive monthly principal installments | installment				23
Final payment			$ 610,500	$ 610,500
Secured debt | Hercules Loan | Minimum
Loan and Security Agreements
Proceeds From Issuance Of Common Stock, Minimum			40,000,000
Secured debt | Hercules Loan Tranche One
Loan and Security Agreements
Amount borrowed	16,500,000
Secured debt | Hercules Loan Tranche Two
Loan and Security Agreements
Additional amount available			$ 8,500,000	$ 8,500,000
Secured debt | LIBOR | Oxford Loan
Loan and Security Agreements
Interest rate (as a percent)		9.20%
Variable rate basis		Three-month U.S. Libor rate
Variable rate base (as a percent)		0.47%
Variable interest rate margin (as a percent)		8.73%
Secured debt | Prime | Hercules Loan
Loan and Security Agreements
Variable rate basis				Prime minus 4.25%
Variable interest rate margin (as a percent)				9.00%
Variable rate adjustment (as a percent)				4.25%
Secured debt | Second year (through February 24, 2017) | Hercules Loan
Loan and Security Agreements
Prepayment premium as percentage of outstanding principal				2.00%
Secured debt | After February 24, 2017 | Hercules Loan
Loan and Security Agreements
Prepayment premium as percentage of outstanding principal				1.00%
Equity financings | Right to participate in future equity financings | Hercules Capital, Inc. | Maximum
Loan and Security Agreements
Equity financings amount	$ 2,000,000
Secured debt | Oxford Loan
Significant assumptions used in preparing the option pricing model for valuing the Company's warrants
Loss on extinguishment of debt					$ 1,000,000

Stockholders' Equity - Private

Stockholders' Equity - Private Placement (Details) $ / shares in Units, $ in Thousands	1 Months Ended	9 Months Ended
	Jan. 31, 2015USD ($)shareholder$ / sharesshares	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)
Sale of stock
Proceeds from the issuance of common stock, net		$ 37,527	$ 19,330
Private Placement
Sale of stock
Proceeds from the issuance of common stock, net	$ 19,300
Private Placement | Stockholders affiliated with members of Board of Directors
Sale of stock
Number of stockholders affiliated with members of Board of Directors who purchased shares | shareholder	2
Proceeds from the issuance of common stock, net	$ 9,500
Private Placement | Common stock
Sale of stock
Common stock issued (in shares) | shares	3,418,804
Share price (in dollars per share) | $ / shares	$ 5.85
Private Placement | Common stock | Stockholders affiliated with members of Board of Directors
Sale of stock
Common stock issued (in shares) | shares	1,623,932

Stockholders' Equity - Shelf Re

Stockholders' Equity - Shelf Registration Statement (Details) $ in Millions	Jun. 19, 2015USD ($)
2015 Shelf Registration
Sale of stock
Aggregate amount of securities issuable	$ 150

Stockholders' Equity - 2016 Pub

Stockholders' Equity - 2016 Public Offering of Common Stock (Details) $ / shares in Units, $ in Thousands	1 Months Ended		2 Months Ended	9 Months Ended
	Feb. 29, 2016$ / sharesshares	Jan. 31, 2016USD ($)shareholder$ / sharesshares	Feb. 29, 2016USD ($)$ / sharesshares	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)
Sale of stock
Proceeds from the issuance of common stock, net | $				$ 37,527	$ 19,330
Underwritten public offering
Sale of stock
Proceeds from the issuance of common stock, net | $			$ 37,500
Underwritten public offering | Stockholders affiliated with members of Board of Directors
Sale of stock
Number of stockholders affiliated with members of Board of Directors who purchased shares | shareholder		1
Proceeds from the issuance of common stock, net | $		$ 2,500
Underwritten public offering | Common stock
Sale of stock
Common stock issued (in shares) | shares		5,511,812	6,338,583
Share price (in dollars per share) | $ / shares		$ 6.35
Underwritten public offering | Common stock | Stockholders affiliated with members of Board of Directors
Sale of stock
Common stock issued (in shares) | shares		393,700
Underwriter purchase option | Common stock
Sale of stock
Common stock issued (in shares) | shares	826,771
Share price (in dollars per share) | $ / shares	$ 6.35		$ 6.35

Stockholders' Equity - Allocati

Stockholders' Equity - Allocation of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Stock-Based Compensation Expense
Total stock-based compensation expense	$ 940	$ 746	$ 2,607	$ 2,129
Research and development
Stock-Based Compensation Expense
Total stock-based compensation expense	299	220	796	857
General and administrative
Stock-Based Compensation Expense
Total stock-based compensation expense	$ 641	$ 526	$ 1,811	$ 1,272

Related Party Transactions (Det

Related Party Transactions (Details) - SmartPharma	3 Months Ended		9 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Jul. 06, 2016person
Related party transactions
Number of Managing Partners appointed to Chief Commercial Officer | person					1
Commercial and business development consulting services
Related party transactions
Fees invoiced by the related party | $	$ 600	$ 18,000	$ 3,300	$ 62,000