Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 01, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | COLLEGIUM PHARMACEUTICAL, INC | ||
Entity Central Index Key | 1,267,565 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 197 | ||
Entity Common Stock, Shares Outstanding | 29,448,609 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 153,225 | $ 95,697 |
Accounts receivable, net | 2,129 | |
Inventory | 1,316 | |
Prepaid expenses and other current assets | 1,905 | 1,186 |
Total current assets | 158,575 | 96,883 |
Property and equipment, net | 1,038 | 738 |
Intangible assets, net | 2,103 | |
Restricted cash | 97 | 97 |
Other long-term assets | 204 | |
Total assets | 162,017 | 97,718 |
Current liabilities: | ||
Accounts payable | 9,106 | 3,537 |
Accrued expenses | 8,879 | 2,228 |
Deferred revenue | 4,944 | |
Current portion of term loan payable | 2,667 | 2,667 |
Total current liabilities | 25,596 | 8,432 |
Lease incentive obligation | 34 | 68 |
Term loan payable, long-term | 1,479 | 4,146 |
Total liabilities | 27,109 | 12,646 |
Commitments and contingencies (see Note 9) | ||
Shareholders’ equity (deficit): | ||
Preferred stock, $0.001 par value; authorized shares - 5,000,000 at December 31, 2016 and December 31, 2015; issued and outstanding shares - none at December 31, 2016 and December 31, 2015 | ||
Common stock, $0.001 par value; authorized shares - 100,000,000 at December 31, 2016 and December 31, 2015; issued and outstanding shares - 29,364,100 at December 31, 2016 and 20,739,351 at December 31, 2015 | 29 | 21 |
Additional paid-in capital | 358,063 | 214,062 |
Accumulated deficit | (223,184) | (129,008) |
Treasury stock | (3) | |
Total shareholders’ equity | 134,908 | 85,072 |
Total liabilities and shareholders’ equity | $ 162,017 | $ 97,718 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, issued shares | 29,364,100 | 20,739,351 |
Common stock, outstanding shares | 29,364,100 | 20,739,351 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues | |||
Product revenues, net | $ 1,711 | ||
Costs and expenses | |||
Cost of product revenues | 213 | ||
Research and development | 14,948 | $ 7,975 | $ 14,959 |
Selling, general and administrative | 80,632 | 18,932 | 2,706 |
Total costs and expenses | 95,793 | 26,907 | 17,665 |
Loss from operations | (94,082) | (26,907) | (17,665) |
Other expense (income): | |||
Interest expense, net | 94 | 439 | 252 |
Gain on extinguishment of debt | (91) | ||
Change in fair value of derivative liability | 7 | ||
Total other expense, net | 94 | 348 | 252 |
Net loss | $ (94,176) | $ (27,255) | $ (17,917) |
Loss per share - basic and diluted | $ (3.88) | $ (1.48) | $ (22.72) |
Weighted-average shares - basic and diluted | 24,262,945 | 13,542,282 | 933,997 |
CONSOLIDATED STATEMENTS OF CONV
CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) - USD ($) $ in Thousands | Series A convertible redeemable preferred stock | Series B convertible redeemable preferred stock | Series C convertible redeemable preferred stock | Series D convertible redeemable preferred stock | Common Stock | Additional Paid-In Capital | Treasury Stock, at cost | Accumulated Deficit | Total |
Balance at beginning of year at Dec. 31, 2013 | $ 12,277 | $ 49,376 | $ 12,154 | $ 1 | $ 12,313 | $ (3) | $ (80,536) | ||
Balance at beginning of year at Dec. 31, 2013 | $ (68,225) | ||||||||
Balance at beginning of year (in shares) at Dec. 31, 2013 | 962,960 | ||||||||
Increase (decrease) in convertible redeemable preferred stock | |||||||||
Exercise of common stock options | 72 | 72 | |||||||
Exercise of common stock options, shares | 32,390 | ||||||||
Issuance of restricted stock awards to employees, shares | 10,869 | ||||||||
Accruals of dividends and accretion to redemption value | 504 | 1,836 | 960 | 3,300 | |||||
Accruals of dividends and accretion to redemption value | (3,300) | (3,300) | |||||||
Stock-based compensation expense | 22 | 22 | |||||||
Net loss | (17,917) | (17,917) | |||||||
Balance at end of year at Dec. 31, 2014 | $ 12,781 | $ 51,212 | $ 13,114 | $ 1 | 12,407 | (3) | (101,753) | ||
Balance at end of year at Dec. 31, 2014 | (89,348) | ||||||||
Balance at end of year (in shares) at Dec. 31, 2014 | 9,232,334 | 27,324,237 | 8,658,008 | 1,006,219 | |||||
Increase (decrease) in convertible redeemable preferred stock | |||||||||
Exercise of common stock options | 517 | 517 | |||||||
Exercise of common stock options, shares | 173,251 | ||||||||
Issuance of restricted stock awards to employees, shares | 194,694 | ||||||||
Accruals of dividends and accretion to redemption value | $ 2,297 | $ 18,034 | $ 2,996 | $ 1,245 | 24,572 | ||||
Accruals of dividends and accretion to redemption value | (24,572) | (24,572) | |||||||
Exercise of warrants | 6 | 6 | |||||||
Exercise of warrants (in shares) | 16,062 | ||||||||
Issuance of convertible redeemable preferred stock, net of issuance costs | $ 44,807 | ||||||||
Issuance of convertible redeemable preferred stock, net of issuance costs, shares | 37,500,000 | ||||||||
Conversion of notes to convertible redeemable preferred stock | $ 5,000 | ||||||||
Conversion of notes to convertible redeemable preferred stock, shares | 4,166,667 | ||||||||
Extinguishment of prior preferred stock dividends | (3,733) | (23,341) | (4,110) | ||||||
Extinguishment of prior preferred stock dividends | 31,184 | 31,184 | |||||||
Conversion of preferred stock to common stock | $ (11,345) | $ (45,905) | $ (12,000) | $ (50,000) | $ 13 | 119,237 | 119,250 | ||
Conversion of preferred stock to common stock, shares | 9,232,334 | 27,324,237 | 8,658,008 | 41,666,667 | 12,591,463 | ||||
Public offering of common stock, net of issuance costs | $ 7 | 72,022 | 72,029 | ||||||
Public offering of common stock, net of issuance costs, shares | 6,670,000 | ||||||||
Issuance of common stock in payment of accrued dividends | $ (1,052) | 1,052 | 1,052 | ||||||
Issuance of common stock in payment of accrued dividends, shares | 87,662 | ||||||||
Stock-based compensation expense | 2,209 | 2,209 | |||||||
Net loss | (27,255) | (27,255) | |||||||
Balance at end of year at Dec. 31, 2015 | $ 21 | 214,062 | (3) | (129,008) | |||||
Balance at end of year at Dec. 31, 2015 | 85,072 | ||||||||
Balance at end of year (in shares) at Dec. 31, 2015 | 20,739,351 | ||||||||
Increase (decrease) in convertible redeemable preferred stock | |||||||||
Exercise of common stock options | 443 | 443 | |||||||
Exercise of common stock options, shares | 81,831 | ||||||||
Public offering of common stock, net of issuance costs | $ 8 | 137,332 | 137,340 | ||||||
Public offering of common stock, net of issuance costs, shares | 8,500,000 | ||||||||
Issuance for employee stock purchase plan | 442 | 442 | |||||||
Issuance for employee stock purchase plan, shares | 42,918 | ||||||||
Retirement of treasury stock | (3) | $ 3 | |||||||
Stock-based compensation expense | 5,787 | 5,787 | |||||||
Net loss | (94,176) | (94,176) | |||||||
Balance at end of year at Dec. 31, 2016 | $ 29 | $ 358,063 | $ (223,184) | ||||||
Balance at end of year at Dec. 31, 2016 | $ 134,908 | ||||||||
Balance at end of year (in shares) at Dec. 31, 2016 | 29,364,100 |
CONSOLIDATED STATEMENTS OF CON6
CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY (DEFICIT) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sale of stock | ||
Issuance costs | $ 845 | $ 2,408 |
Series D convertible redeemable preferred stock | ||
Sale of stock | ||
Issuance costs | 193 | |
Issuance costs | $ 193 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | |||
Net loss | $ (94,176) | $ (27,255) | $ (17,917) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 655 | 171 | 187 |
Lease incentive | (34) | (34) | (34) |
Stock-based compensation expense | 5,787 | 2,209 | 22 |
Non cash interest expense | 6 | 7 | |
Change in fair value of derivative liability | 7 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (2,129) | ||
Inventories | (1,316) | ||
Prepaid expenses and other assets | (923) | (659) | 183 |
Refundable PDUFA fee | 2,335 | (2,335) | |
Accounts payable | 5,569 | 1,298 | 990 |
Accrued expenses | 6,570 | 362 | 943 |
Deferred revenue | 4,944 | ||
Net cash used in operating activities | (75,053) | (21,567) | (17,947) |
Investing activities | |||
Purchase of intangible assets | (2,500) | ||
Purchases of property and equipment | (477) | (362) | (8) |
Net cash used in investing activities | (2,977) | (362) | (8) |
Financing activities | |||
Proceeds from issuance of convertible bridge note | 5,000 | ||
Proceeds from issuances of common stock from public offerings, net of issuance costs of $845 and $2,408 | 137,340 | 72,029 | |
Proceeds from issuances of common stock from employee stock purchase plans | 442 | ||
Proceeds from notes payable, net of original note payoff | 7,056 | ||
Proceeds from issuance of Series D convertible redeemable preferred stock, net of issuance costs of $193 | 44,807 | ||
Repayment of term note | (2,667) | (1,286) | (28) |
Repayment of lease note payable | (59) | (62) | |
Restricted cash | (16) | ||
Proceeds from the exercise of stock options | 443 | 517 | 72 |
Net cash provided by financing activities | 135,558 | 115,992 | 12,038 |
Net increase (decrease) in cash and cash equivalents | 57,528 | 94,063 | (5,917) |
Cash and cash equivalents at beginning of period | 95,697 | 1,634 | 7,551 |
Cash and cash equivalents at end of period | 153,225 | 95,697 | 1,634 |
Supplemental disclosure of cash flow information | |||
Cash paid for interest | 284 | 353 | 181 |
Supplemental disclosure of non-cash activities | |||
Acquisition of property and equipment in accrued expenses | $ 81 | ||
Preferred stock conversion to common stock | 120,302 | ||
Extinguishment of preferred stock | 31,184 | ||
Accruals of dividends and accretion to redemption value | 24,572 | 3,300 | |
Conversion of bridge note to preferred stock | 5,000 | ||
Repayment of term note with proceeds of notes payable | 944 | ||
Series C convertible redeemable preferred stock | |||
Supplemental disclosure of non-cash activities | |||
Accruals of dividends and accretion to redemption value | 2,996 | $ 960 | |
Series D convertible redeemable preferred stock | |||
Supplemental disclosure of non-cash activities | |||
Accruals of dividends and accretion to redemption value | $ 1,245 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | ||
Issuance costs | $ 845 | $ 2,408 |
Series D convertible redeemable preferred stock | ||
Class of Stock [Line Items] | ||
Issuance costs | 193 | |
Initial public offering | Common stock | ||
Class of Stock [Line Items] | ||
Issuance costs | $ 845 | $ 2,408 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
NATURE OF BUSINESS. | |
NATURE OF BUSINESS | 1. NATURE OF BUSINESS Organization Collegium Pharmaceutical, Inc. (the “Company”) was incorporated in Delaware in April 2002 and then reincorporated in Virginia in July 2014. The Company has its principal operations in Canton, Massachusetts. The Company is a specialty pharmaceutical company developing and commercializing next-generation abuse-deterrent products that incorporate the Company’s patented DETERx® technology platform for the treatment of chronic pain and other diseases. The Company’s first product, Xtampza ER®, or Xtampza, is an abuse-deterrent, extended-release, oral formulation of oxycodone, a widely prescribed opioid medication. In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s new drug application (“NDA”) filing for Xtampza for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. In June 2016, the Company announced the commercial launch of Xtampza. The Company’s operations are subject to certain risks and uncertainties. The principal risks include inability to successfully commercialize products, changing market conditions for products and product candidates (including development of competing products), changing regulatory environment and reimbursement landscape, negative outcome of clinical trials, inability or delay in completing clinical trials or obtaining regulatory approvals, the need to retain key personnel and protect intellectual property, patent infringement litigation and the availability of additional capital financing on terms acceptable to the Company. Public Offerings of Common Stock In May 2015, the Company closed an initial public offering (“IPO”) of its common stock, which resulted in the sale of 6,670,000 shares of its common stock at a public offering price of $12.00 per share, including 870,000 shares of common stock upon the exercise by the underwriters of their option to purchase additional shares at the public offering price. The Company received proceeds from the IPO of approximately $72,029 after deducting underwriting discounts, commissions and expenses payable by the Company. In April 2015, in connection with preparing for the IPO, the Company’s board of directors and shareholders approved a one‑for‑6.9 reverse split of the Company’s common stock. All common stock share and per share amounts in the financial statements have been retroactively adjusted for all periods presented to give effect to the reverse split of the Company’s common stock, including reclassifying an amount equal to the reduction in par value to additional paid‑in capital. In connection with the closing of the IPO, all of the Company’s outstanding convertible preferred stock and accrued dividends automatically converted to common stock in May 2015, resulting in an additional 12,591,463 shares of common stock of the Company becoming outstanding. The significant increase in common stock outstanding in May 2015 impacted the year-over-year comparability of the Company’s net loss per share calculations. In January 2016, the Company issued and sold in a public offering an aggregate of 2,750,000 shares of its common stock at $20.00 per share. The Company received net proceeds from this public offering of approximately $51,174, after deduction of underwriting discounts and commissions and expenses payable by the Company. In October 2016, the Company issued and sold in a public offering an aggregate of 5,750,000 shares of its common stock at $16.00 per share. The Company received net proceeds from this public offering of approximately $86,166, after deduction of underwriting discounts and commissions and expenses payable by the Company. Basis of Accounting The consolidated financial statements include the accounts of Collegium Pharmaceutical, Inc. (a Virginia corporation) as well as the accounts of Collegium Securities Corp. (a Massachusetts corporation), incorporated in December 2015, a wholly-owned subsidiary requiring consolidation, and are prepared in conformity with accounting principles generally accepted in the United States of America. All intercompany balances and transactions have been eliminated in consolidation. Liquidity The Company has experienced net losses and negative cash flows from operating activities since its inception, and as of December 31, 2016 and December 31, 2015, had an accumulated deficit of $223,184 and $129,008, respectively. The Company expects to continue to incur net losses in the foreseeable future. A successful transition to profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. The Company believes that its cash and cash equivalents at December 31, 2016, together with expected cash inflows from the commercialization of Xtampza will enable the Company to fund its operating expenses, debt service and capital expenditure requirements into 2019. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional cash. Management intends to fund future operations through additional private or public debt or equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. If the Company is unable to obtain financing or increase profitability, the related lack of liquidity will have a material adverse effect on the Company’s operations and future prospects. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the Company’s financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition, including the estimates of units prescribed, discounts and allowances related to commercial sales of Xtampza, estimates utilized in the valuation of inventory, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, intangible assets, tax valuation reserves and accrued expenses. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. Fair Value Measurements Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. The carrying amounts reported in the Company’s financial statements for cash and cash equivalents, accounts payable, term loan payable and accrued liabilities approximate their respective fair values because of the relative short‑term nature of these accounts. Fair value measurements and disclosures describe 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, as follows: Level 1: Quoted prices in (unadjusted) active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2016 and 2015. The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2016 and 2015. Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs Description Total (Level 1) (Level 2) (Level 3) December 31, 2016 Money market funds, included in cash equivalents $ $ $ — $ — December 31, 2015 Money market funds, included in cash equivalents $ $ $ — $ — Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2016. These customers comprised 44%, 27% and 21% of the accounts receivable balance, respectively. Three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2016. These customers comprised 35%, 28% and 27% of revenue, respectively. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held. The Company has no financial instruments with off‑balance sheet risk of loss. Cash and Cash Equivalents Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2016 and 2015, the carrying amount of cash equivalents was $125,515 and $94,912, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1. Inventory Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of Xtampza, which are primarily the costs of contract manufacturing. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand for the foreseeable future and the expected shelf-life of the inventory components. Estimates of excess inventory consider various factors, including inventory levels, the level of product in the distribution channel, the Company’s projected sales of the product, as well as the remaining shelf lives of the product. The Company recorded such adjustments of $100 in the year ended December 31, 2016, which were recorded as a component of cost of product revenues. Inventories that are not expected to be used within one year are recorded as a non-current asset. The Company outsources the manufacturing of Xtampza to a sole contract manufacturer that produces the finished product. In addition, the Company currently relies on a sole supplier for the active pharmaceutical ingredient for Xtampza. Accordingly, the Company has concentration risk associated with its commercial manufacturing of Xtampza. Prior to the approval of Xtampza by the FDA in April 2016, the Company recorded all costs incurred related to the manufacturing of Xtampza as research and development expense. Subsequent to approval, the Company began capitalizing these costs as inventory as they are incurred. The Company has capitalized $1,316 of inventory as of December 31, 2016. The Company expects sales of the capitalized units to occur during the next twelve months. The Company expects costs of product revenues to increase due to the expected increases in net product sales of Xtampza and the fact that the Company had expensed all manufacturing costs as research and development expense in periods prior to FDA approval of Xtampza. The impact on cost of product revenues as a result of inventory not capitalized prior to FDA approval is immaterial. Property and Equipment Property and equipment are recorded at historical cost. Maintenance and repair costs are expensed as incurred. Costs which materially improve or extend the lives of existing assets are capitalized. The Company provides for depreciation and amortization using the straight‑line method over the estimated useful lives of the assets, which are as follows: Asset Category Estimated Useful Life Machinery and equipment years Computers and office equipment 3 - 5 years Furniture and fixtures years Leasehold improvements Lesser of remaining lease term and estimated useful life Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations. Intangible Assets Intangible assets that are deemed to have a definite life are amortized over their useful lives and are evaluated separately for impairment at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable (See Note 7). Amortization of intangible assets is recognized on a straight-line basis and the useful life of the Company’s only intangible asset is approximately 3.7 years. Restricted Cash Restricted cash represents cash held in a depository account at a financial institution to collateralize a conditional stand‑by letter of credit related to the Company’s Canton, Massachusetts facility lease agreement. Restricted cash is reported as non‑current unless the restrictions are expected to be released in the next twelve months. Revenue Recognition Revenue for product sales is recognized when there is persuasive evidence of an arrangement, title and risk of loss have passed to the customer, when estimated provisions for chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns are reasonably determinable, and when collectability is reasonably assured. Product revenue is recorded net of estimated chargebacks, rebates, sales incentives and allowance, distribution service fees, as well as estimated product returns. The Company sells Xtampza in the United States principally to distributors and retailers (“customers”), which in turn sell the product to healthcare providers for the treatment of patients. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Given the Company’s limited sales history for Xtampza and the inherent uncertainties in estimating product returns, the Company has determined that the shipments of Xtampza made to its customers thus far do not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognizes revenue when the product is sold-through to patients, provided all other revenue recognition criteria are met. The Company invoices its customers upon shipment of Xtampza and records accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price, less any realized adjustments to the gross invoice price. The Company then recognizes revenue when Xtampza is sold-through, or when product is prescribed directly to the patient at which time the right of return has expired. Healthcare providers to whom distributors sell Xtampza hold limited inventory that is designated for patients, thereby limiting the risk of return. Research and Development Costs Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities including salaries and employee related costs, costs associated with market research and design, costs associated with conducting preclinical, clinical and regulatory activities including fees paid to third‑party professional consultants and service providers, costs incurred under clinical trial agreements, costs for laboratory supplies and laboratory equipment, costs to acquire, develop and manufacture preclinical study and clinical trial materials, facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities. Government grants are recognized as a reduction of the qualifying cost being reimbursed. Patent Costs Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain. Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $16,328 in the year ended December 31, 2016. Advertising and product promotion costs are expensed as incurred. Stock‑Based Compensation The Company accounts for grants of stock options, restricted stock awards and restricted stock units to employees, including members of the board of directors, based on their grant date fair value and recognizes compensation expense over their vesting period. The Company estimates the fair value of stock options as of the date of grant using the Black‑Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the underlying common stock as determined by management or the value of the services provided, whichever is more readily determinable. Stock‑based compensation expense represents the cost of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards (usually the vesting period) on a straight‑line basis, net of estimated forfeitures. The expense is adjusted for actual forfeitures as they occur. For stock option grants with performance‑based milestones, the expense is recorded over the remaining service period after the point when the achievement of the milestone is probable or the performance condition has been achieved. For stock option grants with both performance‑based milestones and market conditions, expense is recorded over the derived service period after the point when the achievement of the performance‑based milestone is probable or the performance condition has been achieved. The Company accounts for stock options and restricted stock awards to non‑employees using the fair value approach. Stock options and restricted stock awards to non‑employees are subject to periodic revaluation over their vesting terms. There were no non-employee grants in 2016 and there was one non-employee grant in 2015. Income Taxes The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two‑step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations. Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, stock options, warrants, redeemable convertible preferred stock and unvested restricted stock are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2016, 2015 and 2014, diluted net loss per common share is the same as basic net loss per common share for those periods. Diluted earnings per share is computed using the more dilutive of (i) the two‑class method, or (ii) the if‑converted method. The Company allocates earnings first to preferred shareholders based on dividend rights and then to common and preferred shareholders based on ownership interests. The weighted‑average number of common shares included in the computation of diluted earnings (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants, convertible redeemable preferred stock and the potential issuance of stock upon the conversion of the Company’s convertible notes. Common stock equivalent shares are excluded from the computation of diluted earnings (loss) per share if their effect is antidilutive. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU , 2014-09 (ASC 606), Revenue from Contracts with Customers , which affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers , which defers the effective date of ASU 2014-09 for all entities by one year. ASU 2014-09, which has been codified with the Accounting Standards Codification as Topic 606, is now effective for public companies for annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. In addition, ASC 606 provides guidance on accounting for certain revenue-related costs including, but not limited to, when to capitalize costs associated with obtaining and fulfilling a contract. ASC 606 provides companies with two implementation methods. Companies can choose to apply the standard retrospectively to each prior reporting period presented (full retrospective application) or retrospectively with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application (modified retrospective application). Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within ASC 606 to clarify various elements of the guidance. The Company anticipates that this standard will have a material impact on its consolidated financial statements with respect to inventory and deferred revenues and is continuing to assess all potential impacts of the standard, including evaluating the impact of each potential method of adoption on the Company’s consolidated financial statements and the impact to the pattern with which the Company will recognize revenue. In August 2014, the FASB issued ASU No. 2014 ‑ 15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern . ASU 2014 ‑ 15 requires management to evaluate, at each annual or interim reporting period, whether there are conditions or events that exist that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014 ‑ 15 is effective for annual periods ending after December 15, 2016 and earlier application is permitted. The Company adopted this standard during the three months ended December 31, 2016. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory . ASU 2015-11 applies to all inventory, except for inventory measured using the last-in, first-out method or the retail inventory method. The guidance allows an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The amendments in ASU 2015-11 are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, and may be applied prospectively with earlier adoption permitted. The Company adopted ASU 2015-11 during the three months ended June 30, 2016. The adoption of this ASU did not have a material impact on the Company’s consolidated balance sheets or statements of operations for the year ended and as of December 31, 2016. In March 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-09, Compensation – Stock Compensation (Topic 718 Improvements to Employee Share-Based Payment Accounting) . ASU 2016-09 simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. ASU 2016-09 is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods; however, early adoption is permitted. The Company has early adopted ASU 2016-09 for its year ended December 31, 2016. The adoption of ASU 2016-09 did not have a material impact on the Company’s effective tax rate. In addition, the Company no longer calculates an estimate of expected forfeitures and began recongizing forfeitures as they occur. The recognition of forfeitures, as well as the cumulative-effect decrease to retained earnings with the offset to increase additional paid-in capital recognized upon adoption did not have a material impact on the Company’s consolidated balance sheets, statement of operations or cash flows for the year ended and as of December 31, 2016. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 most significantly impacts lessee accounting and disclosures. First, this guidance requires lessees to identify arrangements that should be accounted for as leases. Under ASU 2016-02, for lease arrangements exceeding a 12-month term, a right-of-use asset and lease obligation is recorded by the lessee for all leases, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU 2016-02 must be calculated using the applicable incremental borrowing rate at the date of adoption. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. In addition, ASU 2016-02 requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. This guidance is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities. The Company has not chosen early adoption for this ASU and is currently evaluating its effect on the Company’s consolidated financial statements. |
NET LOSS PER COMMON SHARE
NET LOSS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2016 | |
NET LOSS PER COMMON SHARE. | |
NET LOSS PER COMMON SHARE | 3. NET LOSS PER COMMON SHARE For the twelve months ended December 31, 2016, 2015 and 2014, these securities were anti‑dilutive due to the net losses in those periods and, therefore, the number of shares used to compute basic and diluted earnings per share are the same for of those periods. The following table presents the computations of basic and dilutive net loss per share: Years ended December 31, 2016 2015 2014 Net loss $ $ $ Extinguishment of preferred stock - see Note 12 — — Accretion and dividends of prior preferred stock - See Note 12 — Accretion and dividends of Series D preferred stock — — Loss attributable to common shareholders — basic and diluted $ $ $ Weighted-average number of common shares used in net loss per share - basic and diluted Loss per share - basic and diluted $ $ $ The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted‑average shares outstanding because such securities have an antidilutive impact due to losses reported (in common stock equivalent shares): Years ended December 31, 2016 2015 2014 Outstanding stock options Warrants Redeemable convertible preferred stock — — Unvested restricted stock Restricted stock units — — |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORY. | |
INVENTORY | 4. INVENTORY Inventory consisted of the following: As of December 31, 2016 Raw materials $ Work in process Finished goods Total inventory $ During the year ended December 31, 2016, the Company incurred aggregate charges of $100 related to excess inventory. These expenses were recorded as a component of cost of product revenues. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS. | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: As of December 31, 2016 2015 Prepaid regulatory fees $ $ — Prepaid development costs — Prepaid insurance Other current assets Other prepaid expenses Deferred financing costs — Prepaid expenses and other current assets $ $ |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT. | |
PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: As of December 31, 2016 2015 Machinery and equipment $ $ Leasehold improvements Computers and office equipment Furniture and fixtures Construction-in-process — Total property and equipment Less: accumulated deprecation Property and equipment, net $ $ Depreciation expense related to property and equipment amounted to $258, $171 and $187 for the years ended December 31, 2016, 2015 and 2014, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
INTANGIBLE ASSETS. | |
INTANGIBLE ASSETS | 7. INTANGIBLE ASSETS In May 2016, the Company entered into an agreement with BioDelivery Sciences International, Inc. (“BDSI”) to license the rights to develop, manufacture, and commercialize Onsolis® (fentanyl buccal soluble film), or Onsolis, in the United States. Onsolis is a Transmucosal Immediate-Release Fentanyl (“TIRF”) film indicated for the management of breakthrough pain in certain cancer patients. The Company expects to launch the product after the completion of the transfer of manufacturing and required submission to the FDA of a Prior Approval Supplement. Subject to FDA approval of the Prior Approval Supplement, the Company expects to launch Onsolis during the second half of 2017. In addition, during the term of the License Agreement, milestone payments in the aggregate amount of $21,000 may become payable by the Company subject to the satisfaction of certain commercialization, intellectual property, and net sales milestones, including $4,000 upon the first commercial sale of the product in the U.S. Finally, the Company will be required to pay royalties in the upper teens based on annual net sales of the product in the U.S. As of December 31, 2016, the Company has not satisfied the criteria of any milestones or royalties payable under the License Agreement and has not recognized any liabilities for such milestones or royalties payable in its consolidated financial statements. The Company made an upfront payment of $2,500 and is contractually committed to reimburse BDSI up to a maximum of $2,000 for its out-of-pocket expenses incurred in connection with the manufacturing transfer. The Company recorded the upfront payment as an intangible asset on the Consolidated Balance Sheet and will amortize it on a straight-line basis over the remaining patent life, a period of approximately 3.7 years. During the year ended December 31, 2016, the Company recognized amortization of expense of $397 related to the Onsolis intangible asset, which also represents the accumulated amortization to date. As of December 31, 2016, the remaining amortization period is approximately 3.1 years and estimated remaining amortization for 2017, 2018, 2019 and 2020 is expected to be $682, $682, $682, $57. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES. | |
Accrued Expenses | 8. ACCRUED EXPENSES Accrued expenses consisted of the following: As of December 31, 2016 2015 Accrued bonuses $ $ Accrued incentive compensation — Accrued development costs Accrued payroll and related benefits Accrued sales and marketing Accrued other operating costs Accrued audit and legal Accrued interest Total accrued expenses $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company may face legal claims or actions in the normal course of business. Except as disclosed below, the Company is not currently a party to any litigation and, accordingly, does not have any amounts recorded for any litigation related matters. The Company’s NDA filing for Xtampza is a 505(b)(2) application, which allows the Company to reference data from an approved drug listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the ‘‘Orange Book’’), in this case OxyContin OP. In connection with the 505(b)(2) process, the Company certified to the FDA and notified Purdue Pharma, L.P. (‘‘Purdue’’), as the holder of the NDA and any other Orange Book-listed patent owners, that the Company does not infringe any of the patents listed for OxyContin OP in the Orange Book. Under the Hatch-Waxman Act of 1984 (the ‘‘Hatch-Waxman Act’’), Purdue had the option to sue the Company for infringement and receive a stay of up to 30 months before the FDA could issue a final regulatory approval for Xtampza, unless the stay was earlier terminated. Purdue exercised its option and elected to sue the Company for infringement in the District of Delaware in March 2015 asserting infringement of three of Purdue’s Orange Book ‑ listed patents and one non-Orange Book-listed patent. In October 2015, the Delaware case was transferred to Massachusetts. After the Company filed a partial motion for judgment on the pleadings relating to the Orange Book-listed patents, the District Court of Massachusetts ordered judgment in favor of the Company on those three patents, and dismissed the claims asserting infringement of those patents with prejudice. Upon dismissal of those claims, the 30-month stay of FDA approval was lifted. As a result, the Company obtained final approval of its Xtampza ER products and has launched the products commercially. In November 2015, Purdue filed a follow-on suit asserting infringement of another patent, Patent No. 9,073,933, which was late-listed in the Orange Book and therefore could not trigger any stay of FDA approval. In June 2016, Purdue filed another follow-on suit asserting infringement of another non-Orange Book listed patent, Patent No. 9,155,717. These suits were consolidated by the District of Massachusetts into the original action where Purdue’s infringement claim relating to the ’497 patent remains pending. Purdue continues to assert infringement of these three patents against the Company, none of which is associated with any stay of FDA approval. Purdue has made a demand for monetary relief but has not quantified their alleged damages. Purdue has also requested a judgment of infringement and an injunction on the sale of the Company’s products accused of infringement. The Company has denied all claims and seeks a judgment that the patents are invalid and/or not infringed by the Company, and seeks a judgment that the case is exceptional, with an award to the Company of its fees for defending the case. The parties are in the early stages of fact discovery. Written discovery has commenced with depositions expected to commence in the first half of 2017. The parties are also in the claims construction stage of the patent litigation. The parties have briefed their proposed constructions and will argue their positions in front of the Court in the second quarter of 2017. The Company has also filed a motion for summary judgment that the asserted claims of the ’933, ’497, and ’717 patents are invalid and not infringed. The Company is not able to predict with certainty when the Court will decide the Company’s motion. No trial date has been scheduled. The Company is, and plans to continue, defending this case vigorously. At this stage, we are unable to evaluate the likelihood of an unfavorable outcome or estimate the amount or range of potential loss, if any. At this time the Company is unable to provide meaningful quantification of how this potential litigation may impact its future financial condition, results of operations, or cash flows. Operating Leases The Company leases its office and research facility under a non‑cancellable operating lease. Terms of the agreement provide for an initial two‑month rent‑free period and future rent escalation, and provide that in addition to minimum lease rental payments, the Company is responsible for a pro‑rata share of operating expenses and taxes. In March 2015, the Company amended its lease to include an additional 9,660 square feet of space for a total of 19,335 square feet. In addition, the lease term was extended and now terminates on August 30, 2020. At the Company’s election, the lease term may be extended for an additional 5 -year term. Aggregate minimum annual lease commitments of the Company under its non‑cancellable operating lease as of December 31, 2016 are as follows: 2017 $ 2018 2019 2020 Total minimum lease payments $ Rent expense under the operating lease agreement amounted to approximately $182, $112 and $69 for the years ended December 31, 2016, 2015 and 2014, respectively. In addition, the Company maintained a stand‑by letter of credit in connection with the Canton facility lease of $97 at December 31, 2016 and December 31, 2015. This amount is classified as restricted cash in the balance sheets. Amounts provided by the lessor related to tenant improvements are considered inducements to enter into the lease. The Company has recorded these costs in the balance sheet as leasehold improvements, with the corresponding liabilities as deferred lease incentive and lease note payable. These liabilities are amortized on a straight‑line basis over the term of the lease. |
TERM LOAN PAYABLE
TERM LOAN PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
TERM LOAN PAYABLE. | |
TERM LOAN PAYABLE | 10. TERM LOAN PAYABLE On August 28, 2012, the Company entered into a loan agreement (“Original Term Loan”) with Silicon Valley Bank (“SVB”) to borrow up to a maximum amount of $1,000. In August 2012, October 2012 and February 2013, the Company borrowed $250, $250 and $500, respectively. The Original Term Loan bore interest at a rate per annum of 2.25% above the prime rate fixed at the time of advance of the Original Term Loan (5.50%). The Original Term Loan provided for interest‑only payments for the first 12 months based on the date of each borrowing, and, thereafter, 36 monthly payments of principal and interest. In connection with the Original Term Loan, the Company granted SVB a warrant to purchase 11,850 shares of common stock at an exercise price of $0.07 per share (See Note 11). In January 2014, the Original Term Loan was amended (“Amendment No. 1”) to provide for the following: borrowings of up to $6,000, repayment in full of the Original Term Loan balance outstanding, and an adjustment of the variable interest rate from 2.25% above the prime rate to 1.75% above the prime rate. In February 2014, the Company borrowed $2,000. The proceeds from the initial borrowing were used to pay down the Original Term Loan balance outstanding resulting in the Company receiving $1,056. Borrowings under Amendment No. 1 bore interest at a rate of 5.0%. Amendment No. 1 provided for interest‑only payments for the first 12 months based on the date of each borrowing, and thereafter, 36 monthly payments of principal and interest. In connection with Amendment No. 1, the Company granted to SVB a warrant to purchase 14,430 shares of common stock with an exercise price of $0.05 per share (See Note 11). In August 2014 the Original Term Loan was further amended (“Amendment No. 2”) to provide for total borrowings of up to $8,000. In August 2014 and September 2014 the Company drew down $3,000 and $3,000, respectively. Pursuant to Amendment No. 2, interest‑only payments are to be made for the first 12 months based on the date of each borrowing; thereafter, 36 monthly payments of principal and interest are to be made. Borrowings under Amendment 2 bear interest at the rate of 5.0%. The warrant agreement contains a performance clause that the Company met, resulting in additional financing extended and issuance of a warrant to purchase 86,580 additional shares of common stock with an exercise price of $0.05 per share (See Note 11). In September 2014, the Original Term Loan was further amended (“Amendment No. 3”) to extend the loan draw period. In November and December of 2014 the Company entered into a Note Purchase Agreement (the “Bridge Notes”) allowing for the issuance of $5,000 of convertible promissory notes to a group of investors (the “Holders”) bearing interest at a rate per annum of 6.0%. The Holders are related parties of the Company. In March 2015, in connection with the Series D convertible preferred stock financing, the Bridge Notes converted into 4,166,667 shares of Series D convertible preferred stock. Upon the conversion, the Company recognized a gain on extinguishment of $91. The accrued interest on the Bridge Notes was waived. As of December 31, 2016, future payments under the Company’s term loan are as follows: 2017 $ 2018 Balance $ |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2016 | |
WARRANTS. | |
WARRANTS | 11. WARRANTS In November 2010, the Company issued a warrant to Comerica Bank. The warrant represents the right to purchase 2,445 shares of common stock with an exercise price of $12.27. The warrant expires in October 2017. In connection with the Term Loan Financings with Silicon Valley Bank, the Company issued warrants to purchase a total of 16,357 shares of common stock. In June 2015, SVB exercised all of its warrants. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
EQUITY. | |
EQUITY | 12. EQUITY Common Stock As of December 31, 2016 and 2015, the Company had reserved the following shares of common stock for the issuance of common stock for the exercise of stock options and warrants and the issuance of shares under the 2015 Employee Stock Purchase Plan (in thousands): As of December 31, 2016 2015 Options to purchase common stock Employee stock purchase plan Warrants Total Convertible Redeemable Preferred Stock Series A, B and Series C Redeemable Convertible Preferred Stock As of December 31, 2014, 54,481,000 shares of preferred stock were authorized, designated as Series A, Series B and Series C Preferred Stock of which 9,232,334, 27,324,237 and 8,658,008 were issued and outstanding, respectively. In March 2015, the Company sold 41,666,667 shares of Series D convertible preferred stock for aggregate consideration of $50,000, comprised of $45,000 in cash and conversion of $5,000 in convertible notes with related parties. The convertible notes converted into 4,166,667 shares of Series D convertible preferred stock. The accrued interest on the convertible notes was waived. In this financing, the mandatory conversion for all series of preferred stock was modified so as to occur upon an initial public offering with gross proceeds in excess of $50,000. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
STOCK BASED COMPENSATION. | |
STOCK BASED COMPENSATION | 13. STOCK‑BASED COMPENSATION Stock Options, Restricted Stock Awards and Restricted Stock Units In May 2015, the Company adopted the Amended and Restated 2014 Stock Incentive Plan (the “Plan”), under which an aggregate of 2,700,000 shares of common stock were authorized for issuance to employees, officers, directors, consultants and advisors of the Company, plus an annual increase to be added on the first day of each fiscal year until the expiration of the Plan equal to 4% of the total number of outstanding shares of common stock on December 31 st of the immediately preceding calendar year (or a lower amount as otherwise determined by the board of directors prior to January 1 st ). As of December 31, 2016, 1,021,509 shares of common stock were available for issuance pursuant to the Plan . The Plan provides for granting of both Internal Revenue Service qualified incentive stock options (“ISOs”) and non‑qualified options (“NQs”), restricted stock awards (“RSAs”) and restricted stock units (“RSUs”). Stock options generally vest over a four year period of service; however, certain options contain performance conditions. The options generally have a ten year contractual life and, upon termination, vested options are generally exercisable between one and three months following the termination date, while unvested options are forfeited immediately. Stock option activity under the Plan is summarized as follows: Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding at December 31, 2015 $ $ Granted Exercised Cancelled Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ Vested and expected to vest at December 31, 2016 $ $ The total intrinsic value of stock options exercised for the year ended December 31, 2016 was $952. As of December 31, 2016, the unrecognized compensation cost related to outstanding options was $14,499, and is expected to be recognized as expense over approximately 2.8 years. As of December 31, 2016, the weighted average fair value of vested options was $6.35. The weighted-average grant date fair value of options granted during the year ended December 31, 2016 was $10.98. The fair value of options that vested during the year ended December 31, 2016 was $7.37. Restricted stock awards under the Plan are summarized as follows: Weighted-Average Purchase Price Shares per Share Unvested at December 31, 2015 $ Granted — — Vested Unvested at December 31, 2016 (1) $ (1) Excludes 39,247 shares of unvested restricted stock remaining from the early exercise of stock options as of December 31, 2016. The total fair value of restricted stock awards vested during the years ended December 31, 2016, was $186. As of December 31, 2016, the unrecognized compensation cost related to restricted stock awards was $233, and is expected to be recognized as expense over approximately 1.2 years. Restricted stock units under the Plan are summarized as follows: Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2015 — $ — Granted Settled — — Forfeited — — Outstanding at December 31, 2016 $ As of December 31, 2016, the unrecognized compensation cost related to restricted stock units was $509, and is expected to be recognized as expense over approximately 3.0 years. Employee Stock Purchase Plan The Company’s 2015 Employee Stock Purchase Plan allows employees as designated by the Company’s Board of Directors to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of our common stock on (1) the first day of the purchase period or (2) the last day of the purchase period. The first purchase period commenced in the year ended December 31, 2016. The expense for the year ended December 31, 2016 was $457. Stock‑Based Compensation Expense The Company granted stock options to employees for the years ended December 31, 2016, 2015 and 2014. The Company estimates the fair value of stock options as of the date of grant using the Black‑Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the award. Stock options and restricted stock issued to non‑board member, non‑employees are accounted for using the fair value approach and are subject to periodic revaluation over their vesting terms. Stock‑based compensation for all stock options, restricted stock awards, restricted stock units and for the employee stock purchase plan are reported within: Years ended December 31, 2016 2015 2014 Research and development $ $ $ Selling, general and administrative Total stock-based compensation expense $ $ $ The weighted‑average assumptions used in the Black‑Scholes option pricing model to determine the fair value of the employee stock option grants were as follows: Years ended December 31, 2016 2015 2014 Risk-free interest rate % % % Volatility % % % Expected term (years) Expected dividend yield — % — % — % Risk‑free Interest Rate. The risk‑free interest rate assumption is based on observed interest rates appropriate for the expected term of the stock option grants. Expected Volatility. Due to the Company’s limited operating history and lack of company‑specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology and pharmaceutical industries. In evaluating similarity, we consider factors such as industry, stage of life cycle and size. Expected Term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, through December 31, 2016 it determined the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. Expected Dividend Yield. The expected dividend yield assumption is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES. | |
INCOME TAXES | 14. INCOME TAXES For the years ended December 31, 2016 and 2015, the Company did not record a current or deferred income tax expense or (benefit) due to current and historical losses incurred by the Company. The Company's losses before income taxes consist solely of domestic losses. The Company has early adopted the provisions of ASU 2016-09 , Compensation – Stock Compensation (Topic 718 Improvements to Employee Share-Based Payment Accounting) , for its year ended December 31, 2016. ASU 2016-09 requires companies to include the benefit of an option deduction in its net operating loss carryforward deferred tax asset. Prior to its adoption of ASU 2016-09, the Company’s excess tax benefits associated with option deductions were maintained in the Company’s APIC pool of windfall tax benefits, which was tracked off balance sheet and not included in its deferred tax assets. As a result of the Company’s adoption of ASU 2016-09, it will track option deductions in its net operating loss deferred tax asset on a modified retrospective basis, and has included the option deductions in the December 31, 2016 deferred tax assets. The gross deferred tax asset and valuation allowance as of December 31, 2016 increased $406 as a result of the cumulative effect of adoption of ASU 2016-09. The Company has not recast its December 31, 2015 and December 31, 2014 deferred tax assets or its rate reconciliation, and therefore the option deductions in 2015 and 2014 are not included in the net operating loss deferred tax asset as originally reported. Since the Company has historically maintained a full valuation allowance on its net worldwide deferred tax asset, there is no net impact to retained earnings from the adoption of ASU 2016-09. A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the consolidated financial statements is as follows: As of December 31, 2016 2015 2014 Federal income tax expense at statutory rate % % % (Increase) decrease income tax (benefit) resulting from: State income tax, net of federal benefit — Permanent differences Research and development credit Change in valuation allowance Effective income tax rate % % % Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are comprised of the following: As of December 31, 2016 2015 Deferred tax assets: U.S. and state net operating loss carryforwards $ $ Research and development credits Accruals and other Depreciation and amortization Total deferred tax assets Valuation allowance Net deferred tax assets $ — $ — The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2016 and 2015, based on the Company's history of operating losses, the Company has concluded that it is not more likely than not that the benefit of its deferred tax assets will be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2016 and 2015. The valuation allowance increased $34,499 and $10,539, during the years ended December 31, 2016 and 2015 respectively, due primarily to net operating losses generated. As of December 31, 2016, 2015 and 2014, the Company had U.S. federal net operating loss carryforwards of $190,926, $104,888 and $78,276, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2036. As of December 31, 2016, 2015, and 2014, the Company also had U.S. state net operating loss carryforwards of $145,902, $59,875, and $34,184 respectively, which may be available to offset future income tax liabilities and expire at various dates through 2036. Included in the federal and state net operating loss carryforwards are approximately $1,539, $1,064, and $0, respectively, of deductions related to the exercise of stock options. As stated above, the company is electing to early adopt ASU 2016-09 on a modified retrospective basis. Therefore, the $1,539 of option deductions is included in the company’s net operating loss deferred tax asset at December 31, 2016. The company is not recasting its net operating loss deferred tax asset at December 31, 2015 and December 31, 2014, and therefore the option deduction of $1,064 and $0, respectively, is not included in the Company’s deferred tax assets. As of December 31, 2016, 2015 and 2014, the Company had federal research and development tax credit carryforwards of approximately $3,367, $3,110, and $2,868, respectively, available to reduce future tax liabilities which expire at various dates through 2036. As of December 31, 2016, 2015 and 2014 the Company had state research and development tax credit carryforwards of approximately $522, $469 and $226, respectively, available to reduce future tax liabilities which expire at various dates through 2031. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed numerous financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. For all years through December 31, 2016, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position for these two years. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance. The Company files income tax returns in the United States and in several states. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2013 through December 31, 2016. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFITS. | |
EMPLOYEE BENEFITS | 15. EMPLOYEE BENEFITS The Company has a retirement savings plan, which is qualified under section 401(k) of the Code, for its employees. The plan allows eligible employees to defer, at the employee’s discretion, pretax compensation up to the Internal Revenue Service annual limits. Employees become eligible to participate after completing 3 months of service. The Company is not required to contribute to this plan. Total expense for contributions made by the Company the years ended December 31, 2016, 2015 and 2014 was $613, $44 and $35 respectively. |
UNAUDITED QUARTERLY OPERATING R
UNAUDITED QUARTERLY OPERATING RESULTS | 12 Months Ended |
Dec. 31, 2016 | |
UNAUDITED QUARTERLY OPERATING RESULTS. | |
UNAUDITED QUARTERLY OPERATING RESULTS | 16. UNAUDITED QUARTERLY OPERATING RESULTS The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2016 and 2015: First Second Third Fourth Year ended December 31, 2016 Quarter Quarter Quarter Quarter Product revenues, net $ - $ - $ $ Costs and expenses Cost of product revenues - - Research and development Selling, general and administrative Total costs and expenses Loss from operations $ $ $ $ Other (expense) income, net Net loss $ $ $ $ Weighted-average shares - basic and diluted Loss per share - basic and diluted $ $ $ $ First Second Third Fourth Year ended December 31, 2015 Quarter Quarter Quarter Quarter Costs and expenses Research and development $ $ $ $ Selling, general and administrative Total costs and expenses Loss from operations $ $ $ $ Other expense, net Net loss $ $ $ $ Shares used in computing net loss per share-basic Shares used in computing net loss per share-diluted Net income (loss) per share-basic $ $ $ $ Net loss per share-diluted $ $ $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS. | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS The Company has concluded that no subsequent events have occurred that require disclosure. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. | |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to revenue recognition, including the estimates of units prescribed, discounts and allowances related to commercial sales of Xtampza, estimates utilized in the valuation of inventory, estimates of useful lives with respect to intangible assets, accounting for stock-based compensation, contingencies, intangible assets, tax valuation reserves and accrued expenses. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. The Company’s actual results may differ from these estimates under different assumptions or conditions. |
Fair Value Measurements | Fair Value Measurements Disclosures of fair value information about financial instruments are required, whether or not recognized in the balance sheet, for financial instruments with respect to which it is practicable to estimate that value. The carrying amounts reported in the Company’s financial statements for cash and cash equivalents, accounts payable, term loan payable and accrued liabilities approximate their respective fair values because of the relative short‑term nature of these accounts. Fair value measurements and disclosures describe 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, as follows: Level 1: Quoted prices in (unadjusted) active markets for identical assets or liabilities Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Transfers are calculated on values as of the transfer date. There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2016 and 2015. The following tables present the Company’s financial instruments carried at fair value using the lowest level input applicable to each financial instrument at December 31, 2016 and 2015. Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs Description Total (Level 1) (Level 2) (Level 3) December 31, 2016 Money market funds, included in cash equivalents $ $ $ — $ — December 31, 2015 Money market funds, included in cash equivalents $ $ $ — $ — |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject the Company to significant concentration of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Three customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2016. These customers comprised 44%, 27% and 21% of the accounts receivable balance, respectively. Three customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2016. These customers comprised 35%, 28% and 27% of revenue, respectively. The Company has not experienced any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the financial institutions in which those deposits are held. The Company has no financial instruments with off‑balance sheet risk of loss. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash in readily available checking and savings accounts and money market funds. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company’s cash equivalents, which consist of money market funds, are measured at fair value on a recurring basis. As of December 31, 2016 and 2015, the carrying amount of cash equivalents was $125,515 and $94,912, respectively, which approximates fair value and was determined based upon Level 1 inputs. Money market funds are valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1. |
Inventory | Inventory Inventories are stated at the lower of cost or net realizable value. Inventory costs consist of costs related to the manufacturing of Xtampza, which are primarily the costs of contract manufacturing. The Company determines the cost of its inventories on a specific identification basis, and removes amounts from inventories on a first-in, first-out basis. If the Company identifies excess, obsolete or unsalable items, inventories are written down to their realizable value in the period in which the impairment is identified. These adjustments are recorded based upon various factors, including the level of product manufactured by the Company, the level of product in the distribution channel, current and projected demand for the foreseeable future and the expected shelf-life of the inventory components. Estimates of excess inventory consider various factors, including inventory levels, the level of product in the distribution channel, the Company’s projected sales of the product, as well as the remaining shelf lives of the product. The Company recorded such adjustments of $100 in the year ended December 31, 2016, which were recorded as a component of cost of product revenues. Inventories that are not expected to be used within one year are recorded as a non-current asset. The Company outsources the manufacturing of Xtampza to a sole contract manufacturer that produces the finished product. In addition, the Company currently relies on a sole supplier for the active pharmaceutical ingredient for Xtampza. Accordingly, the Company has concentration risk associated with its commercial manufacturing of Xtampza. Prior to the approval of Xtampza by the FDA in April 2016, the Company recorded all costs incurred related to the manufacturing of Xtampza as research and development expense. Subsequent to approval, the Company began capitalizing these costs as inventory as they are incurred. The Company has capitalized $1,316 of inventory as of December 31, 2016. The Company expects sales of the capitalized units to occur during the next twelve months. The Company expects costs of product revenues to increase due to the expected increases in net product sales of Xtampza and the fact that the Company had expensed all manufacturing costs as research and development expense in periods prior to FDA approval of Xtampza. The impact on cost of product revenues as a result of inventory not capitalized prior to FDA approval is immaterial. |
Property and Equipment | Property and Equipment Property and equipment are recorded at historical cost. Maintenance and repair costs are expensed as incurred. Costs which materially improve or extend the lives of existing assets are capitalized. The Company provides for depreciation and amortization using the straight‑line method over the estimated useful lives of the assets, which are as follows: Asset Category Estimated Useful Life Machinery and equipment years Computers and office equipment 3 - 5 years Furniture and fixtures years Leasehold improvements Lesser of remaining lease term and estimated useful life Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in the statements of operations. |
Intangible Assets | Intangible Assets Intangible assets that are deemed to have a definite life are amortized over their useful lives and are evaluated separately for impairment at least annually or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable (See Note 7). Amortization of intangible assets is recognized on a straight-line basis and the useful life of the Company’s only intangible asset is approximately 3.7 years. |
Restricted Cash | Restricted Cash Restricted cash represents cash held in a depository account at a financial institution to collateralize a conditional stand‑by letter of credit related to the Company’s Canton, Massachusetts facility lease agreement. Restricted cash is reported as non‑current unless the restrictions are expected to be released in the next twelve months. |
Revenue Recognition | Revenue Recognition Revenue for product sales is recognized when there is persuasive evidence of an arrangement, title and risk of loss have passed to the customer, when estimated provisions for chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns are reasonably determinable, and when collectability is reasonably assured. Product revenue is recorded net of estimated chargebacks, rebates, sales incentives and allowance, distribution service fees, as well as estimated product returns. The Company sells Xtampza in the United States principally to distributors and retailers (“customers”), which in turn sell the product to healthcare providers for the treatment of patients. The Company provides the right of return to its customers for unopened product for a limited time before and after its expiration date. Given the Company’s limited sales history for Xtampza and the inherent uncertainties in estimating product returns, the Company has determined that the shipments of Xtampza made to its customers thus far do not meet the criteria for revenue recognition at the time of shipment. Accordingly, the Company recognizes revenue when the product is sold-through to patients, provided all other revenue recognition criteria are met. The Company invoices its customers upon shipment of Xtampza and records accounts receivable, with a corresponding liability for deferred revenue equal to the gross invoice price, less any realized adjustments to the gross invoice price. The Company then recognizes revenue when Xtampza is sold-through, or when product is prescribed directly to the patient at which time the right of return has expired. Healthcare providers to whom distributors sell Xtampza hold limited inventory that is designated for patients, thereby limiting the risk of return. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities including salaries and employee related costs, costs associated with market research and design, costs associated with conducting preclinical, clinical and regulatory activities including fees paid to third‑party professional consultants and service providers, costs incurred under clinical trial agreements, costs for laboratory supplies and laboratory equipment, costs to acquire, develop and manufacture preclinical study and clinical trial materials, facilities, depreciation and other expenses including allocated expenses for rent and maintenance of facilities. Government grants are recognized as a reduction of the qualifying cost being reimbursed. |
Patent Costs | Patent Costs Costs related to filing and pursuing patent applications are recorded as selling, general and administrative expense as incurred since the recoverability of such expenditures is uncertain. |
Advertising and Product Promotion Costs | Advertising and Product Promotion Costs Advertising and product promotion costs are included in selling, general and administrative expenses and were $16,328 in the year ended December 31, 2016. Advertising and product promotion costs are expensed as incurred. |
Stock-Based Compensation | Stock‑Based Compensation The Company accounts for grants of stock options, restricted stock awards and restricted stock units to employees, including members of the board of directors, based on their grant date fair value and recognizes compensation expense over their vesting period. The Company estimates the fair value of stock options as of the date of grant using the Black‑Scholes option pricing model and restricted stock awards and restricted stock units based on the fair value of the underlying common stock as determined by management or the value of the services provided, whichever is more readily determinable. Stock‑based compensation expense represents the cost of the grant date fair value of employee stock option grants recognized over the requisite service period of the awards (usually the vesting period) on a straight‑line basis, net of estimated forfeitures. The expense is adjusted for actual forfeitures as they occur. For stock option grants with performance‑based milestones, the expense is recorded over the remaining service period after the point when the achievement of the milestone is probable or the performance condition has been achieved. For stock option grants with both performance‑based milestones and market conditions, expense is recorded over the derived service period after the point when the achievement of the performance‑based milestone is probable or the performance condition has been achieved. The Company accounts for stock options and restricted stock awards to non‑employees using the fair value approach. Stock options and restricted stock awards to non‑employees are subject to periodic revaluation over their vesting terms. There were no non-employee grants in 2016 and there was one non-employee grant in 2015. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the years in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes net deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax‑planning strategies and the absence of carryback available from results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future, in excess of its net recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company records uncertain tax positions on the basis of a two‑step process whereby (i) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company will recognize interest and penalties related to uncertain tax positions within income tax expense. Any accrued interest and penalties will be included within the related tax liability. As of December 31, 2016 and 2015, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations. |
Net Loss per Common Share | Net Loss per Common Share Basic net loss per common share is calculated by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted‑average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, stock options, warrants, redeemable convertible preferred stock and unvested restricted stock are considered potentially dilutive securities. Because the Company has reported a net loss for the years ended December 31, 2016, 2015 and 2014, diluted net loss per common share is the same as basic net loss per common share for those periods. Diluted earnings per share is computed using the more dilutive of (i) the two‑class method, or (ii) the if‑converted method. The Company allocates earnings first to preferred shareholders based on dividend rights and then to common and preferred shareholders based on ownership interests. The weighted‑average number of common shares included in the computation of diluted earnings (loss) gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants, convertible redeemable preferred stock and the potential issuance of stock upon the conversion of the Company’s convertible notes. Common stock equivalent shares are excluded from the computation of diluted earnings (loss) per share if their effect is antidilutive. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. | |
Schedule of financial instruments measured at fair value by level within fair value hierarchy | Significant Quoted Prices other Significant in active observable unobservable markets inputs inputs Description Total (Level 1) (Level 2) (Level 3) December 31, 2016 Money market funds, included in cash equivalents $ $ $ — $ — December 31, 2015 Money market funds, included in cash equivalents $ $ $ — $ — |
Schedule of estimated useful lives of property and equipment | Asset Category Estimated Useful Life Machinery and equipment years Computers and office equipment 3 - 5 years Furniture and fixtures years Leasehold improvements Lesser of remaining lease term and estimated useful life |
NET LOSS PER COMMON SHARE (Tabl
NET LOSS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
NET LOSS PER COMMON SHARE. | |
Schedule of computations of basic and diluted net loss per share | Years ended December 31, 2016 2015 2014 Net loss $ $ $ Extinguishment of preferred stock - see Note 12 — — Accretion and dividends of prior preferred stock - See Note 12 — Accretion and dividends of Series D preferred stock — — Loss attributable to common shareholders — basic and diluted $ $ $ Weighted-average number of common shares used in net loss per share - basic and diluted Loss per share - basic and diluted $ $ $ |
Schedule of potentially dilutive securities excluded from computations of diluted weighted-average shares outstanding | Years ended December 31, 2016 2015 2014 Outstanding stock options Warrants Redeemable convertible preferred stock — — Unvested restricted stock Restricted stock units — — |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORY. | |
Schedule of Inventory | As of December 31, 2016 Raw materials $ Work in process Finished goods Total inventory $ |
PREPAID EXPENSES AND OTHER CU30
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS. | |
Schedule of components of prepaid expenses and other current assets | As of December 31, 2016 2015 Prepaid regulatory fees $ $ — Prepaid development costs — Prepaid insurance Other current assets Other prepaid expenses Deferred financing costs — Prepaid expenses and other current assets $ $ |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT. | |
Schedule of components of property and equipment | As of December 31, 2016 2015 Machinery and equipment $ $ Leasehold improvements Computers and office equipment Furniture and fixtures Construction-in-process — Total property and equipment Less: accumulated deprecation Property and equipment, net $ $ |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCRUED EXPENSES. | |
Schedule of components of accrued expenses | As of December 31, 2016 2015 Accrued bonuses $ $ Accrued incentive compensation — Accrued development costs Accrued payroll and related benefits Accrued sales and marketing Accrued other operating costs Accrued audit and legal Accrued interest Total accrued expenses $ $ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES. | |
Schedule of aggregate minimum annual lease commitments under non-cancellable operating lease | 2017 $ 2018 2019 2020 Total minimum lease payments $ |
TERM LOAN PAYABLE (Tables)
TERM LOAN PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
TERM LOAN PAYABLE. | |
Schedule of future payments under debt agreements | 2017 $ 2018 Balance $ |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EQUITY. | |
Schedule of shares of common stock reserved for future issuance | As of December 31, 2016 2015 Options to purchase common stock Employee stock purchase plan Warrants Total |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of restricted stock awards | Weighted-Average Purchase Price Shares per Share Unvested at December 31, 2015 $ Granted — — Vested Unvested at December 31, 2016 (1) $ |
Summary of stock option activity | Weighted- Weighted- Average Average Remaining Aggregate Exercise Price Contractual Intrinsic Shares per Share Term (in years) Value Outstanding at December 31, 2015 $ $ Granted Exercised Cancelled Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ Vested and expected to vest at December 31, 2016 $ $ |
Schedule of weighted-average assumptions used in Black-Scholes option-pricing model | Years ended December 31, 2016 2015 2014 Risk-free interest rate % % % Volatility % % % Expected term (years) Expected dividend yield — % — % — % |
Schedule of stock-based compensation for all stock options and restricted stock awards | Years ended December 31, 2016 2015 2014 Research and development $ $ $ Selling, general and administrative Total stock-based compensation expense $ $ $ |
Restricted Stock Units (RSUs) | |
Summary of restricted stock awards | Weighted-Average Shares Grant Date Fair Value Outstanding at December 31, 2015 — $ — Granted Settled — — Forfeited — — Outstanding at December 31, 2016 $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES. | |
Schedule of reconciliation of income tax expense (benefit) at statutory federal income tax rate to income taxes | As of December 31, 2016 2015 2014 Federal income tax expense at statutory rate % % % (Increase) decrease income tax (benefit) resulting from: State income tax, net of federal benefit — Permanent differences Research and development credit Change in valuation allowance Effective income tax rate % % % |
Schedule of significant components of deferred tax assets and liabilities | As of December 31, 2016 2015 Deferred tax assets: U.S. and state net operating loss carryforwards $ $ Research and development credits Accruals and other Depreciation and amortization Total deferred tax assets Valuation allowance Net deferred tax assets $ — $ — |
UNAUDITED QUARTERLY OPERATING38
UNAUDITED QUARTERLY OPERATING RESULTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
UNAUDITED QUARTERLY OPERATING RESULTS. | |
Summary of unaudited quarterly results of operations | First Second Third Fourth Year ended December 31, 2016 Quarter Quarter Quarter Quarter Product revenues, net $ - $ - $ $ Costs and expenses Cost of product revenues - - Research and development Selling, general and administrative Total costs and expenses Loss from operations $ $ $ $ Other (expense) income, net Net loss $ $ $ $ Weighted-average shares - basic and diluted Loss per share - basic and diluted $ $ $ $ First Second Third Fourth Year ended December 31, 2015 Quarter Quarter Quarter Quarter Costs and expenses Research and development $ $ $ $ Selling, general and administrative Total costs and expenses Loss from operations $ $ $ $ Other expense, net Net loss $ $ $ $ Shares used in computing net loss per share-basic Shares used in computing net loss per share-diluted Net income (loss) per share-basic $ $ $ $ Net loss per share-diluted $ $ $ $ |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | |||||
Oct. 31, 2016USD ($)$ / sharesshares | Jan. 31, 2016USD ($)$ / sharesshares | May 31, 2015USD ($)$ / sharesshares | Apr. 30, 2015 | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Common stock split ratio | 0.1449 | |||||
Accumulated deficit | ||||||
Accumulated deficit | $ | $ 223,184 | $ 129,008 | ||||
Initial public offering | ||||||
Stock Issued During Period, Shares, New Issues | 5,750,000 | 2,750,000 | 6,670,000 | |||
Issue price (in dollars per share) | $ / shares | $ 16 | $ 20 | $ 12 | |||
Net proceeds from IPO | $ | $ 86,166 | $ 51,174 | $ 72,029 | |||
Conversion into common stock | 12,591,463 | |||||
Underwriters over-allotment option | ||||||
Stock Issued During Period, Shares, New Issues | 870,000 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Oct. 31, 2016$ / sharesshares | Jan. 31, 2016$ / sharesshares | May 31, 2015$ / sharesshares | Apr. 30, 2015 | Dec. 31, 2016USD ($)customer | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.1449 | ||||||
Marketing and Advertising Expense | $ 16,328 | ||||||
Allocated Share-based Compensation Expense | 5,787 | $ 2,209 | $ 22 | ||||
Inventory Adjustments | 100 | ||||||
Inventory capitalized | $ 1,316 | ||||||
Finite-Lived Intangible Asset, Useful Life | 3 years 8 months 12 days | ||||||
Fair value measurements | |||||||
Financial instruments with off balance sheet risk of loss, assets | $ 0 | ||||||
Financial instruments with off balance sheet risk of loss, liabilities | $ 0 | ||||||
Accounts Receivable | Customer Concentration Risk | |||||||
Number of customers | customer | 3 | ||||||
Accounts Receivable | Customer Concentration Risk | Customer One [Member] | |||||||
Risk Percentage | 44.00% | ||||||
Accounts Receivable | Customer Concentration Risk | Customer Two [Member] | |||||||
Risk Percentage | 27.00% | ||||||
Accounts Receivable | Customer Concentration Risk | Customer Three [Member] | |||||||
Risk Percentage | 21.00% | ||||||
Revenue | Customer Concentration Risk | |||||||
Number of customers | customer | 3 | ||||||
Revenue | Customer Concentration Risk | Customer One [Member] | |||||||
Risk Percentage | 35.00% | ||||||
Revenue | Customer Concentration Risk | Customer Two [Member] | |||||||
Risk Percentage | 28.00% | ||||||
Revenue | Customer Concentration Risk | Customer Three [Member] | |||||||
Risk Percentage | 27.00% | ||||||
Initial public offering | |||||||
Stock Issued During Period, Shares, New Issues | shares | 5,750,000 | 2,750,000 | 6,670,000 | ||||
Shares Issued, Price Per Share | $ / shares | $ 16 | $ 20 | $ 12 | ||||
Underwriters over-allotment option | |||||||
Stock Issued During Period, Shares, New Issues | shares | 870,000 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial Instruments Carried at Fair Value (Details) - Estimate of fair value - Money market funds - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Fair value measurements | ||
Cash and cash equivalents | $ 125,515 | $ 94,912 |
Quoted Prices in active markets (Level 1) | ||
Fair value measurements | ||
Cash and cash equivalents | $ 125,515 | $ 94,912 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Machinery and equipment | |
Property and Equipment | |
Estimated Useful Life | 5 years |
Computers and office equipment | Minimum | |
Property and Equipment | |
Estimated Useful Life | 3 years |
Computers and office equipment | Maximum | |
Property and Equipment | |
Estimated Useful Life | 5 years |
Furniture and fixtures | |
Property and Equipment | |
Estimated Useful Life | 7 years |
NET LOSS PER COMMON SHARE - Com
NET LOSS PER COMMON SHARE - Computation of Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net loss per common share | |||||||||||
Net loss | $ (27,559) | $ (26,444) | $ (24,520) | $ (15,653) | $ (9,525) | $ (9,362) | $ (4,674) | $ (3,694) | $ (94,176) | $ (27,255) | $ (17,917) |
Extinguishment of preferred stock | 31,806 | ||||||||||
Accretion of prior preferred stock | (23,327) | (3,300) | |||||||||
Loss attributable to common shareholders — basic and diluted | $ (94,176) | $ (20,021) | $ (21,217) | ||||||||
Weighted-average number of common shares used in net loss per share-basic and diluted (in shares) | 27,100,231 | 23,460,340 | 23,417,378 | 23,130,153 | 24,262,945 | 13,542,282 | 933,997 | ||||
(Loss) earnings per share - basic | $ (0.46) | $ (0.46) | $ (0.45) | $ 0.34 | $ (3.88) | $ (1.48) | $ (22.72) | ||||
Series D convertible redeemable preferred stock | |||||||||||
Net loss per common share | |||||||||||
Accretion of prior preferred stock | $ (1,245) |
NET LOSS PER COMMON SHARE - Sum
NET LOSS PER COMMON SHARE - Summary of Potentially Dilutive Securities (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock options | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 2,326,801 | 1,452,149 | 281,029 |
Warrants | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 2,445 | 2,445 | 18,809 |
All series of convertible redeemable preferred stock | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 6,552,820 | ||
Restricted Stock Award | |||
Anti-dilutive securities | |||
Potentially dilutive securities excluded from the computations of diluted weighted-average shares outstanding | 41,741 |
INVENTORY (Details)
INVENTORY (Details) $ in Thousands | Dec. 31, 2016USD ($) |
INVENTORY. | |
Raw materials | $ 294 |
Work in process | 67 |
Finished goods | 955 |
Total inventory | $ 1,316 |
PREPAID EXPENSES AND OTHER CU46
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
PREPAID EXPENSES AND OTHER CURRENT ASSETS. | ||
Prepaid PDUFA fees | $ 512 | |
Prepaid development costs | 485 | |
Prepaid Insurance | 328 | $ 420 |
Other current assets | 304 | 205 |
Other prepaid expenses | 276 | 208 |
Deferred financing costs | 353 | |
Total prepaid expenses and other current assets | $ 1,905 | $ 1,186 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | |||
Total property and equipment | $ 2,370 | $ 1,812 | |
Less: accumulated deprecation | (1,332) | (1,074) | |
Property and equipment, net | 1,038 | 738 | |
Depreciation and amortization | 258 | 171 | $ 187 |
Machinery and equipment | |||
Property and Equipment | |||
Total property and equipment | 863 | 755 | |
Leasehold improvements | |||
Property and Equipment | |||
Total property and equipment | 700 | 678 | |
Computers and office equipment | |||
Property and Equipment | |||
Total property and equipment | 590 | 262 | |
Furniture and fixtures | |||
Property and Equipment | |||
Total property and equipment | 117 | $ 117 | |
Construction-in-process | |||
Property and Equipment | |||
Total property and equipment | $ 100 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
May 31, 2016 | Dec. 31, 2016 | |
INTANGIBLE ASSETS. | ||
Milestone payments payable contingent on the satisfaction of certain commercialization, intellectual property, and net sales milestones | $ 21,000 | |
Milestone payment contingent on the first commercial sale of the product in the U.S. | 4,000 | |
Upfront payment classified as an intangible asset | 2,500 | |
Maximum reimbursement amount for out-of-pocket expenses | $ 2,000 | |
Remaining amortization period | 3 years 8 months 12 days | 3 years 1 month 6 days |
Amortization expense | $ 397 | |
Estimated amortization for 2017 | 682 | |
Estimated amortization for 2018 | 682 | |
Estimated amortization for 2019 | 682 | |
Estimated amortization for 2020 | $ 57 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ACCRUED EXPENSES. | ||
Accrued bonuses | $ 2,210 | $ 1,474 |
Accrued incentive compensation | 1,160 | |
Accrued development costs | 2,485 | 80 |
Accrued payroll and related benefits | 1,217 | 93 |
Accrued sales and marketing | 801 | 157 |
Accrued other operating costs | 572 | 186 |
Accrued audit and legal | 416 | 209 |
Accrued interest | 18 | 29 |
Total accrued expenses | $ 8,879 | $ 2,228 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Minimum Annual Lease Commitments (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2015ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Lease | ||||
Rent-free term | 2 months | |||
Aggregate minimum annual lease commitments under non cancellable operating lease | ||||
2,017 | $ 226 | |||
2,018 | 234 | |||
2,019 | 241 | |||
2,020 | 164 | |||
Total minimum lease payments | 865 | |||
Rent expense under operating lease agreement | ||||
Rent expense | 182 | $ 112 | $ 69 | |
Guarantees | ||||
Restricted cash | 97 | $ 97 | ||
Amendment to office and research facility operating lease | ||||
Lease | ||||
Square of feet of space | ft² | 9,660 | |||
Office and research facility operating lease | ||||
Lease | ||||
Square of feet of space | ft² | 19,335 | |||
Term of lease extension option | 5 years | |||
Stand-by letter of credit | ||||
Guarantees | ||||
Restricted cash | $ 97 |
TERM LOAN PAYABLE (Details)
TERM LOAN PAYABLE (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 28, 2012 | Mar. 31, 2015 | Sep. 30, 2014 | Aug. 31, 2014 | Feb. 28, 2014 | Jan. 31, 2014 | Feb. 28, 2013 | Oct. 31, 2012 | Aug. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 |
Loan and Security Agreements | |||||||||||||
Maximum borrowing capacity | $ 1,000 | ||||||||||||
Proceeds from notes payable, net of original note payoff | $ 7,056 | ||||||||||||
Exercise price of warrant (in dollars per share) | $ 12.27 | ||||||||||||
Gain on extinguishment | $ 91 | ||||||||||||
Common stock warrant, Silicon Valley Bank, Original Term Loan | |||||||||||||
Loan and Security Agreements | |||||||||||||
Common stock that may be purchased upon exercise of warrant (in shares) | 11,850 | ||||||||||||
Exercise price of warrant (in dollars per share) | $ 0.07 | ||||||||||||
Common stock warrant, Silicon Valley Bank, Term Loan, Amendment No. 1 | |||||||||||||
Loan and Security Agreements | |||||||||||||
Common stock that may be purchased upon exercise of warrant (in shares) | 14,430 | ||||||||||||
Exercise price of warrant (in dollars per share) | $ 0.05 | ||||||||||||
Common stock warrant, Silicon Valley Bank, Term Loan, Amendment No. 2 | |||||||||||||
Loan and Security Agreements | |||||||||||||
Common stock that may be purchased upon exercise of warrant (in shares) | 86,580 | ||||||||||||
Exercise price of warrant (in dollars per share) | $ 0.05 | ||||||||||||
Series D convertible redeemable preferred stock | |||||||||||||
Loan and Security Agreements | |||||||||||||
Public offering of common stock, net of issuance costs, shares | 4,166,667 | ||||||||||||
6.0% Convertible promissory notes | |||||||||||||
Loan and Security Agreements | |||||||||||||
Gain on extinguishment | $ 91 | ||||||||||||
6.0% Convertible promissory notes | Bridge Notes Purchase Agreement | Investors | |||||||||||||
Loan and Security Agreements | |||||||||||||
Amount issued | $ 5,000 | ||||||||||||
Stated interest rate | 6.00% | ||||||||||||
Term loan | Silicon Valley Bank loan agreement | |||||||||||||
Loan and Security Agreements | |||||||||||||
Maximum borrowing capacity | $ 1,000 | ||||||||||||
Amount borrowed | $ 500 | $ 250 | $ 250 | ||||||||||
Initial period of interest only payments | 12 months | ||||||||||||
Subsequent period of principal and interest payments | 36 months | ||||||||||||
Term loan | Silicon Valley Bank loan agreement | Prime | |||||||||||||
Loan and Security Agreements | |||||||||||||
Variable interest rate margin (as a percent) | 2.25% | 2.25% | |||||||||||
Interest rate (as a percent) | 5.50% | ||||||||||||
Term loan | Silicon Valley Bank loan agreement, Amendment No. 1 | |||||||||||||
Loan and Security Agreements | |||||||||||||
Maximum borrowing capacity | $ 6,000 | ||||||||||||
Amount borrowed | $ 2,000 | ||||||||||||
Proceeds from notes payable, net of original note payoff | $ 1,056 | ||||||||||||
Initial period of interest only payments | 12 months | ||||||||||||
Subsequent period of principal and interest payments | 36 months | ||||||||||||
Term loan | Silicon Valley Bank loan agreement, Amendment No. 1 | Prime | |||||||||||||
Loan and Security Agreements | |||||||||||||
Variable rate basis | 1.75% | ||||||||||||
Interest rate (as a percent) | 5.00% | ||||||||||||
Term loan | Silicon Valley Bank loan agreement Amendment No. 2 | |||||||||||||
Loan and Security Agreements | |||||||||||||
Maximum borrowing capacity | $ 8,000 | ||||||||||||
Amount borrowed | $ 3,000 | $ 3,000 | |||||||||||
Initial period of interest only payments | 12 months | ||||||||||||
Subsequent period of principal and interest payments | 36 months | ||||||||||||
Term loan | Silicon Valley Bank loan agreement Amendment No. 2 | Prime | |||||||||||||
Loan and Security Agreements | |||||||||||||
Interest rate (as a percent) | 5.00% |
TERM LOAN PAYABLE (Details)52
TERM LOAN PAYABLE (Details) - USD ($) $ in Thousands | 1 Months Ended | 2 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | |
Related party transactions | |||
Gain on extinguishment | $ 91 | ||
6.0% Convertible promissory notes | |||
Related party transactions | |||
Gain on extinguishment | $ 91 | ||
Bridge Notes Purchase Agreement | Investors | 6.0% Convertible promissory notes | |||
Related party transactions | |||
Amount issued | $ 5,000 | ||
Stated interest rate | 6.00% |
TERM LOAN PAYABLE - Future Paym
TERM LOAN PAYABLE - Future Payments (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Future payments under term loan | |
2,017 | $ 2,667 |
2,018 | 1,479 |
Total | $ 4,146 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | Dec. 31, 2016 | Aug. 28, 2012 |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,445 | |
Exercise price of warrant (in dollars per share) | $ 12.27 | |
Common stock warrant, Silicon Valley Bank, Original Term Loan | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 16,357 | |
Exercise price of warrant (in dollars per share) | $ 0.07 |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||
Oct. 31, 2016USD ($)$ / sharesshares | Jan. 31, 2016USD ($)$ / sharesshares | May 31, 2015USD ($)$ / sharesshares | Apr. 30, 2015 | Mar. 31, 2015USD ($)shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014shares | |
Equity | ||||||||
Authorized common stock (in shares) | 100,000,000 | 100,000,000 | ||||||
Par value of common stock (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||
Common stock issued (in shares) | 29,364,100 | 20,739,351 | ||||||
Net proceeds from public offering | $ | $ 137,340 | $ 72,029 | ||||||
Common stock outstanding (in shares) | 29,364,100 | 20,739,351 | ||||||
Authorized preferred stock (in shares) | 54,481,000 | |||||||
Common stock split ratio | 0.1449 | |||||||
Common stock reserved for future issuance (in shares) | 3,714 | 2,844 | ||||||
Employee stock purchase plan | ||||||||
Equity | ||||||||
Common stock reserved for future issuance (in shares) | 364 | 200 | ||||||
Initial public offering | ||||||||
Equity | ||||||||
Public offering of common stock, net of issuance costs, shares | 5,750,000 | 2,750,000 | 6,670,000 | |||||
Issue price (in dollars per share) | $ / shares | $ 16 | $ 20 | $ 12 | |||||
Net proceeds from IPO | $ | $ 86,166 | $ 51,174 | $ 72,029 | |||||
Conversion into common stock | 12,591,463 | |||||||
Underwriters over-allotment option | ||||||||
Equity | ||||||||
Public offering of common stock, net of issuance costs, shares | 870,000 | |||||||
Employee stock options | ||||||||
Equity | ||||||||
Common stock reserved for future issuance (in shares) | 3,348 | 2,642 | ||||||
Warrants | ||||||||
Equity | ||||||||
Common stock reserved for future issuance (in shares) | 2 | 2 | ||||||
Series A convertible redeemable preferred stock | ||||||||
Equity | ||||||||
Preferred stock issued (in shares) | 9,232,334 | |||||||
Preferred stock outstanding (in shares) | 9,232,334 | |||||||
Series B convertible redeemable preferred stock | ||||||||
Equity | ||||||||
Preferred stock issued (in shares) | 27,324,237 | |||||||
Preferred stock outstanding (in shares) | 27,324,237 | |||||||
Series C convertible redeemable preferred stock | ||||||||
Equity | ||||||||
Preferred stock issued (in shares) | 8,658,008 | |||||||
Preferred stock outstanding (in shares) | 8,658,008 | |||||||
Series D convertible redeemable preferred stock | ||||||||
Equity | ||||||||
Aggregate consideration | $ | $ 50,000 | $ 44,807 | ||||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 45,000 | |||||||
Conversion into bridge notes | 5,000,000 | |||||||
Public offering of common stock, net of issuance costs, shares | 4,166,667 |
EQUITY - Redeemeble Preferred (
EQUITY - Redeemeble Preferred (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Mar. 31, 2015shares | Dec. 31, 2015USD ($)shares | |
Performance Adjustment | |||
Performance adjustment ratio | 0.1449 | ||
Series D convertible redeemable preferred stock | |||
Preferred stock | |||
Issuance of stock (in shares) | shares | 41,666,667 | 37,500,000 | |
Closing costs | $ | $ 193 |
STOCK BASED COMPENSATION - Narr
STOCK BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
May 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-based compensation | |||
Employee Stock Purchase Plan, Purchase Price Percentage | 85.00% | ||
Employee Stock Purchase Plan, Compensation Expense | $ 457 | ||
Stock options | |||
Stock-based compensation | |||
Shares of common stock authorized for issuance outstanding (in shares) | 2,326,801 | 1,452,149 | |
Vesting period | 4 years | ||
Contractual life | 10 years | ||
Stock options | Minimum | |||
Stock-based compensation | |||
Period following termination date vested options are exercisable | 1 month | ||
Stock options | Maximum | |||
Stock-based compensation | |||
Period following termination date vested options are exercisable | 3 months | ||
2014 Stock Incentive Plan | |||
Stock-based compensation | |||
Shares of common stock authorized for issuance (in shares) | 2,700,000 | 1,021,509 | |
Increase in number of authorized shares on the first day of each fiscal year, as a percentage of outstanding common stock (as a percent) | 4.00% |
STOCK BASED COMPENSATION - Summ
STOCK BASED COMPENSATION - Summary of Stock Option Activity (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stock option activity | ||
Outstanding at beginning of year (in shares) | 1,452,149 | |
Granted (in shares) | 1,063,981 | |
Exercised (in shares) | (81,831) | |
Cancelled (in shares) | (107,498) | |
Outstanding at end of period (in shares) | 2,326,801 | 1,452,149 |
Exercisable at end of period (in shares) | 556,040 | |
Vested and expected to vest at end of period (in shares) | 2,291,971 | |
Weighted average exercise price per share | ||
Outstanding at beginning of year (in dollars per share) | $ 10.37 | |
Granted (in dollars per share) | 16.46 | |
Exercised (in dollars per share) | 5.41 | |
Cancelled (in dollars per share) | 16.05 | |
Outstanding at end of period (in dollars per share) | 13.07 | $ 10.37 |
Exercisable at end of period (in dollars per share) | 9.19 | |
Vested and expected to vest at end of period (in dollars per share) | $ 13.11 | |
Stock option activity, additional information | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 952 | |
Outstanding Weighted-average remaining contractual term | 8 years 8 months 12 days | 10 years 4 months 24 days |
Exercisable at end of period, Weighted-average remaining contractual term | 8 years | |
Vested and expected to vest at end of period, Weighted-average remaining contractual term | 8 years 8 months 12 days | |
Outstanding Aggregate Intrinsic Value | $ 7,927 | $ 24,887 |
Exercisable at end of period, Aggregate Intrinsic Value | 3,917 | |
Vested and expected to vest at end of period, Aggregate Intrinsic Value | 8,090 | |
Unrecognized compensation cost related to outstanding options | $ 14,499 | |
Period over which unrecognized compensation cost is expected to be recognized as expense | 2 years 9 months 18 days | |
Weighted average fair value of vested options (in dollars per share) | $ 6.35 | |
Weighted-average grant date fair value per share of employee option grants (in dollars per share) | $ 10.98 |
STOCK BASED COMPENSATION - Su59
STOCK BASED COMPENSATION - Summary of Restricted Stock Units (RSUs) Activity (Details) | 12 Months Ended |
Dec. 31, 2016USD ($)$ / sharesshares | |
Shares vested | |
Total fair value of shares vested | $ | $ 7.37 |
Restricted Stock Award | |
Restricted stock awards | |
Balance at beginning of year (in shares) | 75,718 |
Settled (in shares) | (32,453) |
Balance at end of year (in shares) | 43,265 |
Unvested remaining from the early exercise of stock options (in shares) | 39,247 |
Weighted-average purchase price per share | |
Balance at beginning of year (in dollars per share) | $ / shares | $ 5.73 |
Settled (in dollars per share) | $ / shares | 5.73 |
Balance at end of year (in dollars per share) | $ / shares | $ 5.73 |
Unrecognized compensation cost | |
Unrecognized stock-based compensation expense | $ | $ 233,000 |
Period over which unrecognized compensation cost is expected to be recognized as expense | 1 year 2 months 12 days |
Shares vested | |
Total fair value of shares vested | $ | $ 186,000 |
Restricted Stock Units (RSUs) | |
Restricted stock awards | |
Granted (in shares) | 41,741 |
Balance at end of year (in shares) | 41,741 |
Weighted-average purchase price per share | |
Granted (in dollars per share) | $ / shares | $ 16.15 |
Balance at end of year (in dollars per share) | $ / shares | $ 16.15 |
Unrecognized compensation cost | |
Unrecognized stock-based compensation expense | $ | $ 509,000 |
Period over which unrecognized compensation cost is expected to be recognized as expense | 3 years |
STOCK BASED COMPENSATION - Su60
STOCK BASED COMPENSATION - Summary of Valuation Assumptions Used (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants | |||
Risk-free interest rate | 1.50% | 1.70% | 1.80% |
Volatility | 76.30% | 77.00% | 77.10% |
Expected term (in years) | 6 years 7 days | 6 years 2 months 12 days | 6 years 3 months |
Total stock-based compensation expense | $ 5,787 | $ 2,209 | $ 22 |
Research and development | |||
Weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants | |||
Total stock-based compensation expense | 638 | 223 | 12 |
General and administrative | |||
Weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants | |||
Total stock-based compensation expense | $ 5,149 | $ 1,986 | $ 10 |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of Income Tax Expense (Benefit) Computed at Statutory Federal Rate) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements | |||
Federal income tax (benefit) at statutory rate (as a percent) | 34.00% | 34.00% | 34.00% |
State income tax, net of federal benefit | 3.43% | 5.29% | |
Permanent items (as a percent) | (1.45%) | (1.70%) | (0.17%) |
Research and development credits | 0.27% | 0.89% | 3.74% |
Change in valuation allowance (as a percent) | (36.25%) | (38.48%) | (37.57%) |
Income tax expense (benefit) (as a percent) | 0.00% | 0.00% | 0.00% |
INCOME TAXES (Components of Def
INCOME TAXES (Components of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 71,049 | $ 38,405 | |
Research and development credits | 3,712 | 3,421 | |
Accruals and other | 1,541 | 144 | |
Depreciation and amortization | 261 | 94 | |
Deferred tax assets before valuation allowance | 76,563 | 42,064 | |
Valuation allowance | (76,563) | (42,064) | |
Deferred tax liabilities: | |||
Net deferred tax assets | 0 | 0 | |
Valuation allowance | |||
Increase to gross deferred tax asset and valuation allowance resulting from adoption of ASU 2016-09 | 406 | ||
Deferred tax asset valuation allowance increase | (34,499) | (10,539) | |
Net operating loss carryforwards | |||
Operating Loss Carryforwards | 1,539 | 1,064 | $ 0 |
U.S. federal | |||
Deferred tax assets: | |||
Research and development credits | 3,367 | 3,110 | 2,868 |
Net operating loss carryforwards | |||
Available net operating loss carryforwards as of the end of the year | 190,926 | 104,888 | 78,276 |
State | |||
Deferred tax assets: | |||
Research and development credits | 522 | 469 | 226 |
Net operating loss carryforwards | |||
Available net operating loss carryforwards as of the end of the year | $ 145,902 | $ 59,875 | $ 34,184 |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
EMPLOYEE BENEFITS. | |||
Requisite service period of employees to be eligible to participate in the 401(k) plan | 3 months | ||
Total expense for contributions made to 401(k) plan | $ 613 | $ 44 | $ 35 |
UNAUDITED QUARTERLY OPERATING64
UNAUDITED QUARTERLY OPERATING RESULTS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
UNAUDITED QUARTERLY OPERATING RESULTS. | |||||||||||
Product revenues, net | $ 1,303 | $ 408 | $ 1,711 | ||||||||
Cost of product revenues | 184 | 29 | 213 | ||||||||
Research and development | 3,331 | 3,254 | $ 4,301 | $ 4,062 | $ 1,531 | $ 3,358 | $ 1,641 | $ 1,445 | 14,948 | $ 7,975 | $ 14,959 |
Selling, general and administrative | 25,367 | 23,567 | 20,173 | 11,525 | 7,905 | 5,907 | 2,934 | 2,186 | |||
Total costs and expenses | 28,882 | 26,850 | 24,474 | 15,587 | 9,436 | 9,265 | 4,575 | 3,631 | 95,793 | 26,907 | 17,665 |
Loss from operations | (27,579) | (26,442) | (24,474) | (15,587) | (9,436) | (9,265) | (4,575) | (3,631) | (94,082) | (26,907) | (17,665) |
Other expense, net | 20 | (2) | (46) | (66) | (89) | (97) | (99) | (63) | (94) | (348) | (252) |
Net loss | $ (27,559) | $ (26,444) | $ (24,520) | $ (15,653) | $ (9,525) | $ (9,362) | $ (4,674) | $ (3,694) | $ (94,176) | $ (27,255) | $ (17,917) |
Weighted-average number of common shares used in net loss per share - basic | 20,558,205 | 20,531,406 | 11,791,546 | 1,001,704 | |||||||
Weighted Average Number of Shares Outstanding, Basic | 20,558,205 | 20,531,406 | 11,791,546 | 1,001,704 | |||||||
Shares used in computing net loss per share-diluted (in shares) | 20,558,205 | 20,531,406 | 11,791,546 | 7,554,524 | |||||||
Earnings (loss) per share - basic | $ (0.46) | $ (0.46) | $ (0.45) | $ 0.34 | $ (3.88) | $ (1.48) | $ (22.72) | ||||
Earnings (loss) per share - diluted | $ (0.46) | $ (0.46) | $ (0.45) | $ (0.65) | |||||||
Weighted-average shares - basic and diluted | 27,100,231 | 23,460,340 | 23,417,378 | 23,130,153 | 24,262,945 | 13,542,282 | 933,997 | ||||
Loss per share - basic and diluted | $ (1.02) | $ (1.13) | $ (1.05) | $ (0.68) | $ (3.88) | $ (1.48) | $ (22.72) |