Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 05, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Adamas Pharmaceuticals Inc | |
Entity Central Index Key | 1,328,143 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,627,631 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 98,406 | $ 33,104 |
Available-for-sale securities | 64,876 | 73,691 |
Accounts receivable | 461 | 1,284 |
Prepaid expenses and other current assets | 5,837 | 5,108 |
Total current assets | 169,580 | 113,187 |
Property and equipment, net | 2,916 | 2,353 |
Available-for-sale securities, non-current | 5,924 | 13,165 |
Other assets | 38 | 38 |
Total assets | 178,458 | 128,743 |
Current liabilities | ||
Accounts payable | 3,509 | 3,052 |
Accrued liabilities | 6,884 | 8,457 |
Other current liabilities | 266 | 298 |
Total current liabilities | 10,659 | 11,807 |
Non-current liabilities | 699 | 749 |
Total liabilities | $ 11,358 | $ 12,556 |
Commitments and Contingencies (Note 7) | ||
Stockholders' equity | ||
Common stock, $0.001 par value — 100,000,000 shares authorized, 21,473,236 and 18,505,462 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | $ 26 | $ 23 |
Additional paid-in capital | 243,042 | 178,473 |
Accumulated other comprehensive income (loss) | 11 | (158) |
Accumulated deficit | (75,979) | (62,151) |
Total stockholders' equity | 167,100 | 116,187 |
Total liabilities and stockholders’ equity | $ 178,458 | $ 128,743 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Convertible preferred stock, shares issued | 0 | 0 |
Convertible preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 21,473,236 | 18,505,462 |
Common stock, shares outstanding | 21,473,236 | 18,505,462 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Consolidated Statements of Operations | ||
Revenue | $ 175 | $ 226 |
Operating expenses | ||
Research and development | 7,522 | 7,533 |
General and administrative, net | 6,641 | 4,919 |
Total operating expenses | 14,163 | 12,452 |
Loss from operations | (13,988) | (12,226) |
Interest and other income, net | 160 | 78 |
Loss before income taxes | (13,828) | (12,148) |
Provision for income taxes | 54 | |
Net loss | $ (13,828) | $ (12,202) |
Net loss per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ (0.65) | $ (0.69) |
Diluted (in dollars per share) | $ (0.65) | $ (0.69) |
Weighted average number of shares used in computing net loss attributable to common stockholders: | ||
Basic (in shares) | 21,253 | 17,643 |
Diluted (in shares) | 21,253 | 17,643 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Condensed Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (13,828) | $ (12,202) |
Unrealized gain on available-for-sale securities | 169 | 127 |
Comprehensive loss | $ (13,659) | $ (12,075) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (13,828) | $ (12,202) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 137 | 70 |
Stock-based compensation | 2,553 | 2,142 |
Net accretion of discounts and amortization of premiums of available-for-sale securities | 258 | 194 |
Changes in assets and liabilities | ||
Accrued interest of available-for-sale securities | (105) | (114) |
Prepaid expenses and other assets | (729) | 138 |
Accounts receivable | 823 | 39 |
Accounts payable | 57 | 2 |
Accrued liabilities and other liabilities | (1,668) | (4,334) |
Net cash used in operating activities | (12,502) | (14,065) |
Cash flows from investing activities | ||
Purchases of property and equipment | (461) | (18) |
Purchases of available-for-sale securities | (18,435) | |
Maturities of available-for-sale securities | 16,072 | |
Net cash provided by (used in) investing activities | 15,611 | (18,453) |
Cash flows from financing activities | ||
Proceeds from public offerings, net of offering costs | 62,030 | |
Proceeds from issuance of common stock upon exercise of stock options | 163 | 300 |
Net cash provided by financing activities | 62,193 | 300 |
Net increase (decrease) in cash and cash equivalents | 65,302 | (32,218) |
Cash and cash equivalents at beginning of period | 33,104 | 61,446 |
Cash and cash equivalents at end of period | 98,406 | $ 29,228 |
Supplemental disclosure of noncash investing and financing activities | ||
Public offering costs in accounts payable | 208 | |
Purchase of property and equipment in accounts payable and accrued expenses | $ 400 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2016 | |
Description of Business | |
Description of Business | 1. DESCRIPTION OF BUSINESS Adamas Pharmaceuticals, Inc. (the “Company”) is a pharmaceutical company focused on the development and commercialization of therapeutics targeting chronic disorders of the central nervous systems (“CNS”). The Company seeks to achieve this by enhancing the pharmacokinetic profiles of approved drugs to create novel therapeutics for use alone and in fixed-dose combination products. The Company is developing its lead wholly-owned product candidate, ADS-5102 (amantadine hydrochloride) for a complication associated with the treatment of Parkinson’s disease known as levodopa-induced dyskinesia (“LID”). ADS-5102 is an extended-release version of amantadine that is intended for once daily administration at bedtime. The Company completed a Phase 2/3 clinical study in LID in 2013, and initiated two confirmatory Phase 3 trials and a separate open-label safety study in 2014. The Company completed enrollment in the larger of these trials, EASE LID, in July 2015, and the smaller, EASE LID 3, in December 2015. The Company announced top-line results of EASE LID in December 2015 and EASE LID 3 in April 2016. The Company is also exploring the utility of ADS-5102 for the treatment of major symptoms associated with multiple sclerosis in patients with walking impairment with the initiation of a Phase 2 clinical study in June 2015. Through a license agreement with Forest Laboratories Holdings Limited (“Forest Laboratories” or “Forest”), an indirect wholly-owned subsidiary of Allergan plc, the Company’s portfolio also includes two drugs exclusively licensed to Forest and commercially available in the United States for indications relating to Alzheimer’s disease: Namzaric™ (memantine hydrochloride extended-release and donepezil hydrochloride) capsules (formerly MDX-8704) and Namenda XR ® (memantine hydrochloride) extended-release capsules, launched in May 2015 and June 2013, respectively. In April 2014, the Company issued and sold 3,081,371 shares of its common stock in its initial public offering (“IPO”), which includes the partial exercise by the underwriters of their option to purchase additional shares, at a public offering price of $16.00 per share. Proceeds from the IPO were $42.6 million, net of underwriting discounts and offering-related transaction costs. In June 2015, the Company entered into a Controlled Equity Offering Sales Agreement, pursuant to which it may, from time to time, issue and sell shares of common stock having an aggregate offering value of up to $25.0 million. As of March 31, 2016 , the Company had issued 509,741 shares of common stock at an average price of $20.04 and raised net proceeds of $9.7 million under the Sales Agreement. In January 2016, the Company completed a follow-on public offering of 2,875,000 shares of its common stock, which includes the exercise in full by the underwriters of their option to purchase 375,000 shares of common stock, at an offering price of $23.00 per share. Proceeds from the follow-on public offering were approximately $61.8 million, net of underwriting discounts and offering-related transaction costs. The Company was incorporated in the State of Delaware on November 15, 2000. The Company’s headquarters and operations are located in Emeryville, California. The Company has fo ur insignificant subsidiaries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the Company believes are necessary for a fair presentation of the periods presented. The condensed consolidated balance sheet at December 31, 2015 was derived from the audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of results to be expected for the full fiscal year or any other future period and should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2015 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC. Liquidity and Financial Condition To date, nearly all of the Company’s resources have been dedicated to the research and development of its products, and the Company has not generated any commercial revenue from the sale of its products. The Company does not anticipate the generation of any commercial product revenue until it receives the necessary regulatory approvals to launch one of its products. Based upon the current status of, and plans for, its product development, the Company believes that the existing cash, cash equivalents, and investments of $169.2 million as of March 31, 2016 will be adequate to satisfy the Company’s capital needs through at least the next twelve months. However, the process of developing and commercializing products requires significant research and development, preclinical testing and clinical trials, manufacturing arrangements, as well as regulatory approvals. These activities, together with the Company’s general and administrative expenses, are expected to result in significant operating losses until the commercialization of the Company’s products or license agreements generate sufficient revenue to cover expenses. While the Company had net income during 2014 and 2013, it has not generated any commercial revenue from sales of its products. Under its license agreement with Forest, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for sales of Namzaric until mid-2020 and Namenda XR until mid-2018. To achieve sustained profitability, the Company, alone or with others, must successfully develop its product candidates, obtain required regulatory approvals, and successfully manufacture and market its products. Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, clinical trial accruals, fair value of assets and liabilities, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates. Forward Stock Split In March 2014, the Board of Directors of the Company and stockholders approved a forward stock split of the Company’s common and preferred stock. As a result, common and preferred stock, stock options and warrants to purchase common and preferred stock were adjusted in the ratio of 2 :1, effective March 24, 2014. All common and preferred shares and per share amounts presented in these condensed consolidated financial statements for all periods have been retroactively adjusted to reflect the 2 -for-1 forward stock split. No fractional shares were issued. Revenue Recognition The Company recognizes revenue when all four of the following criteria have been met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured. Revenue under license arrangements is recognized based on the performance requirements of the contract. Determinations of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fees charged for deliverables and the collectability of those fees. Should changes in conditions cause management to determine that these criteria are not met for any new or modified transactions, revenue recognized could be adversely affected. The Company generates revenue from collaboration and license agreements for the development and commercialization of products. Collaboration and license agreements may include non-refundable upfront license fees, partial or complete reimbursement of research and development costs, contingent consideration payments based on the achievement of defined objectives and royalties on sales of commercialized products. The Company’s performance obligations under the collaboration and license agreements may include the license or transfer of intellectual property rights, obligations to provide research and development services and related materials and obligations to participate on certain development and/or commercialization committees with the partners. For revenue agreements with multiple-element arrangements, the Company allocates revenue to each non-contingent element based on the relative-selling-price of each element in an arrangement. When applying the relative-selling-price method, the Company determines the selling price for each deliverable using the following estimation hierarchy: (i) vendor-specific objective evidence of fair value of the deliverable, if it exists, (ii) third-party evidence of selling price, if vendor-specific objective evidence is not available or (iii) vendor’s best estimate of selling price, if neither vendor-specific nor third-party evidence is available. Revenue allocated is then recognized when the four basic revenue recognition criteria, mentioned above, are met for each element . The Company recognizes payments that are contingent upon achievement of a substantive milestone in their entirety in the period in which the milestone is achieved. Milestones are defined as events that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones subject to this guidance. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Amounts related to research and development funding and full-time equivalents assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage clinical trials on its behalf. In accruing service fees, the Company obtains the reported level of patient enrollment at each site and estimates the time period over which services will be performed and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. Research and Development Research and development (“R&D”) expenses include salaries and related compensation, contractor and consultant fees, external clinical trial expenses performed by contract research organizations (“CRO”), licensing fees, acquired intellectual property with no alternative future use, and facility and administrative expense allocations. In addition, the Company funds R&D at research institutions under agreements that are generally cancelable at its option. Research costs typically consist of applied research and preclinical and toxicology work. Pharmaceutical manufacturing development costs consist of product formulation, chemical analysis, and the transfer and scale-up of manufacturing at the Company’s contract manufacturers. Clinical development costs include the costs of Phase 1, Phase 2, and Phase 3 clinical trials. These costs are a significant component of the Company’s research and development expenses. The Company accrues costs for clinical trial activities performed by contract research organizations and other third parties based upon the estimated amount of work completed on each study as provided by the CRO. These estimates are reviewed for reasonableness by its internal clinical personnel, and the Company aims to match the accrual to actual services performed by the organizations as determined by patient enrollment levels and related activities. The Company monitors patient enrollment levels and related activities using available information; however, if the Company underestimates activity levels associated with various studies at a given point in time, the Company could be required to record significant additional R&D expenses in future periods when the actual activity level becomes known. The Company charges all such costs to R&D expenses. Non-refundable advance payments are capitalized and expensed as the related goods are delivered or services are performed. Basic and Diluted Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted under the Company’s stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and unvested restricted stock units are excluded from the computation when there is a loss as their effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. At March 31, 2016 and 2015, approximately 5,370,000 and 456,000 , respectively, shares of potentially dilutive securities were excluded from the computation of diluted net income per share of common stock as their effect would have been anti-dilutive. Stock-Based Compensation The Company accounts for stock-based compensation of stock options granted to employees and directors and for employee stock purchase plan shares by estimating the fair value of stock-based awards using the Black-Scholes option-pricing model. The Company accounts for stock-based compensation of restricted stock units granted to employees based on the closing price of the Company’s common stock on the date of grant. The fair value of stock-based awards are recognized and amortized over the applicable vesting period. All stock options awarded to non-employees are accounted for at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model. Stock options granted to non-employees are subject to periodic revaluation at each reporting date as the underlying equity instruments vest. In order to estimate the value of share-based awards, the Company uses the Black-Scholes model, which requires the use of certain subjective assumptions. The most significant subjective assumptions are management’s estimates of the expected volatility and the expected term of the award. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from any of these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard will replace most existing revenue recognition guidance. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard to 2018 for public companies, with an option that would permit companies to adopt the standard as early as the original effective date of 2017. Early adoption prior to the original effective date is not permitted. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . This ASU provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a Company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about the company’s ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this update are effective for annual periods ending after December 15, 2016, and for interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company is evaluating the impact the revised guidance will have on its consolidated financial statements . In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . Under ASU 2015-17, a reporting entity is required to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. Current guidance requiring the offsetting of deferred tax assets and liabilities of a tax-paying component of an entity and presentation as a single noncurrent amount is not affected. This ASU is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for financial statements as of the beginning of an interim or annual reporting period. Entities may apply the update prospectively to all deferred tax assets and liabilities and taxes, or retrospectively for all periods presented. The effects of this update on the Company’s consolidated financial statements are not expected to be material. In February 2016, the FASB issued ASU No. 2016-02, Leases . The authoritative guidance significantly amends the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation . The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | 3. FAIR VALUE MEASUREMENTS In accordance with ASC 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows: · Level 1 inputs which include quoted prices in active markets for identical assets or liabilities; · Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For available-for-sale securities, the Company reviews trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and · Level 3 inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation. The following table represents the fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis (in thousands): Fair Value Measurements at March 31, 2016 Total Level 1 Level 2 Level 3 Assets Money market $ $ $ — $ — Corporate debt — — U.S. Treasury notes — — Total assets measured at fair value $ $ $ $ — Fair Value Measurements at December 31, 2015 Total Level 1 Level 2 Level 3 Assets Money market $ $ $ — $ — Corporate debt — — U.S. Treasury notes — — Total assets measured at fair value $ $ $ $ — Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. Corporate debt and U.S. Treasury notes are measured at fair value using level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy. There were no transfers to or from Level 1 and Level 2 during the three months ended March 31, 2016 . |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Investments | |
Investments | 4. INVESTMENTS The Company’s investments consist of corporate debt and U.S. Treasury notes classified as available-for-sale securities. The Company limits the amount of investment exposure as to institution, maturity, and investment type. To mitigate credit risk, the Company invests in investment grade corporate debt and United States Treasury notes. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and shown separately as a component of accumulated other comprehensive loss within stockholders' equity. Realized gains and losses are reclassified from other comprehensive loss to other income (expense) on the condensed consolidated statements of operations when incurred. The Company may pay a premium or receive a discount upon the purchase of available-for-sale securities. Interest earned and gains realized on available-for-sale securities and amortization of discounts received and accretion of premiums paid on the purchase of available-for-sale securities are included in investment income. The following table is a summary of amortized cost, unrealized gain and loss, and the fair value of available-for-sale securities as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ $ $ $ U.S. Treasury notes — Total $ $ $ $ Reported as: Short-term investments $ $ $ $ Long-term investments — Total $ $ $ $ December 31, 2015 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ $ — $ $ U.S. Treasury notes Total $ $ $ $ Reported as: Short-term investments $ $ $ $ Long-term investments — Total $ $ $ $ Short -term and long-term investments includes accrued interest of $ 0.5 million and $17,000 respectively, as of March 31, 2016 . Short-term and long-term investments includes accrued interest of $0.4 million and $ 36,000 , respectively, as of December 31, 2015 . The Company has not incurred any realized gains or losses on investments for the three months ended March 31, 2016 and 2015 . Investments are classified as short-term or long-term depending on the underlying investment’s maturity date. Long-term investments have a maturity date range of greater than 12 months and a maximum of 17 months as of March 31, 2016 . |
License Agreements
License Agreements | 3 Months Ended |
Mar. 31, 2016 | |
License Agreements | |
License Agreements | 5. License Agreements In November 2012, the Company granted Forest an exclusive license, with right to sublicense, certain of the Company’s intellectual property rights relating to human therapeutics containing memantine in the United States. In connection with these rights, Forest markets and sells Namzaric and Namenda XR for the treatment of moderate to severe dementia related to Alzheimer’s disease. Pursuant to the agreement, Forest made an upfront payment of $65.0 million. The Company earned and received additional cash payments totaling $95.0 million upon achievement by Forest of certain development and regulatory milestones. Under the agreement, external costs incurred related to the prosecution and litigation of intellectual property rights are reimbursable. As of March 31, 2016, amounts reimbursed of $ 0.3 million are reflected as a reduction to general and administrative, net. In addition, the Company may earn tiered royalty payments based on future net sales of Namzaric and Namenda XR. The Company is entitled to receive royalties on net sales in the United States by Forest, its affiliates, or any of its sublicensees of controlled-release versions of memantine products covered by the terms of the license agreement. Beginning in May 2020, the Company will be entitled to receive royalties in the low double digits to the mid-teens from Forest for sales of Namzaric in the United States and in June 2018, the Company will be entitled to receive royalties in the low to mid-single digits for sales of Namenda XR in the United States. Forest’s obligation to pay royalties with respect to fixed-dose memantine-donepezil products, including Namzaric, continues until the later of (i) 15 years after the commercial launch of the first fixed-dose memantine-donepezil product by Forest in the United States or (ii) the expiration of the Orange Book listed patents for which Forest obtained rights from the Company covering such product. Forest’s obligation to pay royalties with respect to Namenda XR continues until the expiration of the Orange Book listed patents covering such products. However, Forest’s obligation to pay royalties for any product covered by the license is eliminated in any quarter where there is significant competition from generics. |
Warrants to Purchase Common Sto
Warrants to Purchase Common Stock | 3 Months Ended |
Mar. 31, 2016 | |
Warrants to Purchase Common or preferred Stock | |
Warrants to Purchase Common Stock | 6. WARRANTS TO PURCHASE COMMON STOCK In conjunction with various financings between 2002 and 2012, the Company issued warrants to purchase 758,994 shares of convertible preferred stock and 127,780 shares of common stock. The relative fair value of these warrants was determined using the Black-Scholes model and was amortized to interest expense over the term of each loan, unless subsequently modified. Immediately prior to the completion of the Company’s IPO in 2014, 206,162 of the warrants to purchase common stock were either exercised for cash or automatically net exercised for a total issuance of 199,837 shares of common stock, pursuant to the terms of the warrants. In July 2015, warrants to purchase an aggregate of 7,116 shares of common stock were exercised in a cashless exercise, resulting in the issuance of 3,484 shares of common stock. As of both March 31, 2016 and December 31, 2015 , there were no warrants to purchase common stock outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases approximately 18,500 square feet of office space in Emeryville, California under an operating lease that expires April 30, 2020. The lease provides for periods of escalating rent. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period. As of March 31, 2016 , future minimum lease payments under a non-cancelable facility operating lease including related office equipment were as follows (in thousands): March 31, 2016 2016 (remaining) $ 2017 2018 2019 2020 Thereafter — Total $ Contingencies In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown, because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Indemnification In accordance with the Company’s amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving in such capacity. There have been no claims to date, and the Company has a directors and officers liability insurance policy that may enable it to recover a portion of any amounts paid for future claims. Litigation In November 2012, the Company granted Forest an exclusive license to certain of the Company’s intellectual property rights relating to human therapeutics containing memantine in the United States. Under the terms of that license agreement, Forest has the right to enforce such intellectual property rights which are related to its right to market and sell Namzaric and Namenda XR for the treatment of moderate to severe dementia related to Alzheimer’s disease. The Company has a right to participate in, but not control, such enforcement actions by Forest. As of the date of this filing, several companies have submitted Abbreviated New Drug Applications, or ANDAs, to the FDA requesting permission to manufacture and market generic versions of Namenda XR, on which the Company is entitled to receive royalties from Forest beginning in June 2018. In the notices, these companies allege that the patents associated with Namenda XR, some of which are owned by Forest or licensed by Forest from Merz Pharma GmbH & Co. KGaA, and others of which are owned by the Company and licensed by the Company exclusively to Forest in the United States, are invalid, unenforceable, and/or will not be infringed by the companies’ manufacture, use, or sale of generic versions of Namenda XR. The Company, Forest, Merz Pharma GmbH & Co. KGaA, and Merz Pharmaceuticals GmbH (together Merz) filed lawsuits in the U.S. District Court for the District of Delaware for infringement of the relevant patents against all of these companies. The parties are collectively seeking judgment that (i) the defendants have infringed the patents at issue, (ii) the effective date of any approval of the defendants’ ANDAs shall not be earlier than the expiration date of the last to expire of the relevant patents, including any extensions or exclusivities, (iii) the defendants be enjoined from commercially manufacturing, using, offering for sale, or selling in the United States, or importing into the United States, any products that infringe or induce or contribute to the infringement of the patents at issue prior to the expiration date of the last to expire of the patents, including extensions and exclusivities, and (iv) the Company, Forest, and Merz be awarded monetary relief, in addition to any attorneys’ fees, costs, and expenses relating to the actions. The Company and Forest have entered into a series of settlement agreements with the Namenda XR ANDA filers, except for two remaining defendants. The earliest date on which any of these agreements grants a license to market generic version of Namenda XR is January 31, 2020 or in the alternative, an option to launch an authorized generic version of Namenda XR beginning on January 31, 2021. In January 2016, the Delaware District Court issued a claim construction (Markman) ruling in the Namenda XR litigation that includes findings of indefiniteness as to certain claim terms in the asserted patents licensed by the Company to Forest, which may negatively impact at least some of the patent claims. The Company and Forest continue to review the ruling to determine how it may also affect the ANDA litigation regarding Namzaric, which is described below. In February 2016, Forest and Adamas proceeded to trial against one defendant with respect to one of the asserted patents, and no final judgment has been issued by the District Court . As of the date of this filing, Forest and Adamas have reached agreement on settlement with that defendant subject to Court approval . Additionally, as of the date of this filing, four companies have submitted ANDAs requesting permission to manufacture and market generic versions of Namzaric, on which the Company is entitled to receive royalties from Forest beginning in May 2020. The Company and Forest have begun to file lawsuits alleging infringement of the relevant patents against Namzaric ANDA filers in the same court and seeking comparable relief as in the Namenda XR case. The Markman hearing is scheduled for November 2016 and the trial is scheduled for October 2017. Because these Namenda XR and Namzaric enforcement actions were filed within the requisite 45-day period provided in the U.S. Food, Drug and Cosmetic Act, there are stays preventing FDA approval of the ANDAs involved in both litigations for 30 months or until a court decision adverse to the patents. The 30 -month stays for these Namenda XR and Namzaric ANDAs will expire beginning in June 2016 and January 2018, respectively. From time to time, the Company may be party to legal proceedings, investigations, and claims in the ordinary course of its business. Other than the matters described above, the Company is not presently a party to any material legal proceedings. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity | |
Stockholders' Equity | 8. STOCKHOLDERS’ EQUITY Common Stock The amended and restated certificate of incorporation authorizes the Company to issue 100,000,000 shares of common stock. Common stockholders are entitled to dividends as and when declared by the board of directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. Each share of common stock is entitled to one vote. The Company has classified payments received for all unvested shares of common stock issued upon the early exercise of stock options as employee deposits (a liability) as these options are not considered to be substantively exercised until vested. At March 31, 2016 and December 31, 2015 , zero and 3,000 shares of common stock, respectively, from early exercised options were unvested. Controlled Equity Offering On June 1, 2015, the Company entered into a Controlled Equity Offering Sales Agreement (“Sales Agreement”), with Cantor Fitzgerald & Co. (“Cantor”), as sales agent, pursuant to which the Company may, at its discretion, issue and sell common stock from time to time with a value of up to a maximum of $25.0 million in an at-the-market offering. All sales of shares have been and will continue to be made pursuant to a shelf registration statement that was declared effective by the Securities and Exchange Commission (“SEC”) on June 1, 2015. Cantor is acting as sole sales agent for any sales made under the Sales Agreement for a 3% commission on gross proceeds. The common stock is sold at prevailing market prices at the time of the sale, and, as a result, prices may vary. Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold. During the three months ended March 31, 2016 , there were no additional shares sold under the Sales Agreement. As of March 31, 2016, the Company had sold a total of 509,741 shares of common stock under the Sales Agreement at an average price of $20.04 for net proceeds of $9.7 million. Public Offering On January 6, 2016, the Company completed a follow-on public offering of 2,875,000 shares of common stock, which includes the exercise in full by the underwriters of their option to purchase 375,000 shares of common stock, at an offering price of $23.00 per share. Proceeds from the follow-on public offering were approximately $61.8 million, net of underwriting discounts and offering-related transaction costs. Shares reserved for Future Issuance Shares of Company’s common stock reserved for future issuance are as follows: March 31, December 31, 2016 2015 Common stock awards issued and outstanding Authorized for future issuance under 2014 Equity Incentive Plan Authorized for future issuance under 2016 Inducement Plan — Employee stock purchase plan Total |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. STOCK-BASED COMPENSATION Stock Compensation Plans In 2014, the Company’s board of directors adopted, and in March 2014 the Company’s stockholders approved, the 2014 Equity Incentive Plan (the “2014 Plan”), which became effective on the completion of the IPO. The number of shares of the Company’s common stock reserved for issuance pursuant to the 2014 Plan will automatically increase on the first day of each fiscal year for a period of up to 10 years, commencing on the first day of the fiscal year following 2014, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding fiscal year, or a lesser number of shares as determined by the Company’s board of directors. For 2016 , the common stock available for issuance under the 2014 Plan increased by 739,708 shares of common stock. In March 2016, the Company’s board of directors approved the 2016 Inducement Plan (the “Inducement Plan”) under which 450,000 shares of the Company’s common stock were made available for issuance. Options granted under the Inducement Plan may have terms of up to ten years. Consistent with the 2014 Plan, options granted generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48th per month thereafter. Restricted stock units granted vest at a rate of 25% per year over four years. The Inducement Plan was adopted by the board of directors without stockholder approval pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules. As of March 31, 2016, the Company had not granted any stock awards under the 2016 Inducement Plan . The stock option and related activity under all of the Company’s stock compensation plans is summarized as follows: Outstanding Options Weighted Average Stock Options Number of Shares Exercise Price Balances, December 31, 2015 $ Granted Exercised Forfeited Balances, March 31, 2016 $ Vested and expected to vest, March 31, 2016 $ Vested, March 31, 2016 $ The restricted stock unit and related activity under the Company’s stock compensation plans is summarized as follows: Outstanding Units Weighted Average Grant Date Restricted Stock Units Number of Shares Fair Value Unvested, December 31, 2015 — $ — Granted Vested — — Forfeited — — Unvested, March 31, 2016 $ Employee Stock Purchase Plan In February 2014, the Company’s board of directors adopted and, in March 2014, the Company’s stockholders approved, the 2014 Employee Stock Purchase Plan (the “ESPP”), which became effective on the completion of the Company’s IPO. Beginning January 1, 2015 and continuing through and including January 1, 2024, the amount of common stock reserved for issuance under the ESPP will increase annually on that date by the lesser of (i) one percent ( 1% ) of the total number of shares of common stock outstanding on such December 31, (ii) 520,000 shares of common stock, or (iii) a number of shares as determined by the board of directors prior to the beginning of each year, which shall be the lesser of (i) or (ii) above. For 2016 , the common stock available for issuance under the ESPP increased by 184,927 shares of common stock. Stock-Based Compensation The following table reflects stock-based compensation expense recognized for the three months ended March 31, 2016 and 2015 , respectively (in thousands): Three Months Ended March 31, 2016 2015 Research and development: Employees $ $ Nonemployee consultants General and administrative: Employees Nonemployee consultants Total expense $ $ As of March 31, 2016 , th ere was total unrecognized compensation cost related to unvested options of approximately $24.0 million. This cost is expected to be recognized over a period of 2.9 years . As of March 31, 2016 , there was total unrecognized compensation cost related to unvested RSU’s of approximately $1.8 million. This cost is expected to be recognized over a period of 4.0 years. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Basis of presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the Company believes are necessary for a fair presentation of the periods presented. The condensed consolidated balance sheet at December 31, 2015 was derived from the audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These interim financial results are not necessarily indicative of results to be expected for the full fiscal year or any other future period and should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2015 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC. |
Liquidity and Financial Condition | Liquidity and Financial Condition To date, nearly all of the Company’s resources have been dedicated to the research and development of its products, and the Company has not generated any commercial revenue from the sale of its products. The Company does not anticipate the generation of any commercial product revenue until it receives the necessary regulatory approvals to launch one of its products. Based upon the current status of, and plans for, its product development, the Company believes that the existing cash, cash equivalents, and investments of $169.2 million as of March 31, 2016 will be adequate to satisfy the Company’s capital needs through at least the next twelve months. However, the process of developing and commercializing products requires significant research and development, preclinical testing and clinical trials, manufacturing arrangements, as well as regulatory approvals. These activities, together with the Company’s general and administrative expenses, are expected to result in significant operating losses until the commercialization of the Company’s products or license agreements generate sufficient revenue to cover expenses. While the Company had net income during 2014 and 2013, it has not generated any commercial revenue from sales of its products. Under its license agreement with Forest, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for sales of Namzaric until mid-2020 and Namenda XR until mid-2018. To achieve sustained profitability, the Company, alone or with others, must successfully develop its product candidates, obtain required regulatory approvals, and successfully manufacture and market its products. |
Use of Estimates | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, clinical trial accruals, fair value of assets and liabilities, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates. |
Forward Stock Split | Forward Stock Split In March 2014, the Board of Directors of the Company and stockholders approved a forward stock split of the Company’s common and preferred stock. As a result, common and preferred stock, stock options and warrants to purchase common and preferred stock were adjusted in the ratio of 2 :1, effective March 24, 2014. All common and preferred shares and per share amounts presented in these condensed consolidated financial statements for all periods have been retroactively adjusted to reflect the 2 -for-1 forward stock split. No fractional shares were issued. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when all four of the following criteria have been met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable and (iv) collectability is reasonably assured. Revenue under license arrangements is recognized based on the performance requirements of the contract. Determinations of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fees charged for deliverables and the collectability of those fees. Should changes in conditions cause management to determine that these criteria are not met for any new or modified transactions, revenue recognized could be adversely affected. The Company generates revenue from collaboration and license agreements for the development and commercialization of products. Collaboration and license agreements may include non-refundable upfront license fees, partial or complete reimbursement of research and development costs, contingent consideration payments based on the achievement of defined objectives and royalties on sales of commercialized products. The Company’s performance obligations under the collaboration and license agreements may include the license or transfer of intellectual property rights, obligations to provide research and development services and related materials and obligations to participate on certain development and/or commercialization committees with the partners. For revenue agreements with multiple-element arrangements, the Company allocates revenue to each non-contingent element based on the relative-selling-price of each element in an arrangement. When applying the relative-selling-price method, the Company determines the selling price for each deliverable using the following estimation hierarchy: (i) vendor-specific objective evidence of fair value of the deliverable, if it exists, (ii) third-party evidence of selling price, if vendor-specific objective evidence is not available or (iii) vendor’s best estimate of selling price, if neither vendor-specific nor third-party evidence is available. Revenue allocated is then recognized when the four basic revenue recognition criteria, mentioned above, are met for each element . The Company recognizes payments that are contingent upon achievement of a substantive milestone in their entirety in the period in which the milestone is achieved. Milestones are defined as events that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones subject to this guidance. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Amounts related to research and development funding and full-time equivalents assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. |
Clinical Trial Accruals | Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage clinical trials on its behalf. In accruing service fees, the Company obtains the reported level of patient enrollment at each site and estimates the time period over which services will be performed and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. |
Research and Development | Research and Development Research and development (“R&D”) expenses include salaries and related compensation, contractor and consultant fees, external clinical trial expenses performed by contract research organizations (“CRO”), licensing fees, acquired intellectual property with no alternative future use, and facility and administrative expense allocations. In addition, the Company funds R&D at research institutions under agreements that are generally cancelable at its option. Research costs typically consist of applied research and preclinical and toxicology work. Pharmaceutical manufacturing development costs consist of product formulation, chemical analysis, and the transfer and scale-up of manufacturing at the Company’s contract manufacturers. Clinical development costs include the costs of Phase 1, Phase 2, and Phase 3 clinical trials. These costs are a significant component of the Company’s research and development expenses. The Company accrues costs for clinical trial activities performed by contract research organizations and other third parties based upon the estimated amount of work completed on each study as provided by the CRO. These estimates are reviewed for reasonableness by its internal clinical personnel, and the Company aims to match the accrual to actual services performed by the organizations as determined by patient enrollment levels and related activities. The Company monitors patient enrollment levels and related activities using available information; however, if the Company underestimates activity levels associated with various studies at a given point in time, the Company could be required to record significant additional R&D expenses in future periods when the actual activity level becomes known. The Company charges all such costs to R&D expenses. Non-refundable advance payments are capitalized and expensed as the related goods are delivered or services are performed. |
Basic and Diluted Net Income Per Share Attributable to Common Stockholders | Basic and Diluted Net Loss Per Share Attributable to Common Stockholders Basic net loss per share attributable to common stockholders is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted under the Company’s stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and unvested restricted stock units are excluded from the computation when there is a loss as their effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. At March 31, 2016 and 2015, approximately 5,370,000 and 456,000 , respectively, shares of potentially dilutive securities were excluded from the computation of diluted net income per share of common stock as their effect would have been anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation of stock options granted to employees and directors and for employee stock purchase plan shares by estimating the fair value of stock-based awards using the Black-Scholes option-pricing model. The Company accounts for stock-based compensation of restricted stock units granted to employees based on the closing price of the Company’s common stock on the date of grant. The fair value of stock-based awards are recognized and amortized over the applicable vesting period. All stock options awarded to non-employees are accounted for at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model. Stock options granted to non-employees are subject to periodic revaluation at each reporting date as the underlying equity instruments vest. In order to estimate the value of share-based awards, the Company uses the Black-Scholes model, which requires the use of certain subjective assumptions. The most significant subjective assumptions are management’s estimates of the expected volatility and the expected term of the award. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from any of these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard will replace most existing revenue recognition guidance. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard to 2018 for public companies, with an option that would permit companies to adopt the standard as early as the original effective date of 2017. Early adoption prior to the original effective date is not permitted. The Company has not yet selected a transition method nor has it determined the effect of the standard on its consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern . This ASU provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a Company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about the company’s ability to continue as a going concern within one year from the date the financial statements are issued. The amendments in this update are effective for annual periods ending after December 15, 2016, and for interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company is evaluating the impact the revised guidance will have on its consolidated financial statements . In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes . Under ASU 2015-17, a reporting entity is required to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. Current guidance requiring the offsetting of deferred tax assets and liabilities of a tax-paying component of an entity and presentation as a single noncurrent amount is not affected. This ASU is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for financial statements as of the beginning of an interim or annual reporting period. Entities may apply the update prospectively to all deferred tax assets and liabilities and taxes, or retrospectively for all periods presented. The effects of this update on the Company’s consolidated financial statements are not expected to be material. In February 2016, the FASB issued ASU No. 2016-02, Leases . The authoritative guidance significantly amends the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation . The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for fiscal years beginning after December 15, 2016. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements | |
Schedule of fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis | The following table represents the fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis (in thousands): Fair Value Measurements at March 31, 2016 Total Level 1 Level 2 Level 3 Assets Money market $ $ $ — $ — Corporate debt — — U.S. Treasury notes — — Total assets measured at fair value $ $ $ $ — Fair Value Measurements at December 31, 2015 Total Level 1 Level 2 Level 3 Assets Money market $ $ $ — $ — Corporate debt — — U.S. Treasury notes — — Total assets measured at fair value $ $ $ $ — |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments | |
Summary of amortized cost, unrealized gain and loss and the fair value of available-for-sale securities | The following table is a summary of amortized cost, unrealized gain and loss, and the fair value of available-for-sale securities as of March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ $ $ $ U.S. Treasury notes — Total $ $ $ $ Reported as: Short-term investments $ $ $ $ Long-term investments — Total $ $ $ $ December 31, 2015 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ $ — $ $ U.S. Treasury notes Total $ $ $ $ Reported as: Short-term investments $ $ $ $ Long-term investments — Total $ $ $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments under a non-cancelable facility operating lease | As of March 31, 2016 , future minimum lease payments under a non-cancelable facility operating lease including related office equipment were as follows (in thousands): March 31, 2016 2016 (remaining) $ 2017 2018 2019 2020 Thereafter — Total $ |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' Equity | |
Schedule of shares of Company's common stock reserved for future issuance | March 31, December 31, 2016 2015 Common stock awards issued and outstanding Authorized for future issuance under 2014 Equity Incentive Plan Authorized for future issuance under 2016 Inducement Plan — Employee stock purchase plan Total |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stock-Based Compensation | |
Schedule of activity under the company's stock option plans | Outstanding Options Weighted Average Stock Options Number of Shares Exercise Price Balances, December 31, 2015 $ Granted Exercised Forfeited Balances, March 31, 2016 $ Vested and expected to vest, March 31, 2016 $ Vested, March 31, 2016 $ |
Schedule of restricted stock unit and related activity under all of our stock compensation plans | Outstanding Units Weighted Average Grant Date Restricted Stock Units Number of Shares Fair Value Unvested, December 31, 2015 — $ — Granted Vested — — Forfeited — — Unvested, March 31, 2016 $ |
Schedule of allocation of total stock-based compensation expense | The following table reflects stock-based compensation expense recognized for the three months ended March 31, 2016 and 2015 , respectively (in thousands): Three Months Ended March 31, 2016 2015 Research and development: Employees $ $ Nonemployee consultants General and administrative: Employees Nonemployee consultants Total expense $ $ |
Description of Business - Initi
Description of Business - Initial Public Offering (Details) $ / shares in Units, $ in Thousands | Jan. 06, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Apr. 30, 2014USD ($)$ / sharesshares | Mar. 31, 2016subsidiary$ / sharesshares | Mar. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015shares |
Initial Public Offering [Line Items] | ||||||
Common stock, shares issued and sold in the IPO | shares | 3,081,371 | 21,473,236 | 21,473,236 | 18,505,462 | ||
Public offering price (in dollars per share) | $ / shares | $ 16 | |||||
Proceeds from public offering of common stock, net of underwriting discounts | $ | $ 42,600 | |||||
Number of subsidiaries | subsidiary | 4 | |||||
Cantor | ||||||
Initial Public Offering [Line Items] | ||||||
Common stock value authorized | $ | $ 25,000 | |||||
Stock Issued During Period, Shares, New Issues | shares | 509,741 | |||||
Net proceeds from issuance of common stock | $ | $ 9,700 | |||||
Share price | $ / shares | $ 20.04 | $ 20.04 | ||||
Common Stock | ||||||
Initial Public Offering [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | shares | 2,875,000 | |||||
Net proceeds from issuance of common stock | $ | $ 61,800 | |||||
Share price | $ / shares | $ 23 | |||||
Common Stock | Stock options | Underwriters | ||||||
Initial Public Offering [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | shares | 375,000 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) $ in Millions | Mar. 24, 2014 | Mar. 31, 2016USD ($) |
Basis of Presentation | ||
Cash, cash equivalents and investments | $ 169.2 | |
Common Stock | ||
Stock split ratio | ||
Stock split ratio | 2 | |
Convertible preferred stock | ||
Stock split ratio | ||
Stock split ratio | 2 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies - Revenue Recognition and EPS (Details) | 3 Months Ended | |
Mar. 31, 2016segmentshares | Mar. 31, 2015shares | |
Segments | ||
Number of criteria to recognize revenue | segment | 4 | |
Potentially Dilutive Securities | shares | 5,370,000 | 456,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Fair value measurement on a recurring basis | ||
Assets | $ 158,798 | $ 110,286 |
Money market | ||
Fair value measurement on a recurring basis | ||
Assets | 87,998 | 23,430 |
Corporate debt | ||
Fair value measurement on a recurring basis | ||
Assets | 40,633 | 56,787 |
U.S. Treasury notes | ||
Fair value measurement on a recurring basis | ||
Assets | 30,167 | 30,069 |
Level 1 | ||
Fair value measurement on a recurring basis | ||
Assets | 87,998 | 23,430 |
Level 1 | Money market | ||
Fair value measurement on a recurring basis | ||
Assets | 87,998 | 23,430 |
Level 2 | ||
Fair value measurement on a recurring basis | ||
Assets | 70,800 | 86,856 |
Level 2 | Corporate debt | ||
Fair value measurement on a recurring basis | ||
Assets | 40,633 | 56,787 |
Level 2 | U.S. Treasury notes | ||
Fair value measurement on a recurring basis | ||
Assets | $ 30,167 | $ 30,069 |
Fair Value Measurements Transfe
Fair Value Measurements Transfers (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Fair value transfers between Level 1 and Level 2 | |
Fair value, assets, Level 1 to Level 2 transfers | $ 0 |
Fair value, assets, Level 2 to Level 1 transfers | 0 |
Fair value, liabilities, Level 1 to Level 2 transfers | 0 |
Fair value, liabilities, Level 2 to Level 1 transfers | $ 0 |
Investments (Details)
Investments (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Available-for-sale securities | ||
Amortized Cost | $ 70,789,000 | $ 87,014,000 |
Gross Unrealized Gains | 25,000 | 1,000 |
Gross Unrealized Losses | (14,000) | (159,000) |
Fair Value | 70,800,000 | 86,856,000 |
Short-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 64,867,000 | 73,817,000 |
Gross Unrealized Gains | 23,000 | 1,000 |
Gross Unrealized Losses | (14,000) | (127,000) |
Fair Value | 64,876,000 | 73,691,000 |
Accrued interest | 500,000 | 400,000 |
Long-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 5,922,000 | 13,197,000 |
Gross Unrealized Gains | 2,000 | |
Gross Unrealized Losses | (32,000) | |
Fair Value | 5,924,000 | 13,165,000 |
Accrued interest | $ 17,000 | 36,000 |
Minimum | Long-term investments | ||
Available-for-sale securities | ||
Maturity range of long term investment | 12 months | |
Maximum | Long-term investments | ||
Available-for-sale securities | ||
Maturity range of long term investment | 17 months | |
Corporate debt | ||
Available-for-sale securities | ||
Amortized Cost | $ 40,635,000 | 56,892,000 |
Gross Unrealized Gains | 12,000 | |
Gross Unrealized Losses | (14,000) | (105,000) |
Fair Value | 40,633,000 | 56,787,000 |
U.S. Treasury notes | ||
Available-for-sale securities | ||
Amortized Cost | 30,154,000 | 30,122,000 |
Gross Unrealized Gains | 13,000 | 1,000 |
Gross Unrealized Losses | (54,000) | |
Fair Value | $ 30,167,000 | $ 30,069,000 |
License Agreements (Details)
License Agreements (Details) - USD ($) $ in Millions | Nov. 30, 2012 | Mar. 31, 2016 |
License Agreements | ||
Period describing the commercial launch of dose | 15 years | |
License agreement | ||
License Agreements | ||
Upfront payment received | $ 65 | |
Maximum total additional cash payments receivable upon achievement of certain development and regulatory milestones | $ 95 | |
Prosecution and litigation cost | $ (0.3) |
Warrants to Purchase Common S29
Warrants to Purchase Common Stock (Details) - shares | Apr. 30, 2014 | Jul. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 |
Warrants to Purchase Common or Preferred Stock | |||||
Number of warrants exercised | 7,116 | ||||
Warrants exercised for common stock | 3,484 | ||||
Warrants to purchase convertible preferred stock | |||||
Warrants to Purchase Common or Preferred Stock | |||||
Issue of warrants to purchase shares | 758,994 | ||||
Warrants to purchase common stock | |||||
Warrants to Purchase Common or Preferred Stock | |||||
Issue of warrants to purchase shares | 127,780 | ||||
Number of warrants exercised | 206,162 | ||||
Number of warrants outstanding | 0 | 0 | |||
Common Stock | |||||
Warrants to Purchase Common or Preferred Stock | |||||
Warrants exercised for common stock | 199,837 |
Commitments and Contingencies30
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended |
Feb. 29, 2016defendantpatent | Mar. 31, 2016USD ($)ft²claimcompany | |
Lease agreement square footage | ft² | 18,500 | |
Number of claims | claim | 0 | |
Future minimum lease payments under non-cancelable facility operating leases | ||
2016 (remaining) | $ 488 | |
2,017 | 650 | |
2,018 | 660 | |
2,019 | 666 | |
2,020 | 223 | |
Total | $ 2,687 | |
Information about litigation matters | ||
Number of defendants | defendant | 1 | |
Number of patents | patent | 1 | |
Number of Companies that have submitted ANDAs | company | 4 | |
Namenda XR | ||
Information about litigation matters | ||
Term of ANDA stays | 30 months | |
Namzaric ANDA | ||
Information about litigation matters | ||
Term of ANDA stays | 30 months |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | Jan. 06, 2016USD ($)$ / sharesshares | Jun. 01, 2015 | Mar. 31, 2016USD ($)itemshares | Mar. 31, 2016USD ($)item$ / sharesshares | Dec. 31, 2015shares |
Shareholders' Equity | |||||
Authorized shares of common stock | 100,000,000 | 100,000,000 | 100,000,000 | ||
Dividends declared | $ | $ 0 | ||||
Number of votes per share | item | 1 | 1 | |||
Common Stock | |||||
Net proceeds | $ | $ 62,030 | ||||
Total | 8,467,802 | 8,467,802 | 7,185,941 | ||
Employee stock purchase plan | |||||
Common Stock | |||||
Total | 579,075 | 579,075 | 394,148 | ||
Controlled Equity Offering | |||||
Common Stock | |||||
Value of shares authorized | $ | $ 25,000 | ||||
Sale of shares under the sales agreement | 0 | 509,741 | |||
Average price | $ / shares | $ 20.04 | ||||
Net Proceeds From Issuance Of Common Stock | $ | $ 9,700 | ||||
Controlled Equity Offering | Cantor | |||||
Common Stock | |||||
Commission of sale proceeds (as a percent) | 3.00% | ||||
2016 Inducement Plan | |||||
Common Stock | |||||
Total | 450,000 | 450,000 | |||
Stock options | |||||
Shareholders' Equity | |||||
Unvested shares of common stock from early exercised options | 0 | 0 | 3,000 | ||
Common Stock | |||||
Common stock awards issued | 5,734,146 | 5,328,378 | |||
Common stock awards outstanding | 5,597,435 | 5,597,435 | 5,328,378 | ||
Stock options | 2014 Equity Incentive Plan | |||||
Common Stock | |||||
Authorized for future issuance | 1,704,581 | 1,704,581 | 1,463,415 | ||
Stock options | 2016 Inducement Plan | |||||
Common Stock | |||||
Authorized for future issuance | 450,000 | 450,000 | |||
Stock Options And Restricted Stock Units | |||||
Common Stock | |||||
Common stock awards outstanding | 5,734,146 | 5,734,146 | |||
Common Stock | |||||
Common Stock | |||||
Sale of shares under the sales agreement | 2,875,000 | ||||
Net Proceeds From Issuance Of Common Stock | $ | $ 61,800 | ||||
Share price | $ / shares | $ 23 | ||||
Net proceeds | $ | $ 61,800 | ||||
Common Stock | Stock options | Underwriters | |||||
Common Stock | |||||
Sale of shares under the sales agreement | 375,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Stock Option Plans | ||
Company’s common stock available for issuance | 8,467,802 | 7,185,941 |
Stock options | ||
Number of Shares | ||
Balances, beginning of the period (in shares) | 5,328,378 | |
Options granted (in shares) | 597,425 | |
Options exercised (in shares) | (92,774) | |
Options forfeited (in shares) | (235,594) | |
Balances, end of the period (in shares) | 5,597,435 | |
Vested and expected to vest, end of the period (in shares) | 5,411,527 | |
Vested, end of the period (in shares) | 2,941,604 | |
Weighted Average Exercise Price | ||
Balances, beginning of the period (in dollars per share) | $ 8.57 | |
Options granted (in dollars per share) | 13.75 | |
Options exercised (in dollars per share) | 1.76 | |
Options forfeited (in dollars per share) | 12.55 | |
Balances, end of the period (in dollars per share) | 9.07 | |
Vested and expected to vest, end of the period (in shares) | 8.94 | |
Vested, end of the period (in shares) | $ 5.59 | |
RSU | ||
Number of shares | ||
Granted (in shares) | 136,711 | |
Unvested, Ending balance (in shares) | 136,711 | |
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 13.66 | |
Unvested, Ending balance (in dollars per share) | $ 13.66 | |
Employee Stock Purchase Plan | ||
Stock Option Plans | ||
Increase in common stock available for issuance | 184,927 | |
Employee Stock Purchase Plan | Maximum | ||
Stock Option Plans | ||
Increase in common stock reserved for issuance as a percentage of total number of shares of the Company's capital stock outstanding on the last day of the preceding fiscal year | 1.00% | |
Threshold number of shares to determine increase in common stock reserved for future issuance | 520,000 | |
2014 Equity Incentive Plan | ||
Stock Option Plans | ||
Increase in common stock reserved for issuance as a percentage of total number of shares of the Company's capital stock outstanding on the last day of the preceding fiscal year | 4.00% | |
Increase in common stock available for issuance | 739,708 | |
2014 Equity Incentive Plan | Stock options | Maximum | ||
Stock Option Plans | ||
Term of awards | 10 years | |
2016 Inducement Plan | ||
Stock Option Plans | ||
Company’s common stock available for issuance | 450,000 | |
2016 Inducement Plan | RSU | ||
Stock Option Plans | ||
Vesting rate (as percent) | 25.00% | |
2016 Inducement Plan | Employee Stock Options | ||
Stock Option Plans | ||
Vesting period | 4 years | |
Vesting percentage on first anniversary of the issuance date | 25.00% | |
Monthly vesting percentage after first anniversary of the issuance date | 2.0833% | |
2016 Inducement Plan | Employee Stock Options | Maximum | ||
Stock Option Plans | ||
Term of awards | 10 years |
Stock-Based Compensation Other
Stock-Based Compensation Other (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock-based compensation expense | ||
Total stock-based compensation expense | $ 2,553 | $ 2,142 |
Employee Stock Options | ||
Stock-based compensation expense | ||
Total unrecognized compensation cost (in dollars) | $ 24,000 | |
Period for recognition of unrecognized compensation cost | 2 years 10 months 24 days | |
RSU | ||
Stock-based compensation expense | ||
Period for recognition of unrecognized compensation cost | 4 years | |
Unrecognized compensation cost | $ 1,800 | |
Research and development | Employee Stock Options | ||
Stock-based compensation expense | ||
Total stock-based compensation expense | 585 | 510 |
Research and development | Non-employees stock options | ||
Stock-based compensation expense | ||
Total stock-based compensation expense | 82 | 232 |
General and administrative | Employee Stock Options | ||
Stock-based compensation expense | ||
Total stock-based compensation expense | 1,833 | 1,272 |
General and administrative | Non-employees stock options | ||
Stock-based compensation expense | ||
Total stock-based compensation expense | $ 53 | $ 128 |