Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
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 | Sep. 30, 2017 | |
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 (in shares) | 22,778,880 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 22,121 | $ 23,735 |
Available-for-sale securities | 101,605 | 89,917 |
Accounts receivable | 3 | 794 |
Inventory | 425 | 0 |
Prepaid expenses and other current assets | 2,806 | 2,541 |
Total current assets | 126,960 | 116,987 |
Property and equipment, net | 3,110 | 3,156 |
Available-for-sale securities, non-current | 7,004 | 22,292 |
Other assets | 38 | 38 |
Total assets | 137,112 | 142,473 |
Current liabilities | ||
Accounts payable | 5,380 | 3,589 |
Accrued liabilities | 9,539 | 5,867 |
Other current liabilities | 292 | 287 |
Total current liabilities | 15,211 | 9,743 |
Long-term debt | 35,408 | 0 |
Other non-current liabilities | 615 | 547 |
Total liabilities | 51,234 | 10,290 |
Commitments and Contingencies (Note 7) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value — 5,000,000 shares authorized, and zero shares issued and outstanding at September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.001 par value — 100,000,000 shares authorized, 22,716,277 and 22,013,644 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 27 | 27 |
Additional paid-in capital | 268,305 | 254,558 |
Accumulated other comprehensive loss | (112) | (193) |
Accumulated deficit | (182,342) | (122,209) |
Total stockholders’ equity | 85,878 | 132,183 |
Total liabilities and stockholders’ equity | $ 137,112 | $ 142,473 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Convertible preferred stock, authorized (in shares) | 5,000,000 | 5,000,000 |
Convertible preferred stock, issued (in shares) | 0 | 0 |
Convertible preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, issued (in shares) | 22,716,277 | 22,013,644 |
Common stock, outstanding (in shares) | 22,716,277 | 22,013,644 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
License and grant revenue | $ 1 | $ 138 | $ 3 | $ 535 |
Operating expenses | ||||
Research and development | 6,459 | 7,437 | 20,723 | 24,183 |
Selling, general and administrative, net | 16,064 | 7,344 | 38,323 | 22,043 |
Total operating expenses | 22,523 | 14,781 | 59,046 | 46,226 |
Loss from operations | (22,522) | (14,643) | (59,043) | (45,691) |
Interest and other income, net | 839 | 249 | 1,265 | 593 |
Interest expense | (1,677) | 0 | (2,406) | 0 |
Loss before income taxes | (23,360) | (14,394) | (60,184) | (45,098) |
Benefit for income taxes | 0 | 0 | (51) | 0 |
Net loss | $ (23,360) | $ (14,394) | $ (60,133) | $ (45,098) |
Net loss per share, basic and diluted (in dollars per share) | $ (1.04) | $ (0.66) | $ (2.69) | $ (2.09) |
Weighted average shares used in computing net loss per share, basic and diluted (in shares) | 22,569 | 21,941 | 22,390 | 21,616 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (23,360) | $ (14,394) | $ (60,133) | $ (45,098) |
Unrealized gain (loss) on available-for-sale securities | 71 | (96) | 81 | 94 |
Comprehensive loss | $ (23,289) | $ (14,490) | $ (60,052) | $ (45,004) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (60,133) | $ (45,098) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation | 884 | 562 |
Stock-based compensation | 9,911 | 7,782 |
Non-cash interest expense | 2,406 | 0 |
Change in fair value of embedded derivative liability | (531) | 0 |
Net accretion of discounts and amortization of premiums of available-for-sale securities | 216 | (332) |
Changes in assets and liabilities | ||
Accrued interest of available-for-sale securities | (261) | (119) |
Inventory | (75) | 0 |
Prepaid expenses and other assets | 356 | (2,325) |
Accounts receivable | 791 | 515 |
Accounts payable | 924 | 3,007 |
Accrued liabilities and other liabilities | 3,509 | (2,431) |
Net cash used in operating activities | (42,003) | (38,439) |
Cash flows from investing activities | ||
Purchases of property and equipment | (936) | (1,222) |
Purchases of available-for-sale securities | (56,524) | (95,528) |
Maturities of available-for-sale securities | 60,250 | 46,795 |
Net cash provided by (used in) investing activities | 2,790 | (49,955) |
Cash flows from financing activities | ||
Proceeds from issuance of long-term debt | 34,600 | 0 |
Proceeds from public offerings, net of offering costs | 0 | 61,822 |
Payment of debt issuance costs | (623) | 0 |
Proceeds from issuance of common stock upon exercise of stock options | 3,192 | 2,918 |
Proceeds from employee stock purchase plan | 430 | 326 |
Net cash provided by financing activities | 37,599 | 65,066 |
Net decrease in cash and cash equivalents | (1,614) | (23,328) |
Cash and cash equivalents at beginning of period | 23,735 | 33,104 |
Cash and cash equivalents at end of period | 22,121 | 9,776 |
Supplemental disclosure of noncash investing and financing activities | ||
Purchases of inventory in accounts payable and accrued expenses | 337 | 0 |
Debt issuance costs in accounts payable and accrued expense | 10 | 0 |
Purchases of property and equipment in accounts payable and accrued expense | 51 | 227 |
Stock-based compensation capitalized in inventory | $ 13 | $ 0 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | DESCRIPTION OF BUSINESS Adamas Pharmaceuticals, Inc. (the “Company”) discovers, develops, and commercializes new medicines to treat chronic neurologic disorders. The Company’s portfolio includes: • GOCOVRI TM (amantadine) extended release capsules, formerly referred to as ADS-5102, for the treatment of dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy, with or without concomitant dopaminergic medications; • ADS-5102 (amantadine) extended release capsules (GOCOVRI) in development for the treatment of walking impairment in patients with multiple sclerosis; • ADS-4101 (lacosamide) modified release capsules in development for the treatment of partial onset seizures in patients with epilepsy; and • Namzaric ® (memantine hydrochloride extended release and donepezil hydrochloride) capsules and Namenda XR ® (memantine hydrochloride) extended release capsules for the treatment of moderate to severe Alzheimer’s disease. GOCOVRI (formerly referred to as ADS-5102) for the Treatment of Dyskinesia in Patients with Parkinson’s Disease On August 24, 2017, the U.S. Food and Drug Administration (“FDA”) approved the Company’s New Drug Application (“NDA”) for GOCOVRI (amantadine) extended release capsules for the treatment of dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy, with or without concomitant dopaminergic medications (“dyskinesia”). The Company made GOCOVRI available for physician and patient use in the fourth quarter of 2017, with plans for a full commercial launch via the deployment of the Company’s sales team in January 2018. GOCOVRI has orphan drug exclusivity until August 24, 2024. ADS-5102 (GOCOVRI) in Development for the Treatment of Walking Impairment in Patients with Multiple Sclerosis ADS-5102 is an investigational high-dose, extended release amantadine capsule, taken once-daily at bedtime. The Company completed a Phase 2 proof-of-concept study designed to evaluate ADS-5102 in patients with multiple sclerosis who have walking impairment and plans to initiate a Phase 3 clinical program in the first quarter of 2018. ADS-4101 in Development for the Treatment of Partial Onset Seizures in Patients with Epilepsy ADS-4101 is an investigational high-dose, modified release lacosamide capsule, taken once -daily at bedtime. Lacosamide is an anti-epilepsy active ingredient previously approved by the FDA and currently marketed by UCB SA/NV as VIMPAT ® (lacosamide). The Company completed two Phase 1 studies of ADS-4101 in healthy volunteers and expects to meet with the FDA at an End-of-Phase 2 Meeting regarding a planned Phase 3 clinical development program for ADS-4101 in the first quarter of 2018. Namzaric and Namenda XR for the Treatment of Moderate to Severe Alzheimer’s Disease Namzaric (memantine hydrochloride extended release and donepezil hydrochloride) capsules and Namenda XR (memantine hydrochloride) extended release capsules are two commercially available medicines, which are currently marketed by Forest Laboratories Holdings Limited (“Forest”), an indirect wholly-owned subsidiary of Allergan plc (“Allergan”), in the United States for the treatment of moderate to severe Alzheimer’s disease. The Company is eligible to receive royalties on net sales of Namenda XR and Namzaric beginning in June of 2018 and May of 2020, respectively. The Company was incorporated in the State of Delaware on November 15, 2000, and operates as one segment. The Company’s headquarters and operations are located in Emeryville, California. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The 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, 2016 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, 2016 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC. 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 including short-term and long-term classification, embedded derivatives, 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. Liquidity and Financial Condition To date, a significant portion of the Company’s resources have been dedicated to the research and development of its products. The Company has not generated any commercial revenue from the sale of its products through September 30, 2017 ; however, the Company received approval for GOCOVRI on August 24, 2017. The Company made GOCOVRI available for physician and patient use in the fourth quarter of 2017, with plans for a full commercial launch via the deployment of the Company’s sales team in January 2018. Based upon the current status of, and plans for, its product development and commercialization, the Company believes that the existing cash, cash equivalents, and investments of $130.7 million as of September 30, 2017 will be adequate to satisfy the Company’s capital needs through at least the next twelve months from the issuance of this Quarterly Report on Form 10-Q. 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 selling, 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 offset expenses. While the Company had net income during 2014, 2013, and 2012, it has not generated any commercial revenue from sales of its products. Under its license agreement with Allergan, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for net 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. Inventory Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. Inventory consists of raw materials, work-in-process, and GOCOVRI finished goods. Raw materials and work-in-process that may be utilized for both commercial and clinical programs are included in inventory and charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes. Costs include active pharmaceutical ingredient (API), third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. If the Company identifies excess, obsolete or unsalable product, the Company will write down its inventory to its net realizable value in the period it is identified. The Company begins capitalizing costs as inventory when the product candidate receives regulatory approval. Prior to regulatory approval, inventory costs related to product candidates are recorded as research and development expense. The Company received FDA approval for GOCOVRI on August 24, 2017, and began capitalizing inventory manufactured at the FDA approved location, after FDA approval. 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) the 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 equivalent employees assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. Accounts Receivable The Company’s accounts receivable balance consists of amounts due from Allergan, in accordance with the contract terms of the license agreement, for research and development funding and full-time equivalent employees assigned to the Allergan license agreement, as well as for reimbursement of external costs, recorded as contra-expense, associated with supporting prosecution and litigation of intellectual property rights. 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 contract 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 CROs 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 are to 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 CROs, 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 pre-approval inventory purchases, product formulation, chemical analysis, and the transfer and scale-up of manufacturing at facilities operated by 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 CROs 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 the Company’s 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. Long-Term Debt Long-term debt consists of the Company’s loan agreement with HealthCare Royalty Partners (“HCRP”). The Company accounted for the loan agreement as a debt financing arrangement. Interest expense is accrued using the effective interest rate method over the estimated period the debt will be repaid. Debt issuance costs have been recorded as a debt discount in the Company’s consolidated balance sheets and are being amortized and recorded as interest expense throughout the life of the loan using the effective interest rate method. The Company must make certain assumptions and estimates, including future royalties and net product sales, in determining the expected repayment term and amortization period of the debt discount, as well as the classification between current and long-term portions. The Company periodically assesses these assumptions and estimates, and adjusts the liabilities accordingly. Embedded Derivatives Related to Debt Instruments Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the debt instrument. Under the Company’s loan agreement with HCRP, upon the occurrence of a default or a change in control, the Company may be required to make mandatory prepayments of the borrowings. The prepayment premium is considered an embedded derivative, as the holder of the loans may exercise the option to require prepayment by the Company. Further, in the event of a regulatory change that results in a material adverse effect on HCRP’s rate of return, the Company shall pay directly to HCRP an amount that compensates HCRP for such reduction. The embedded derivative is presented as a component of other non-current liabilities. The Company will remeasure the embedded derivatives each reporting period and report changes in the estimated fair value as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share 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. For the three and nine months ended September 30, 2017 , approximately 6,206,000 and 6,002,000 , respectively, shares of potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2016 , approximately 5,523,000 and 5,535,000 , respectively, shares of potentially dilutive securities were excluded from the computation of diluted net loss per share 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 is 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. Since the issuance of ASU 2014-09, the FASB has issued several amendments which clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , ASU 2016-10, Identifying Performance Obligations and Licensing , ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting , ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company plans to adopt the new standard in the first quarter of fiscal year 2018 using the full retrospective method to restate each prior reporting period presented in its consolidated financial statements. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. 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 June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. The new guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) – Scope of Modification Accounting. The new guidance clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. This guidance is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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): September 30, 2017 Total Level 1 Level 2 Level 3 Assets: Money market $ 11,043 $ 11,043 $ — $ — Corporate debt 37,913 — 37,913 — U.S. Treasury notes 70,696 — 70,696 — Total assets measured at fair value $ 119,652 $ 11,043 $ 108,609 $ — Liabilities: Embedded derivative liability $ 233 $ — $ — $ 233 Total liabilities measured at fair value $ 233 $ — $ — $ 233 December 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market $ 192 $ 192 $ — $ — Corporate debt 51,233 — 51,233 — U.S. Treasury notes 60,976 — 60,976 — Total assets measured at fair value $ 112,401 $ 192 $ 112,209 $ — 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. In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3. The Company classified an embedded derivative related to the Royalty-Backed Loan as a Level 3 liability. The fair value of the embedded derivative as a result of a change in control was calculated using a probability-weighted discounted cash flow model. The model used in valuing this embedded derivative requires the use of significant estimates and assumptions including but not limited to: 1) expected cash flows the Company expects to receive on U.S. net sales of GOCOVRI and on royalties from Allergan on U.S. net sales of Namzaric ® ; 2) the Company’s risk adjusted discount rates; 3) the probability of receipt of orphan drug exclusivity for GOCOVRI for the treatment of dyskinesia in patients with Parkinson’s disease; and 4) the probability of a change in control occurring during the term of the note based on the percentage of similar companies that were acquired over the previous five year period. Changes in the estimated fair value of the bifurcated embedded derivative are reported as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. In the periods presented, the embedded derivative value as a result of an event of default and the value as a result of increased costs due to a regulatory change are both not material, but could become material in future periods if a specified event of default or regulatory change became more probable than is currently estimated. See Note 8 “Long-Term Debt,” for further description. The following table sets forth a summary of the changes in the estimated fair value of the Company’s embedded derivative, which is measured at fair value as a Level 3 liability on a recurring basis (in thousands): Balance as of December 31, 2016 $ — Issuance of long-term debt with embedded derivative 764 Change in fair value included in interest and other income, net (531 ) Balance as of September 30, 2017 $ 233 There were no transfers between any of the levels of the fair value hierarchy during the three and nine months ended September 30, 2017 . |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | 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 September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Investments: Corporate debt $ 37,948 $ — $ (35 ) $ 37,913 U.S. Treasury notes 70,773 — (77 ) 70,696 Total $ 108,721 $ — $ (112 ) $ 108,609 Reported as: Short-term investments $ 101,709 $ — $ (104 ) $ 101,605 Long-term investments 7,012 — (8 ) 7,004 Total $ 108,721 $ — $ (112 ) $ 108,609 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Investments: Corporate debt $ 51,354 $ — $ (121 ) $ 51,233 U.S. Treasury notes 61,048 5 (77 ) 60,976 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Reported as: Short-term investments $ 90,050 $ 1 $ (134 ) $ 89,917 Long-term investments 22,352 4 (64 ) 22,292 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Short-term and long-term investments include accrued interest of $0.6 million and $30,000 , respectively, as of September 30, 2017 . Short-term and long-term investments includes accrued interest of $0.3 million and $0.1 million , respectively, as of December 31, 2016 . The Company has not incurred any realized gains or losses on investments for the three and nine months ended September 30, 2017 and 2016 . Investments are classified as short-term or long-term depending on the underlying investment’s maturity date. Long-term investments held by the Company have a maturity date range of greater than 12 months and a maximum of 14 months as of September 30, 2017 . |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | INVENTORY The Company began capitalizing inventory in August 2017 once the FDA approved GOCOVRI. Inventory consists of the following (in thousands): September 30, 2017 December 31, 2016 Raw materials $ 326 $ — Work-in-process 72 — Finished goods 27 — Total inventory $ 425 $ — |
License Agreements
License Agreements | 9 Months Ended |
Sep. 30, 2017 | |
License Agreements | |
License Agreements | LICENSE AGREEMENTS In November 2012, the Company granted Allergan 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, Allergan markets and sells Namzaric ® and Namenda XR ® for the treatment of moderate to severe dementia related to Alzheimer’s disease. Pursuant to the agreement, Allergan made an upfront payment of $65.0 million . The Company earned and received additional cash payments totaling $95.0 million upon achievement by Allergan of certain development and regulatory milestones. Under the agreement, external costs incurred related to the prosecution and litigation of intellectual property rights are reimbursable. For the nine months ended September 30, 2017 and 2016 , reimbursed expenses amounting to zero and $2.4 million , respectively, are reflected as a reduction to selling, 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 Allergan, 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 to mid-teens from Allergan for sales of Namzaric ® in the United States. Beginning 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. Allergan’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 Allergan in the United States or (ii) the expiration of the Orange Book listed patents for which Allergan obtained rights from the Company covering such product. Allergan’s obligation to pay royalties with respect to Namenda XR ® continues until the expiration of the Orange Book listed patents covering such products. However, Allergan’s obligation to pay royalties for any product covered by the license is eliminated in any quarter where there is significant competition from generics. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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. Purchase Commitments The Company has entered into agreements for the supply of API and the manufacture of commercial supply of GOCOVRI, with Moehs Ibérica, S.L. and Catalent Pharma Solutions, LLC, respectively. Under the terms of the agreements, the Company will supply the vendors with non-cancelable firm commitment purchase orders. The Company has also entered into other agreements with certain vendors for the provision of services, including services related to data access and packaging, under which the Company is contractually obligated to make certain payments to the vendors. The Company enters into contracts in the normal course of business that include, among others, arrangements with CROs for clinical trials, vendors for pre-clinical research, and vendors for manufacturing. These contracts generally provide for termination upon notice, and therefore the Company believes that its obligations under these agreements are not material. As of September 30, 2017 , future minimum lease payments under the non-cancelable facility operating lease and non-cancelable purchase commitments were as follows (in thousands): September 30, 2017 2017 (remaining) $ 2,144 2018 1,918 2019 1,925 2020 592 2021 — Thereafter — Total $ 6,579 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 and Other Legal Proceedings 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, including one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv) to the FDA requesting approval 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 Company and Forest will continue to enforce the patents associated with Namenda XR ® . The Company and Forest have entered into a series of settlement agreements with all Namenda XR ® ANDA filers, except for one ANDA filer. Entry dates for generic Namenda XR ® are governed by the settlement agreements in that action. Subject to those agreements, 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. On July 26, 2016, the District Court issued a final judgment of invalidity on those patents based upon the Markman ruling. The Company and Forest filed the notice of appeal of that final judgment to the United States Court of Appeals for the Federal Circuit. The appeal is ongoing. If the appeal is unsuccessful, generic entry of Namenda XR® could occur prior to January 31, 2020. On June 2, 2017, the Company and Forest filed a lawsuit against the remaining ANDA filer in the U.S. District Court for the District of Delaware for infringement of certain patents based on that filer’s filing of an ANDA seeking FDA approval to manufacture and market generic versions of Namenda XR ® that included one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv). This action is ongoing and in a very early stage. On July 24, 2017, an ANDA filer that previously entered into a settlement agreement with Forrest and Adamas filed a complaint against the Company and Forest in the Court of Chancery of the State of Delaware alleging that Forest and the Company breached the license agreement and settlement agreement entered into with that filer to settle the litigation related to its ANDA referencing Namenda XR ® as the reference listed drug. As of the date of this filing, this action has been settled by the parties. Additionally, as of the date of this filing, a number of companies have submitted ANDAs including one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv) to the FDA requesting approval 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 filed lawsuits alleging infringement of the relevant patents against Namzaric ® ANDA filers, who are seeking to launch generic versions of Namzaric ® , in the same court as heard the Namenda XR ® litigation. As of the date of this filing, the Company and Forest have settled with all but one of the ANDA filers, including all first filers on all the available dosage forms of Namzaric ® . Entry dates for generic Namzaric ® are governed by the settlement agreements in those actions. Subject to those agreements, the earliest date on which any of these agreements grants a license to market generic version of Namzaric ® is January 1, 2025 or in the alternative, an option to launch an authorized generic version of Namzaric ® beginning on January 1, 2026. The Company and Forest intend to continue to enforce the patents associated with Namzaric ® . On June 2, 2017, the Company and Forest filed a lawsuit against the remaining ANDA filer in the U.S. District Court for the District of Delaware for infringement of certain patents based on its filing of an ANDA seeking FDA approval to manufacture and market generic versions of Namzaric ® that included one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv). This action is ongoing and in a very early stage. On April 20, 2017, an opposition was filed against Adamas’ European Patent EP 2 506 709 B1, which relates to extended release compositions comprising amantadine or a pharmaceutically acceptable salt thereof. On May 26, 2017, the Company received a Communication of Notices of Opposition (R. 79(1) EPC) from the European Patent Office that requested the Company file its observations in response to the opposition within a period of four months from May 26, 2017. The Company filed its response to the opposition on October 5, 2017. 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 currently party to any material legal proceedings. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt | LONG-TERM DEBT Royalty-Backed Loan Agreement In May 2017, the Company, through a new wholly-owned subsidiary, Adamas Pharma, LLC, entered into a Royalty-Backed Loan with HCRP, whereby the Company initially borrowed $35.0 million and will borrow an additional $65.0 million upon FDA approval and when the FDA’s Orange Book is updated to recognize the 7-year orphan drug exclusivity, which GOCOVRI earned upon approval on August 24, 2017. Principal and interest will be payable quarterly from the proceeds of a 12.5% royalty on U.S. net sales of GOCOVRI and up to $15.0 million of the Company’s annual royalties from Allergan on U.S. net sales of Namzaric ® starting in May 2020, pursuant to the Company’s license agreement with Allergan. The royalty rate on net sales of GOCOVRI will drop to 6.25% after the principal amount of the loan has been repaid in full, until the Company has made total payments of 200% of the funded amounts. The Company may elect to voluntarily prepay the loan at any time in which case the amount due will be 200% of the funded amounts, less total payments made to date. Royalty rates are subject to increase to 17.5% and 22.5% if total principal and interest payments have not reached minimum specified levels at measurement dates on December 2021 and December 2022, respectively. Under the terms of the loan, HCRP has recourse to Adamas Pharma, LLC, not the Company. The loan agreement matures in December 2026 but as the repayment of the loan amount is contingent upon the sales volumes of GOCOVRI and royalties from Allergan, the repayment term may be shortened depending on the actual sales of GOCOVRI and actual royalties received from Allergan. The loans bear interest at an annual rate of 11% on the outstanding principal amount and includes an interest-only period until the interest payment date following the ninth full calendar quarter after the earlier of the $65.0 million additional loan or October 2018. To the extent that royalties are insufficient to pay interest in full during the first nine quarters of the loan, any unpaid portion of the quarterly interest payment will be added to the principal amount of the loans. For the three and nine months ended September 30, 2017 , accrued interest in the amount of $1.6 million and $ 2.3 million was added to the principal balance of the loan. In connection with the Royalty-Backed Loan, the Company paid HCRP a lender expense amount of $0.4 million and incurred additional debt issuance costs totaling $ 0.8 million . The lender expense and additional debt issuance costs have been recorded as a debt discount and are being amortized and recorded as interest expense over the estimated term of the loan using the effective interest method. The Company recorded interest expense, including amortization of the debt discount, related to the Royalty-Backed Loan, of $1.7 million and $ 2.4 million for the three and nine months ended September 30, 2017 . The effective interest rate as of September 30, 2017 on the amounts borrowed under the Royalty-Backed Loan, including the amortization of the debt discount, was 20.6% . The assumptions used in determining the expected repayment term of the loan and amortization period of the debt discount require that we make estimates that could impact the short and long-term classification of these costs, as well as the period over which these costs will be amortized and the effective interest rate. The Company may be required to make mandatory prepayments of the borrowings under the Royalty-Backed Loan, subject to specified prepayment trigger events, including: (1) the occurrence of any event of default or (2) the occurrence of a change in control. Upon the prepayment of all or any of the outstanding principal balance, the Company shall pay in addition to such prepayment, a prepayment premium. As the holder of the loans may exercise the option to require prepayment by the Company, the prepayment premium is considered to be an embedded derivative which is required to be bifurcated from its host contract and accounted for as a separate financial instrument. The valuation of the embedded derivative is described further in Note 3. Long-term debt and unamortized debt discount balances are as follows (in thousands): September 30, 2017 Loans payable, gross $ 35,000 Less: Unamortized debt discount and issuance costs (1,879 ) Plus: Unpaid portion of quarterly interest payment 2,287 Carrying value of loans payable $ 35,408 Less: Current portion of long-term debt — Non-current portion of long-term debt $ 35,408 The estimated fair value of the long-term debt, as measured using Level 3 inputs, approximates $42.5 million as of September 30, 2017 . The estimated fair value was calculated in the same manner as the valuation of the embedded derivative as described further in Note 3. There are no contractual minimum principal payments due until the loan matures in December 2026 as the repayment of the loan amount is contingent upon the sales volumes of GOCOVRI and royalties from Allergan. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 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. Public Offering In January 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 the Company’s common stock reserved for future issuance are as follows: September 30, December 31, Common stock awards issued and outstanding 5,926,814 5,483,557 Authorized for future issuance under 2014 Equity Incentive Plan 1,700,824 1,576,926 Authorized for future issuance under 2016 Inducement Plan 429,365 334,062 Employee stock purchase plan 718,210 532,849 Total 8,775,213 7,927,394 Sales Agreement In May 2017, the Company entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may, from time to time, issue and sell at its option, shares of the Company’s common stock for an aggregate offering price of up to $50.0 million under an at-the-market offering (“ATM Offering”). Sales of the common stock, if any, will be made pursuant to a shelf registration statement that was declared effective by the Securities and Exchange Commission (“SEC”) on November 21, 2016. Cowen is acting as sole sales agent for any sales made under the Sales Agreement and the Company will pay Cowen a commission of up to 3% of the gross proceeds. The Company’s common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary. The Company is not obligated to make any sales of shares of common stock under the Sales Agreement. Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold. As of September 30, 2017 , no shares have been sold under the Sales Agreement. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION Stock Compensation Plans In January 2017 , the common stock available for issuance under the 2014 Equity Incentive Plan (the “2014 Plan”) automatically increased by 4% of the total number of shares of the Company’s capital stock outstanding on December 31, 2016 , or 880,362 shares. 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. In January 2017, an amendment to the Inducement Plan was approved to increase the number of shares available for issuance an additional 450,000 shares for a total of 900,000 shares. Employee Stock Purchase Plan In January 2017 , the common stock available for issuance under the 2014 Employee Stock Purchase Plan (the “ESPP”) automatically increased by 1% of the total number of shares of the Company’s capital stock outstanding on December 31, 2016 , or 220,090 shares. Stock-Based Compensation Expense The following table reflects stock-based compensation expense recognized for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Research and development $ 837 $ 738 $ 2,553 $ 2,136 Selling, general and administrative 2,425 1,860 7,358 5,646 Total stock-based compensation expense $ 3,262 $ 2,598 $ 9,911 $ 7,782 Stock-based compensation of $13,000 was capitalized into inventory for the three and nine months ended September 30, 2017 . Stock-based compensation capitalized into inventory is recognized as cost of sales when the related product is sold. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | SUBSEQUENT EVENTS In October 2017, the FDA recognized GOCOVRI’s orphan drug exclusivity by letter to the Company and on its Orphan Drug Designation and Approvals database listing. Under the Company’s Royalty-Backed Loan agreement with HRCP, the Company will borrow an additional $65.0 million when the FDA’s Orange Book is updated to recognize the 7-year orphan drug exclusivity. The Company expects to receive the $65.0 million during the fourth quarter of 2017. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The 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, 2016 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, 2016 , included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission, or SEC. |
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 including short-term and long-term classification, embedded derivatives, 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. |
Liquidity and Financial Condition | Liquidity and Financial Condition To date, a significant portion of the Company’s resources have been dedicated to the research and development of its products. The Company has not generated any commercial revenue from the sale of its products through September 30, 2017 ; however, the Company received approval for GOCOVRI on August 24, 2017. The Company made GOCOVRI available for physician and patient use in the fourth quarter of 2017, with plans for a full commercial launch via the deployment of the Company’s sales team in January 2018. Based upon the current status of, and plans for, its product development and commercialization, the Company believes that the existing cash, cash equivalents, and investments of $130.7 million as of September 30, 2017 will be adequate to satisfy the Company’s capital needs through at least the next twelve months from the issuance of this Quarterly Report on Form 10-Q. 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 selling, 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 offset expenses. While the Company had net income during 2014, 2013, and 2012, it has not generated any commercial revenue from sales of its products. Under its license agreement with Allergan, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for net 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. |
Inventory | Inventory Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. Inventory consists of raw materials, work-in-process, and GOCOVRI finished goods. Raw materials and work-in-process that may be utilized for both commercial and clinical programs are included in inventory and charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes. Costs include active pharmaceutical ingredient (API), third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. If the Company identifies excess, obsolete or unsalable product, the Company will write down its inventory to its net realizable value in the period it is identified. The Company begins capitalizing costs as inventory when the product candidate receives regulatory approval. Prior to regulatory approval, inventory costs related to product candidates are recorded as research and development expense. The Company received FDA approval for GOCOVRI on August 24, 2017, and began capitalizing inventory manufactured at the FDA approved location, after FDA approval. |
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) the 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 equivalent employees assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. |
Accounts Receivable | Accounts Receivable The Company’s accounts receivable balance consists of amounts due from Allergan, in accordance with the contract terms of the license agreement, for research and development funding and full-time equivalent employees assigned to the Allergan license agreement, as well as for reimbursement of external costs, recorded as contra-expense, associated with supporting prosecution and litigation of intellectual property rights. |
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 contract 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 CROs 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 are to 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 CROs, 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 pre-approval inventory purchases, product formulation, chemical analysis, and the transfer and scale-up of manufacturing at facilities operated by 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 CROs 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 the Company’s 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. |
Long-Term Debt | Long-Term Debt Long-term debt consists of the Company’s loan agreement with HealthCare Royalty Partners (“HCRP”). The Company accounted for the loan agreement as a debt financing arrangement. Interest expense is accrued using the effective interest rate method over the estimated period the debt will be repaid. Debt issuance costs have been recorded as a debt discount in the Company’s consolidated balance sheets and are being amortized and recorded as interest expense throughout the life of the loan using the effective interest rate method. The Company must make certain assumptions and estimates, including future royalties and net product sales, in determining the expected repayment term and amortization period of the debt discount, as well as the classification between current and long-term portions. The Company periodically assesses these assumptions and estimates, and adjusts the liabilities accordingly. |
Embedded Derivatives Related to Debt Instruments | Embedded Derivatives Related to Debt Instruments Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the debt instrument. Under the Company’s loan agreement with HCRP, upon the occurrence of a default or a change in control, the Company may be required to make mandatory prepayments of the borrowings. The prepayment premium is considered an embedded derivative, as the holder of the loans may exercise the option to require prepayment by the Company. Further, in the event of a regulatory change that results in a material adverse effect on HCRP’s rate of return, the Company shall pay directly to HCRP an amount that compensates HCRP for such reduction. The embedded derivative is presented as a component of other non-current liabilities. The Company will remeasure the embedded derivatives each reporting period and report changes in the estimated fair value as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share 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. |
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 is 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. Since the issuance of ASU 2014-09, the FASB has issued several amendments which clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , ASU 2016-10, Identifying Performance Obligations and Licensing , ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting , ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, and ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company plans to adopt the new standard in the first quarter of fiscal year 2018 using the full retrospective method to restate each prior reporting period presented in its consolidated financial statements. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. 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 June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. The new guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) – Scope of Modification Accounting. The new guidance clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. This guidance is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
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): September 30, 2017 Total Level 1 Level 2 Level 3 Assets: Money market $ 11,043 $ 11,043 $ — $ — Corporate debt 37,913 — 37,913 — U.S. Treasury notes 70,696 — 70,696 — Total assets measured at fair value $ 119,652 $ 11,043 $ 108,609 $ — Liabilities: Embedded derivative liability $ 233 $ — $ — $ 233 Total liabilities measured at fair value $ 233 $ — $ — $ 233 December 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market $ 192 $ 192 $ — $ — Corporate debt 51,233 — 51,233 — U.S. Treasury notes 60,976 — 60,976 — Total assets measured at fair value $ 112,401 $ 192 $ 112,209 $ — |
Summary of the changes in the estimated fair value of the Company’s embedded derivative | The following table sets forth a summary of the changes in the estimated fair value of the Company’s embedded derivative, which is measured at fair value as a Level 3 liability on a recurring basis (in thousands): Balance as of December 31, 2016 $ — Issuance of long-term debt with embedded derivative 764 Change in fair value included in interest and other income, net (531 ) Balance as of September 30, 2017 $ 233 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
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 September 30, 2017 and December 31, 2016 (in thousands): September 30, 2017 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Investments: Corporate debt $ 37,948 $ — $ (35 ) $ 37,913 U.S. Treasury notes 70,773 — (77 ) 70,696 Total $ 108,721 $ — $ (112 ) $ 108,609 Reported as: Short-term investments $ 101,709 $ — $ (104 ) $ 101,605 Long-term investments 7,012 — (8 ) 7,004 Total $ 108,721 $ — $ (112 ) $ 108,609 December 31, 2016 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Investments: Corporate debt $ 51,354 $ — $ (121 ) $ 51,233 U.S. Treasury notes 61,048 5 (77 ) 60,976 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Reported as: Short-term investments $ 90,050 $ 1 $ (134 ) $ 89,917 Long-term investments 22,352 4 (64 ) 22,292 Total $ 112,402 $ 5 $ (198 ) $ 112,209 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consists of the following (in thousands): September 30, 2017 December 31, 2016 Raw materials $ 326 $ — Work-in-process 72 — Finished goods 27 — Total inventory $ 425 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under a non-cancelable facility operating lease | As of September 30, 2017 , future minimum lease payments under the non-cancelable facility operating lease and non-cancelable purchase commitments were as follows (in thousands): September 30, 2017 2017 (remaining) $ 2,144 2018 1,918 2019 1,925 2020 592 2021 — Thereafter — Total $ 6,579 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt and unamortized debt discount balances | Long-term debt and unamortized debt discount balances are as follows (in thousands): September 30, 2017 Loans payable, gross $ 35,000 Less: Unamortized debt discount and issuance costs (1,879 ) Plus: Unpaid portion of quarterly interest payment 2,287 Carrying value of loans payable $ 35,408 Less: Current portion of long-term debt — Non-current portion of long-term debt $ 35,408 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of shares of Company's common stock reserved for future issuance | Shares of the Company’s common stock reserved for future issuance are as follows: September 30, December 31, Common stock awards issued and outstanding 5,926,814 5,483,557 Authorized for future issuance under 2014 Equity Incentive Plan 1,700,824 1,576,926 Authorized for future issuance under 2016 Inducement Plan 429,365 334,062 Employee stock purchase plan 718,210 532,849 Total 8,775,213 7,927,394 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of allocation of total stock-based compensation expense | The following table reflects stock-based compensation expense recognized for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Research and development $ 837 $ 738 $ 2,553 $ 2,136 Selling, general and administrative 2,425 1,860 7,358 5,646 Total stock-based compensation expense $ 3,262 $ 2,598 $ 9,911 $ 7,782 |
Description of Business (Detail
Description of Business (Details) | 9 Months Ended |
Sep. 30, 2017productsegment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of developed medicines | product | 2 |
Number of operating segments | segment | 1 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accounting Policies [Abstract] | ||||
Cash, cash equivalents, and investments | $ 130.7 | $ 130.7 | ||
Potentially dilutive securities (in shares) | 6,206 | 5,523 | 6,002 | 5,535 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets: | ||
Total assets measured at fair value | $ 119,652 | $ 112,401 |
Liabilities: | ||
Total liabilities measured at fair value | 233 | |
Embedded derivative liability | ||
Liabilities: | ||
Total liabilities measured at fair value | 233 | |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 11,043 | 192 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 1 | Embedded derivative liability | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 108,609 | 112,209 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 2 | Embedded derivative liability | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 3 | ||
Liabilities: | ||
Total liabilities measured at fair value | 233 | |
Level 3 | Embedded derivative liability | ||
Liabilities: | ||
Total liabilities measured at fair value | 233 | |
Money market | ||
Assets: | ||
Total assets measured at fair value | 11,043 | 192 |
Money market | Level 1 | ||
Assets: | ||
Total assets measured at fair value | 11,043 | 192 |
Corporate debt | ||
Assets: | ||
Total assets measured at fair value | 37,913 | 51,233 |
Corporate debt | Level 2 | ||
Assets: | ||
Total assets measured at fair value | 37,913 | 51,233 |
U.S. Treasury notes | ||
Assets: | ||
Total assets measured at fair value | 70,696 | 60,976 |
U.S. Treasury notes | Level 2 | ||
Assets: | ||
Total assets measured at fair value | $ 70,696 | $ 60,976 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Estimated Fair Value of Embedded Derivative (Details) - Level 3 - Long-term debt with embedded derivative $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of December 31, 2016 | $ 0 |
Issuance of long-term debt with embedded derivative | 764 |
Change in fair value included in interest and other income, net | (531) |
Balance as of September 30, 2017 | $ 233 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) | Sep. 30, 2017USD ($) |
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 ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Available-for-sale securities | ||
Amortized Cost | $ 108,721 | $ 112,402 |
Gross Unrealized Gains | 0 | 5 |
Gross Unrealized Losses | (112) | (198) |
Estimated Fair Value | 108,609 | 112,209 |
Short-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 101,709 | 90,050 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (104) | (134) |
Estimated Fair Value | 101,605 | 89,917 |
Accrued interest | 600 | 300 |
Long-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 7,012 | 22,352 |
Gross Unrealized Gains | 0 | 4 |
Gross Unrealized Losses | (8) | (64) |
Estimated Fair Value | 7,004 | 22,292 |
Accrued interest | $ 30 | 100 |
Long-term investments | Minimum | ||
Available-for-sale securities | ||
Maturity range of long term investment | 12 months | |
Long-term investments | Maximum | ||
Available-for-sale securities | ||
Maturity range of long term investment | 14 months | |
Corporate debt | ||
Available-for-sale securities | ||
Amortized Cost | $ 37,948 | 51,354 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (35) | (121) |
Estimated Fair Value | 37,913 | 51,233 |
U.S. Treasury notes | ||
Available-for-sale securities | ||
Amortized Cost | 70,773 | 61,048 |
Gross Unrealized Gains | 0 | 5 |
Gross Unrealized Losses | (77) | (77) |
Estimated Fair Value | $ 70,696 | $ 60,976 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 326 | $ 0 |
Work-in-process | 72 | 0 |
Finished goods | 27 | 0 |
Total inventory | $ 425 | $ 0 |
License Agreements (Details)
License Agreements (Details) - USD ($) | 1 Months Ended | 9 Months Ended | |
Nov. 30, 2012 | Sep. 30, 2017 | Sep. 30, 2016 | |
License Agreements | |||
Period describing the commercial launch of dose | 15 years | ||
License agreement | |||
License Agreements | |||
Upfront payment received | $ 65,000,000 | ||
Maximum total additional cash payments receivable upon achievement of certain development and regulatory milestones | $ 95,000,000 | ||
Prosecution and litigation cost | $ 0 | $ 2,400,000 |
Commitments and Contingencies34
Commitments and Contingencies (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($)ft²claimdefendant | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease agreement square footage | ft² | 18,500 |
Future minimum lease payments under non-cancelable facility operating leases | |
2017 (remaining) | $ 2,144 |
2,018 | 1,918 |
2,019 | 1,925 |
2,020 | 592 |
2,021 | 0 |
Thereafter | 0 |
Total | $ 6,579 |
Number of claims | claim | 0 |
Namzaric XR | |
Loss Contingencies [Line Items] | |
Number of defendants not entered Into settlement agreements | defendant | 1 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
May 31, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | ||||
Payment of debt issuance costs | $ 623,000 | $ 0 | ||
Level 3 | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, fair value | $ 42,500,000 | 42,500,000 | ||
HCRP | Royalty-backed loan agreement | ||||
Debt Instrument [Line Items] | ||||
Proceeds from issuance of debt | $ 35,000,000 | |||
Contingent consideration, asset | $ 65,000,000 | |||
Percentage revenue interest of future net sales | 12.50% | |||
Quarterly royalty payment (up to) | $ 15,000,000 | |||
Royalty percentage of future net sales | 6.25% | |||
Royalty trail cap, percentage of face amount | 200.00% | |||
Voluntary prepay election, amount due, percentage of funded amount | 200.00% | |||
Interest rate, stated percentage | 11.00% | |||
Unpaid interest payment added to principal amount, term | 2 years 3 months | |||
Accrued interest | 1,600,000 | 2,300,000 | ||
Lender expense | $ 400,000 | |||
Payment of debt issuance costs | $ 800,000 | |||
Interest expense | $ 1,700,000 | $ 2,400,000 | ||
Effective interest rate | 20.60% | |||
HCRP | Royalty-backed loan agreement | December 2021 | ||||
Debt Instrument [Line Items] | ||||
Royalty percentage of future net sales if principal and interest payments below minimum specified levels (up to) | 17.50% | |||
HCRP | Royalty-backed loan agreement | December 2022 | ||||
Debt Instrument [Line Items] | ||||
Royalty percentage of future net sales if principal and interest payments below minimum specified levels (up to) | 22.50% |
Long-term Debt - Long-Term Debt
Long-term Debt - Long-Term Debt and Unamortized Debt Discount Balances (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 35,408 | $ 0 |
HCRP | Royalty-backed loan agreement | ||
Debt Instrument [Line Items] | ||
Loans payable, gross | 35,000 | |
Less: Unamortized debt discount and issuance costs | (1,879) | |
Plus: Unpaid portion of quarterly interest payment | 2,287 | |
Carrying value of loans payable | 35,408 | |
Less: Current portion of long-term debt | 0 | |
Long-term debt | $ 35,408 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | Jan. 06, 2016USD ($)$ / sharesshares | Sep. 30, 2017USD ($)voteshares | Sep. 30, 2016USD ($) | May 31, 2017USD ($) | Jan. 31, 2017shares | Dec. 31, 2016shares | Mar. 31, 2016shares |
Shareholders' Equity | |||||||
Authorized shares of common stock (in shares) | 100,000,000 | 100,000,000 | |||||
Dividends declared | $ | $ 0 | ||||||
Number of votes per share | vote | 1 | ||||||
Net proceeds from follow-on public offering | $ | $ 0 | $ 61,822,000 | |||||
Total common stock reserved for future issuance (in shares) | 8,775,213 | 7,927,394 | |||||
Cowen | |||||||
Shareholders' Equity | |||||||
At-the-market offering, aggregate offering price (up to) | $ | $ 50,000,000 | ||||||
At-the-market offering, commission as a percentage of gross proceeds (up to) | 3.00% | ||||||
2016 Inducement Plan | |||||||
Shareholders' Equity | |||||||
Total common stock reserved for future issuance (in shares) | 900,000 | 450,000 | |||||
Employee Stock Purchase Plan | |||||||
Shareholders' Equity | |||||||
Total common stock reserved for future issuance (in shares) | 718,210 | 532,849 | |||||
Stock options | |||||||
Shareholders' Equity | |||||||
Total common stock reserved for future issuance (in shares) | 5,926,814 | 5,483,557 | |||||
Stock options | 2014 Equity Incentive Plan | |||||||
Shareholders' Equity | |||||||
Authorized for future issuance (in shares) | 1,700,824 | 1,576,926 | |||||
Stock options | 2016 Inducement Plan | |||||||
Shareholders' Equity | |||||||
Authorized for future issuance (in shares) | 429,365 | 334,062 | |||||
Common Stock | |||||||
Shareholders' Equity | |||||||
Sale of shares under the sales agreement (in shares) | 2,875,000 | ||||||
Share price (in dollars per share) | $ / shares | $ 23 | ||||||
Net proceeds from follow-on public offering | $ | $ 61,800,000 | ||||||
Common Stock | Stock options | Over-Allotment Option | |||||||
Shareholders' Equity | |||||||
Sale of shares under the sales agreement (in shares) | 375,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Mar. 31, 2016 | |
Stock Option Plans | |||||
Company’s common stock available for issuance (in shares) | 8,775,213 | 7,927,394 | |||
Stock-based compensation capitalized in inventory | $ 13 | $ 0 | |||
Employee Stock Purchase Plan | |||||
Stock Option Plans | |||||
Increase in common stock available for issuance (in shares) | 220,090 | ||||
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% | ||||
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 (in shares) | 880,362 | ||||
2016 Inducement Plan | |||||
Stock Option Plans | |||||
Company’s common stock available for issuance (in shares) | 900,000 | 450,000 | |||
Company’s additional common stock available for issuance (in shares) | 450,000 |
Stock-Based Compensation - Othe
Stock-Based Compensation - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-based compensation expense | ||||
Total stock-based compensation expense | $ 3,262 | $ 2,598 | $ 9,911 | $ 7,782 |
Research and development | ||||
Stock-based compensation expense | ||||
Total stock-based compensation expense | 837 | 738 | 2,553 | 2,136 |
Selling, general and administrative | ||||
Stock-based compensation expense | ||||
Total stock-based compensation expense | $ 2,425 | $ 1,860 | $ 7,358 | $ 5,646 |
Subsequent Events (Details)
Subsequent Events (Details) - Royalty-backed loan agreement - HCRP - USD ($) | 1 Months Ended | 3 Months Ended |
May 31, 2017 | Dec. 31, 2017 | |
Subsequent Event [Line Items] | ||
Proceeds from issuance of debt | $ 35,000,000 | |
Scenario, Forecast | ||
Subsequent Event [Line Items] | ||
Proceeds from issuance of debt | $ 65,000,000 |