Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 01, 2018 | Jun. 30, 2017 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | VNDA | ||
Entity Registrant Name | Vanda Pharmaceuticals Inc. | ||
Entity Central Index Key | 1,347,178 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 45,437,938 | ||
Entity Public Float | $ 715.2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 33,627 | $ 40,426 |
Marketable securities | 109,786 | 100,914 |
Accounts receivable, net | 17,601 | 20,268 |
Inventory | 840 | 779 |
Prepaid expenses and other current assets | 8,003 | 11,788 |
Total current assets | 169,857 | 174,175 |
Property and equipment, net | 5,306 | 5,015 |
Intangible assets, net | 26,069 | 27,819 |
Non-current inventory and other | 4,193 | 3,365 |
Total assets | 205,425 | 210,374 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 20,335 | 16,196 |
Accrued government and other rebates | 23,028 | 34,124 |
Milestone obligations under license agreements | 27,000 | |
Total current liabilities | 70,363 | 50,320 |
Milestone obligations under license agreements | 25,000 | |
Other non-current liabilities | 3,675 | 3,724 |
Total liabilities | 74,038 | 79,044 |
Commitments and contingencies (Notes 11 and 16) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding | ||
Common stock, $0.001 par value; 150,000,000 shares authorized; 44,938,133 and 44,000,614 shares issued and outstanding at December 31, 2017 and 2016, respectively | 45 | 44 |
Additional paid-in capital | 492,802 | 477,087 |
Accumulated other comprehensive income (loss) | (34) | 58 |
Accumulated deficit | (361,426) | (345,859) |
Total stockholders' equity | 131,387 | 131,330 |
Total liabilities and stockholders' equity | $ 205,425 | $ 210,374 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 44,938,133 | 44,000,614 |
Common stock, shares outstanding | 44,938,133 | 44,000,614 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Net product sales | $ 165,083 | $ 146,017 | $ 109,925 |
Total revenues | 165,083 | 146,017 | 109,925 |
Operating expenses: | |||
Cost of goods sold, excluding amortization | 17,848 | 24,712 | 23,462 |
Research and development | 38,547 | 29,156 | 29,145 |
Selling, general and administrative | 123,841 | 99,787 | 84,531 |
Intangible asset amortization | 1,750 | 10,933 | 12,972 |
Total operating expenses | 181,986 | 164,588 | 150,110 |
Loss from operations | (16,903) | (18,571) | (40,185) |
Other income | 1,472 | 665 | 320 |
Loss before income taxes | (15,431) | (17,906) | (39,865) |
Provision for income taxes | 136 | 104 | |
Net loss | $ (15,567) | $ (18,010) | $ (39,865) |
Net loss per share: | |||
Basic | $ (0.35) | $ (0.41) | $ (0.94) |
Diluted | $ (0.35) | $ (0.41) | $ (0.94) |
Weighted average shares outstanding: | |||
Basic | 44,735,146 | 43,449,441 | 42,250,254 |
Diluted | 44,735,146 | 43,449,441 | 42,250,254 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss | $ (15,567) | $ (18,010) | $ (39,865) |
Other comprehensive income: | |||
Net foreign currency translation gain (loss) | 30 | (1) | |
Change in net unrealized gain (loss) on marketable securities | (122) | 20 | 23 |
Tax provision on other comprehensive income | 0 | 0 | 0 |
Other comprehensive income (loss), net of tax | (92) | 19 | 23 |
Comprehensive loss | $ (15,659) | $ (17,991) | $ (39,842) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Other Comprehensive Income (Loss) | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2014 | 41,486,361 | ||||
Beginning balance at Dec. 31, 2014 | $ 160,817 | $ 41 | $ 448,744 | $ 16 | $ (287,984) |
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | 4,374 | $ 2 | 4,372 | ||
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares) | 1,353,877 | ||||
Shares withheld upon settlement of equity awards | (283) | (283) | |||
Shares withheld upon settlement of equity awards(in shares) | (24,947) | ||||
Stock-based compensation expense | 7,961 | 7,961 | |||
Net loss | (39,865) | (39,865) | |||
Other comprehensive income (loss), net of tax | 23 | 23 | |||
Ending balance (in shares) at Dec. 31, 2015 | 42,815,291 | ||||
Ending balance at Dec. 31, 2015 | 133,027 | $ 43 | 460,794 | 39 | (327,849) |
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | 7,751 | $ 1 | 7,750 | ||
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares) | 1,185,323 | ||||
Stock-based compensation expense | 8,543 | 8,543 | |||
Net loss | (18,010) | (18,010) | |||
Other comprehensive income (loss), net of tax | $ 19 | 19 | |||
Ending balance (in shares) at Dec. 31, 2016 | 44,000,614 | 44,000,614 | |||
Ending balance at Dec. 31, 2016 | $ 131,330 | $ 44 | 477,087 | 58 | (345,859) |
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | 5,251 | $ 1 | 5,250 | ||
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares) | 937,519 | ||||
Stock-based compensation expense | 10,465 | 10,465 | |||
Net loss | (15,567) | (15,567) | |||
Other comprehensive income (loss), net of tax | $ (92) | (92) | |||
Ending balance (in shares) at Dec. 31, 2017 | 44,938,133 | 44,938,133 | |||
Ending balance at Dec. 31, 2017 | $ 131,387 | $ 45 | $ 492,802 | $ (34) | $ (361,426) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (15,567) | $ (18,010) | $ (39,865) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation of property and equipment | 1,234 | 935 | 582 |
Stock-based compensation | 10,465 | 8,543 | 7,961 |
Amortization of (discounts) premiums on marketable securities | (426) | 62 | 677 |
Intangible asset amortization | 1,750 | 10,933 | 12,972 |
Other non-cash adjustments, net | 587 | 542 | 483 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 2,525 | (4,298) | (12,677) |
Prepaid expenses and other assets | 3,652 | (6,159) | (2,558) |
Inventory | (1,060) | 200 | 387 |
Accounts payable and other liabilities | 5,953 | 575 | 9,432 |
Accrued government and other rebates | (11,096) | (1,426) | 35,055 |
Net cash provided by (used in) operating activities | (1,983) | (8,103) | 12,449 |
Cash flows from investing activities | |||
Purchases of property and equipment | (1,664) | (1,407) | (2,527) |
Purchases of marketable securities | (148,135) | (165,405) | (193,111) |
Proceeds from sale of marketable securities | 999 | ||
Maturities of marketable securities | 139,568 | 156,787 | 168,041 |
Other investing activities | 124 | (46) | |
Net cash used in investing activities | (10,107) | (10,071) | (26,598) |
Cash flows from financing activities | |||
Proceeds from exercise of employee stock options | 5,251 | 7,751 | 4,374 |
Tax obligations paid in connection with settlement of restricted stock units | (283) | ||
Net cash provided by financing activities | 5,251 | 7,751 | 4,091 |
Effect of exchange rate changes on cash and cash equivalents | 40 | 6 | |
Net decrease in cash and cash equivalents | (6,799) | (10,417) | (10,058) |
Cash and cash equivalents | |||
Beginning of year | 40,426 | 50,843 | 60,901 |
End of year | $ 33,627 | $ 40,426 | $ 50,843 |
Business Organization and Prese
Business Organization and Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Business Organization and Presentation | 1. Business Organization and Presentation Business organization Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s portfolio includes the following products: • HETLIOZ ® Non-24-Hour (Non-24), ® Non-24 ® ® Non-24, • Fanapt ® ® ® ® ® • Tradipitant (VLY-686), neurokinin-1 (NK-1R) • VTR-297 • VQW-765 AQW-051), alpha-7 • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. Basis of presentation The accompanying consolidated financial statements includes the accounts of Vanda Pharmaceuticals Inc. and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.). All intercompany accounts and transactions have been eliminated in consolidation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Management continually re-evaluates Cash and Cash Equivalents For purposes of the consolidated balance sheets and consolidated statements of cash flows, cash equivalents represent highly-liquid investments with a maturity date of three months or less at the date of purchase. Cash and cash equivalents includes investments in money market funds with commercial banks and financial institutions, and commercial paper of high-quality corporate issuers. Restricted cash of $0.7 million and $0.8 million relating primarily to leases for office space is included in other current and other non-current Marketable Securities The Company classifies all of its marketable securities as available-for-sale Available-for-sale available-for-sale available-for-sale non-current. Inventory Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out non-current. Intangible Assets Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as expense. Obligations for milestone payments to other pharmaceutical companies that may result in a capitalized intangible asset are recognized when it is deemed probable that the milestone event will occur. In the event a product has been approved by the FDA or an alternative future use exists for a product, patent and license costs are capitalized and amortized on a straight-line basis over the estimated useful economic life of the of the related product patents. For intangible assets related to HETLIOZ ® ® ® ® Property and Equipment Property and equipment are stated at cost less accumulated depreciation. The costs of leasehold improvements funded by or reimbursed by the lessor are capitalized and amortized as leasehold improvements along with a corresponding deferred rent liability. Depreciation of most property and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized using a straight-line basis over the lesser of the estimated useful lives of the assets or the terms of the related leases. The costs of additions and improvements are capitalized, and repairs and maintenance costs are charged to operations in the period incurred. Upon retirement or disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statement of operations for that period. Accounts Payable and Accrued Liabilities The Company’s management is required to estimate accrued liabilities as part of the process of preparing financial statements. The estimation of accrued liabilities involves identifying services that have been performed on the Company’s behalf, and then estimating the level of service performed and the associated cost incurred for such services as of each balance sheet date in the financial statements. Accrued liabilities include research and development expenses, such as accrued costs under contracts with clinical monitors, data management organizations and investigators in conjunction with clinical trials, fees to contract manufacturers in conjunction with the production of clinical materials, consulting and professional fees, such as lawyers and fees for marketing and other commercialization activities, accrued compensation and employee benefits, such as accrued bonus, royalties payable under licensing agreements, and other accrued fees. Pursuant to management’s assessment of the services that have been performed on clinical trials and other contracts, the Company recognizes these expenses as the services are provided. Such management assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment. In the event that the Company does not identify certain costs that have begun to be incurred or the Company under- or over-estimates the level of services performed or the costs of such services, the Company’s reported expenses for such period would be too low or too high. Net Product Sales The Company’s net product sales consist of sales of HETLIOZ ® ® Year Ended December 31, ( in thousands ) 2017 2016 2015 HETLIOZ ® $ 89,978 $ 71,671 $ 44,302 Fanapt ® 75,105 74,346 65,623 $ 165,083 $ 146,017 $ 109,925 The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-15, Revenue Recognition—Products Major Customers HETLIOZ ® ® Year Ended December 31, Percent of Net Product Sales 2017 2016 2015 Distributor A 32 % 23 % 14 % Distributor B 15 % 16 % 18 % Distributor C 15 % 16 % 19 % Distributor D 12 % 15 % 17 % Distributor E 11 % 16 % 14 % Distributor F 10 % 1 % 0 % Distributor G — 9 % 12 % The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016: December 31, Percent of Accounts Receivable, Net 2017 2016 Distributor A 28 % 22 % Distributor B 18 % 19 % Distributor C 10 % 15 % Distributor D 21 % 25 % Distributor E 8 % 11 % Product Sales Discounts and Allowances The Company’s product sales are recorded net of applicable discounts, rebates, chargebacks, service fees, co-pay co-pay Prompt-pay: Rebates: Chargebacks: non-profit Medicare Part D Coverage Gap: Service Fees: Co-payment co-payment Co-pay co-pay Product Returns: (in thousands) Balance at December 31, 2014 $ 85 Additions 986 Credits/payments (12 ) Balance at December 31, 2015 1,059 Additions 2,507 Credits/payments (486 ) Balance at December 31, 2016 3,080 Additions 5,978 Credits/payments (4,939 ) Balance at December 31, 2017 $ 4,119 Cost of Goods Sold Cost of goods sold includes royalties payable, the cost of inventory sold, manufacturing and supply chain costs and product shipping and handling costs related to sales of HETLIOZ ® ® Research and Development Expenses Research and development expenses consist primarily of fees for services provided by third parties in connection with the clinical trials, costs of contract manufacturing services, milestone payments, costs of materials used in clinical trials and research and development, costs for regulatory consultants and filings, depreciation of capital resources used to develop products, related facilities costs, and salaries, other employee-related costs and stock-based compensation for research and development personnel. The Company expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments related to license agreements are capitalized. Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with the Company’s research and development efforts and has no alternative future use. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of salaries, stock-based compensation, facilities and third party expenses. Selling, general and administrative expenses are associated with the activities of the executive, finance, accounting, information technology, business development, commercial support, trade and distribution, sales, marketing, legal, medical affairs and human resource functions. Additionally, selling, general and administrative expenses included an estimate for the annual Patient Protection and Affordable Care fee. Stock-Based Compensation Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company recognizes the expense over the award’s vesting period. The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Advertising Expense The Company expenses the costs of advertising, including branded promotional expenses, as incurred. Branded advertising expenses, recorded in selling, general and administrative expenses, were $1.3 million, $1.4 million and $3.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Foreign Currency The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s international subsidiaries is the local currency. Assets and liabilities, including inter-company balances for which settlement is anticipated in the foreseeable future, denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Foreign currency equity balances are translated at historical rates. Revenues and expenses denominated in foreign currencies are translated at average exchange rates for the respective periods. Foreign currency translation adjustments are recorded in accumulated other comprehensive income. Transactions denominated in currencies other than subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the consolidated balance sheets related to these items will result in unrealized foreign currency transaction gains and losses based upon period-end Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted. Changes in ownership may limit the amount of NOL carryforwards that can be utilized in the future to offset taxable income. Non-Cash Purchases of property and equipment accrued in current liabilities amounted to zero, $0.2 million and $0.2 million for each of the years ended December 31, 2017, 2016 and 2015, respectively. The acquisition of an intangible asset relating to HETLIOZ ® non-current Certain Risks and Uncertainties The Company’s products under development require approval from the FDA or other international regulatory agencies prior to commercial sales. There can be no assurance the products will receive the necessary clearance. If the Company is denied clearance or clearance is delayed, it may have a material adverse impact on the Company. The Company’s products are concentrated in rapidly-changing, highly-competitive markets, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. Any failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer requirements or changes in regulatory requirements or industry standards or any significant delays in the development or introduction of products or services could have a material adverse effect on the Company’s business, operating results and future cash flows. The Company depends on single source suppliers for critical raw materials for manufacturing, as well as other components required for the administration of its products. The loss of these suppliers could delay the clinical trials or prevent or delay commercialization of the products. Concentrations of Credit Risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash, cash equivalents and marketable securities. The Company places its cash, cash equivalents and marketable securities with highly-rated financial institutions. At December 31, 2017, the Company maintained all of its cash, cash equivalents and marketable securities in three financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and the Company believes there is minimal risk of losses on such balances. Segment and Geographic Information The Company operates in one reporting segment and, accordingly, no segment disclosures are presented herein. Foreign sales were not material for each of the years ended December 31, 2017, 2016 and 2015. Recent Accounting Pronouncements In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Restricted Cash beginning-of-period end-of-period In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting paid-in In February 2016, the FASB issued ASU 2016-02, Leases right-of-use In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers 2015-14, Revenue from Contracts with Customers 2016-08 Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue versus Net) 2016-10, Revenue from Contracts with Customers, identifying Performance Obligations and Licensing 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients 2014-09. 2016-08, 2016-10, 2016-12 2014-09 2015-14. |
Earnings per Share
Earnings per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings per Share | 3. Earnings per Share Basic earnings per share (EPS) is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing the net loss by the weighted average number of shares of common stock outstanding, plus potential outstanding common stock for the period. Potential outstanding common stock includes stock options and shares underlying RSUs, but only to the extent that their inclusion is dilutive. The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the years ended December 31, 2017, 2016, and 2015: Year Ended December 31, (in thousands, except for share and per share amounts) 2017 2016 2015 Numerator: Net loss $ (15,567 ) $ (18,010 ) $ (39,865 ) Denominator: Weighted average shares outstanding, basic and diluted 44,735,146 43,449,441 42,250,254 Net loss per share, basic and diluted: Basic $ (0.35 ) $ (0.41 ) $ (0.94 ) Diluted $ (0.35 ) $ (0.41 ) $ (0.94 ) Antidilutive securities excluded from calculations of diluted net income (loss) per share 3,136,515 4,943,797 5,660,199 The Company incurred a net loss for each of the years ended December 31, 2017, 2016 and 2015 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent. |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2017 | |
Marketable Securities | 4. Marketable Securities The following is a summary of the Company’s available-for-sale Gross Gross Fair December 31, 2017 Amortized Unrealized Unrealized Market (in thousands) Cost Gains Losses Value U.S. Treasury and government agencies $ 60,681 $ — $ (63 ) $ 60,618 Corporate debt 49,168 12 (12 ) 49,168 $ 109,849 $ 12 $ (75 ) $ 109,786 The following is a summary of the Company’s available-for-sale Gross Gross Fair December 31, 2016 Amortized Unrealized Unrealized Market (in thousands) Cost Gains Losses Value U.S. Treasury and government agencies $ 50,661 $ 3 $ (17 ) $ 50,647 Corporate debt 50,194 89 (16 ) 50,267 $ 100,855 $ 92 $ (33 ) $ 100,914 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | 5. Fair Value Measurements Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: • Level 1 — defined as observable inputs such as quoted prices in active markets • Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable • Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions Marketable securities classified in Level 1 and Level 2 as of December 31, 2017 and 2016 consist of cash equivalents and available-for-sale The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2017, as follows: Fair Value Measurement as of December 31, 2017 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs (in thousands) 2017 (Level 1) (Level 2) (Level 3) U.S. Treasury and government agencies 60,618 60,618 — — Corporate debt 53,164 — 53,164 — $ 113,782 $ 60,618 $ 53,164 $ — Total assets measured at fair value as of December 31, 2017 include $4.0 million of cash equivalents. The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2016, as follows: Fair Value Measurement as of December 31, 2016 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs (in thousands) 2016 (Level 1) (Level 2) (Level 3) U.S. Treasury and government agencies $ 50,647 $ 50,647 $ — $ — Corporate debt 50,267 — 50,267 — $ 100,914 $ 50,647 $ 50,267 $ — The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, the carrying value of which materially approximate their fair values. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory | 6. Inventory The Company evaluates expiry risk by evaluating current and future product demand relative to product shelf life. The Company builds demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. Inventory levels are evaluated for the amount of inventory that would be sold within one year. At certain times, the level of inventory can exceed the forecasted level of cost of goods sold for the next twelve months. The Company classifies the estimate of such inventory as non-current. December 31, December 31, (in thousands) 2017 2016 Current assets Work-in-process $ 80 $ 17 Finished goods 760 762 $ 840 $ 779 Non-Current Raw materials $ 87 $ 127 Work-in-process 2,821 2,225 Finished goods 408 83 $ 3,316 $ 2,435 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses and Other Current Assets | 7. Prepaid Expenses and Other Current Assets The following is a summary of the Company’s prepaid expenses and other current assets as of December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 2,415 $ 2,397 Consulting and other professional fees 2,876 6,051 Prepaid royalties — 1,761 Other 2,712 1,579 $ 8,003 $ 11,788 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | 8. Property and Equipment The following is a summary of the Company’s property and equipment, at cost, as of December 31, 2017 and 2016: Estimated Useful Life December 31, (in thousands) (Years) 2017 2016 Computer and other equipment 3 $ 3,342 $ 2,426 Furniture and fixtures 5 - 7 1,929 1,412 Leasehold improvements 5 - 11 4,515 4,408 9,786 8,246 Accumulated depreciation and amortization (4,480 ) (3,231 ) $ 5,306 $ 5,015 Depreciation expense was $1.2 million, $0.9 million and $0.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Intangible Assets | 9. Intangible Assets HETLIOZ ® . ® ® The Company is obligated to make a future milestone payment to BMS of $25.0 million when cumulative worldwide sales of HETLIOZ ® non-current ® ® Fanapt ® ® ® Pursuant to a settlement agreement in December 2014, Novartis transferred all U.S. and Canadian rights in the Fanapt ® ® ® ® The following is a summary of the Company’s intangible assets as of December 31, 2017: December 31, 2017 Estimated Gross Net Useful Life Carrying Accumulated Carrying (in thousands) (Years) Amount Amortization Amount HETLIOZ ® May 2034 $ 33,000 $ 6,931 $ 26,069 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 34,872 $ 26,069 The following is a summary of the Company’s intangible assets as of December 31, 2016: December 31, 2016 Estimated Gross Net Useful Life Carrying Accumulated Carrying (in thousands) (Years) Amount Amortization Amount HETLIOZ ® January 2033 $ 33,000 $ 5,181 $ 27,819 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,122 $ 27,819 Intangible assets are amortized over their estimated useful economic life using the straight-line method. Amortization expense for the years ended December 31, 2017, 2016 and 2015 was as follows: Year Ended December 31, (in thousands) 2017 2016 2015 HETLIOZ ® $ 1,750 $ 1,721 $ 2,922 Fanapt ® — 9,212 10,050 $ 1,750 $ 10,933 $ 12,972 The following is a summary of the future intangible asset amortization schedule as of December 31, 2017: (in thousands) Total 2018 2019 2020 2021 2022 Thereafter HETLIOZ ® $ 26,069 $ 1,545 $ 1,591 $ 1,591 $ 1,591 $ 1,591 $ 18,160 |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Payable and Accrued Liabilities | 10. Accounts Payable and Accrued Liabilities The following is a summary of the Company’s accounts payable and accrued liabilities as of December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 4,663 $ 3,024 Consulting and other professional fees 3,961 3,192 Compensation and employee benefits 5,323 4,291 Royalties payable 4,394 4,555 Other 1,994 1,134 $ 20,335 $ 16,196 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | 11. Commitments and Contingencies Operating Leases Commitments relating to operating leases represent the minimum annual future payments under operating leases and subleases for a total of 40,188 square feet of office space for the Company’s headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. that expire in 2026, the operating lease for 2,880 square feet of office space for the Company’s European headquarters in London that has a noncancellable lease term ending in 2021, and 1,249 square feet of office space in Berlin under a short-term operating lease. The following is a summary of the minimum annual future payments under operating leases and subleases for office space as of December 31, 2017: Cash payments due by year (in thousands) Total 2018 2019 2020 2021 2022 Thereafter Operating leases $ 19,789 $ 2,311 $ 2,295 $ 2,351 $ 2,174 $ 2,187 $ 8,471 In 2011, the Company entered into an operating lease for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. for 21,400 square feet of office space. A lease amendment in 2014 increased the office space under lease to 30,260 square feet, and a lease amendment in June 2016 extended the lease term from April 2023 to September 2026. Subject to the prior rights of other tenants, the Company has the right to renew the lease for five years following its expiration. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. The lease may be terminated early by the Company or the landlord under certain circumstances. In June 2016, the Company entered into a sublease under which the Company leases 9,928 square feet of office space for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. The sublease term began in January 2017 and ends in July 2026, but may be terminated earlier by either party under certain circumstances. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. Rent expense under operating leases and subleases, was $3.2 million, $2.5 million and $1.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. Guarantees and Indemnifications The Company has entered into a number of standard intellectual property indemnification agreements in the ordinary course of its business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual from the date of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Since inception, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain conditions. License Agreements The Company’s rights to develop and commercialize its products are subject to the terms and conditions of licenses granted to the Company by other pharmaceutical companies. HETLIOZ ® . ® ® ® ® ® ® ® mid-twenties. ® ® Fanapt ® . ® ® mid-twenties ® know-how. know-how know-how ® know-how Tradipitant. NK-1R pre-NDA pre-NDA VQW-765 AQW-051). ® VQW-765, alpha-7 VQW-765 mid-teens. Portfolio of CFTR activators and inhibitors pre-investigational Research and Development and Marketing Agreements In the course of its business, the Company regularly enters into agreements with clinical organizations to provide services relating to clinical development and clinical manufacturing activities under fee service arrangements. The Company’s current agreements for clinical services may be terminated on generally 60 days’ notice without incurring additional charges, other than charges for work completed but not paid for through the effective date of termination and other costs incurred by the Company’s contractors in closing out work in progress as of the effective date of termination. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | 12. Income Taxes The Company recorded total tax expense of $0.1 million on consolidated pretax loss of $15.4 million, consisting of $15.7 million of pretax loss in the U.S. and $0.3 million of pretax income from foreign subsidiaries for the year ended December 31, 2017. The Company recorded total tax expense of $0.1 million on consolidated pretax loss of $17.9 million, consisting of $18.1 million of pretax loss in the U.S. and $0.2 million of pretax income from foreign subsidiaries for the year ended December 31, 2016. The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, (in thousands) 2017 2016 2015 Current: Federal $ — $ — $ — State 65 66 — Foreign (66 ) 142 Deferred: Federal — — — State — — Foreign 137 (104 ) — Provision for income taxes $ 136 $ 104 $ — Deferred tax assets are reduce by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The fact that the Company has historically generated pretax losses in the U.S. serves as strong evidence that it is more likely than not that deferred tax assets in the U.S. will not be realized in the future. Therefore, the Company had a full tax valuation allowance against all deferred tax assets in the U.S. as of December 31, 2017 and 2016. As a result of the tax valuation allowance against deferred tax assets in the U.S., there was no benefit for income taxes associated with the loss before income taxes for each of the years ended December 31, 2017, 2016 and 2015. The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 Federal tax at statutory rate 35.0 % 35.0 % 35.0 % State taxes 1.7 % 0.8 % -0.1 % The U.S. Tax Cuts and Job Act (1) -262.6 % 0.0 % 0.0 % Change in valuation allowance - U.S. Tax Cuts and Jobs Act 262.6 % 0.0 % 0.0 % Other change in valuation allowance -47.8 % -38.4 % -25.4 % Research and development credit 9.0 % 3.8 % 1.5 % Orphan drug credit 6.3 % 7.6 % 1.6 % Section 162(m) limitation 8.1 % 0.0 % -5.7 % Other tax rate changes -2.6 % 3.9 % -0.3 % Change in state NOLs 5.1 % 0.0 % -1.4 % Stock-based compensation -13.0 % -12.5 % -5.1 % Other items -2.7 % -0.8 % -0.1 % Effective tax rate -0.9 % -0.6 % 0.0 % (1) The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate. The following is a summary of the components of the Company’s deferred tax assets, net, and the related tax valuation allowance as of December 31, 2017 and 2016: December 31, (in thousands) 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 59,222 $ 84,177 Stock-based compensation 5,383 12,443 Accrued and deferred expenses 1,967 2,558 Research and development and orphan drug credit carryforwards 43,976 41,104 Intangible assets 3,745 5,477 Other 2,174 1,019 Total deferred tax assets 116,467 146,778 Deferred tax liabilities: Other (386 ) (666 ) Total deferred tax liabilities (386 ) (666 ) Deferred tax assets, net 116,081 146,112 Valuation allowance 116,110 146,012 Net deferred tax assets (liabilities) $ (29 ) $ 100 The Company’s net deferred tax liability of less than $0.1 million as of December 31, 2017 is included as a component of other non-current non-current The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2017, 2016 and 2015: Balance at Balance at Beginning End of (in thousands) of Year Additions Reductions Year Year Ended: December 31, 2017 $ 146,012 $ 12,403 $ (42,305 ) $ 116,110 December 31, 2016 139,037 11,031 (4,056 ) 146,012 December 31, 2015 128,890 17,002 (6,855 ) 139,037 The Company has net operating loss (NOL) and other tax credit carryforwards in several jurisdictions. As of December 31, 2017, the Company has $49 million of deferred tax assets relating to U.S. federal NOL carryforwards, along with deferred tax assets of $9 million and $35 million related to U.S. federal research and development credits and orphan drug credits, respectively. These tax attributes will begin to expire in 2028, 2024 and 2030, respectively. In addition, the Company has $10 million of deferred tax assets relating to U.S. state NOL carryforwards, which primarily relate to the District of Columbia. State NOLs for the District of Columbia will begin to expire in 2031 and other state NOLs will begin to expire in 2018. A valuation allowance is recorded against these U.S. federal and U.S. state deferred tax assets. Because the Company has generated NOLs from inception through December, 31, 2017, all income tax returns filed by the Company are open to examination by tax jurisdictions. As of December 31, 2017, the Company’s income tax returns had not been under examination by any federal or state tax jurisdictions. As of December 31, 2017 and 2016, the Company had no uncertain tax positions. Certain tax attributes of the Company, including NOLs and credits, would be subject to a limitation should an ownership change as defined under the Internal Revenue Code of 1986, as amended (IRC), Section 382, occur. The limitations resulting from a change in ownership could affect the Company’s ability to utilize its NOLs and credit carryforward (tax attributes). Ownership changes occurred in the years ending December 31, 2014 and December 31, 2008. The Company believes that the ownership changes in 2014 and 2008 will not impact its ability to utilize NOL and credit carryforwards; however, future ownership changes may cause the Company’s existing tax attributes to have additional limitations. Because the Company maintains a valuation allowance on its U.S. tax attributes, any limitation as a result of application of IRC Section 382 limitation would not have a material impact on the Company’s provision for income taxes for the year ended December 31, 2017. The Tax Cuts and Jobs Act (TCJA) was enacted in December 2017. The TCJA reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2017 | |
Accumulated Other Comprehensive Income (Loss) | 13. Accumulated Other Comprehensive Income (Loss) The accumulated balances related to each component of other comprehensive income (loss) were as follows for the years ended December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Foreign currency translation $ 29 $ (1 ) Available-for-sale (63 ) 59 $ (34 ) $ 58 There were no reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2017, 2016 and 2015. |
Equity Incentive Plans
Equity Incentive Plans | 12 Months Ended |
Dec. 31, 2017 | |
Equity Incentive Plans | 14. Equity Incentive Plans As of December 31, 2017, there were 6,077,622 shares that were subject to outstanding options and RSUs under the 2006 Equity Incentive Plan (2006 Plan) and the 2016 Equity Incentive Plan (2016 Plan, and together with the 2006 Plan, Plans). The 2006 Plan expired by its terms on April 12, 2016, and the Company adopted the 2016 Plan. Outstanding options and RSUs under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan. In June 2016, the Company’s stockholders approved the 2016 Plan under which 2,000,000 shares of common stock were reserved for issuance. In June 2017, the Company’s stockholders approved the amendment and restatement of the 2016 Plan pursuant to which an additional 2,700,000 shares were reserved for issuance, among other administrative changes. As a result, there are a total of 4,700,000 shares of common stock reserved for issuance under the 2016 Plan, 3,168,565 shares of which remained available for future grant as of December 31, 2017. Stock Options The Company has granted option awards under the Plans with service conditions (service option awards) that are subject to terms and conditions established by the compensation committee of the board of directors. Service option awards have 10-year The Company’s equity incentive plan, the Second Amended and Restated Management Equity Plan (2004 Plan), expired by its terms in 2014 and no additional options will be granted under the 2004 Plan. There were no shares subject to outstanding options granted under the 2004 Plan as of December 31, 2017 and 2016. The following is a summary of option activity for the 2004 Plan for the year ended December 31, 2015: Weighted Average Weighted Average Aggregate 2004 Plan Number of Exercise Price at Remaining Term Intrinsic (in thousands, except for share and per share amounts) Shares Grant Date (Years) Value Outstanding at December 31, 2014 652,810 $ 1.74 0.78 $ 8,212 Exercised (652,810 ) 1.74 6,129 Outstanding at December 31, 2015 — The following is a summary of option activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015: Weighted Average Weighted Average Aggregate 2006 and 2016 Plans Number of Exercise Price at Remaining Term Intrinsic (in thousands, except for share and per share amounts) Shares Grant Date (Years) Value Outstanding at December 31, 2014 6,227,112 $ 11.58 6.71 $ 28,523 Granted 1,056,500 11.74 Forfeited (496,854 ) 10.75 Expired (64,336 ) 25.69 Exercised (469,974 ) 7.02 2,594 Outstanding at December 31, 2015 6,252,448 11.87 6.16 7,498 Granted 866,011 8.43 Forfeited (392,700 ) 11.23 Expired (279,766 ) 17.38 Exercised (897,657 ) 8.63 4,264 Outstanding at December 31, 2016 5,548,336 11.62 5.58 32,453 Granted 643,000 14.44 Forfeited (290,729 ) 10.73 Expired (605,617 ) 29.87 Exercised (575,206 ) 9.13 3,140 Outstanding at December 31, 2017 4,719,784 10.03 5.63 24,421 Exercisable at December 31, 2017 3,540,804 9.35 4.73 20,715 Vested and expected to vest at December 31, 2017 4,589,591 9.94 5.56 24,129 The weighted average grant-date fair value of options granted was $7.81, $4.53 and $6.59 per share for the years ended December 31, 2017, 2016 and 2015, respectively. Proceeds from the exercise of stock options amounted to $5.3 million, $7.8 million and $4.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. Restricted Stock Units An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs under the Plans with service conditions (service RSUs) that vest in four equal annual installments provided that the employee remains employed with the Company. As of December 31, 2017, $12.1 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 1.7 years. No RSUs are classified as a liability as of December 31, 2017. The following is a summary of RSU activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015: Number of Weighted Shares Average Underlying Grant Date RSUs RSUs Fair Value Unvested at December 31, 2014 1,025,961 $ 9.94 Granted 417,000 11.51 Forfeited (189,187 ) 10.60 Vested (231,093 ) 7.96 Unvested at December 31, 2015 1,022,681 10.90 Granted 657,742 8.71 Forfeited (254,329 ) 10.38 Vested (287,666 ) 9.65 Unvested at December 31, 2016 1,138,428 10.07 Granted 857,336 14.57 Forfeited (275,613 ) 11.41 Vested (362,313 ) 9.78 Unvested at December 31, 2017 1,357,838 12.72 The grant date fair value for the 362,313 shares underlying RSUs that vested during the year ended December 31, 2017 was $3.5 million. Stock-Based Compensation Expense Stock-based compensation expense recognized for the years ended December 31, 2017, 2016 and 2015 was allocated as follows: Year Ended December 31, (in thousands) 2017 2016 2015 Research and development $ 1,152 $ 2,087 $ 2,269 Selling, general and administrative 9,313 6,456 5,692 $ 10,465 $ 8,543 $ 7,961 The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has not paid dividends to its stockholders since its inception (other than a dividend of preferred share purchase rights, which was declared in September 2008) and does not plan to pay dividends in the foreseeable future. Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2017, 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 Expected dividend yield 0 % 0 % 0 % Weighted average expected volatility 57 % 57 % 60 % Weighted average expected term (years) 5.89 6.08 6.00 Weighted average risk-free rate 1.97 % 1.37 % 1.67 % |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2017 | |
Employee Benefit Plan | 15. Employee Benefit Plan The Company has a defined contribution plan under IRC Section 401(k). This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax |
Legal Matters
Legal Matters | 12 Months Ended |
Dec. 31, 2017 | |
Legal Matters | 16. Legal Matters In June 2014, the Company filed suit against Roxane Laboratories, Inc. (Roxane) in the U.S. District Court for the District of Delaware (Delaware District Court). The suit seeks an adjudication that Roxane has infringed one or more claims of the Company’s U.S. Patent No. 8,586,610 (‘610 Patent) by submitting to the FDA an Abbreviated New Drug Application (ANDA) for a generic version of Fanapt ® ® five-day In 2015, the Company filed six separate patent infringement lawsuits in the Delaware District Court against Roxane, Inventia Healthcare Pvt. Ltd. (Inventia), Lupin Ltd. and Lupin Pharmaceuticals, Inc. (Lupin), Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd. (Taro), and Apotex Inc. and Apotex Corp. (collectively, the Defendants). The lawsuits each seek an adjudication that the respective Defendants infringed one or more claims of the ‘610 Patent and/or the Company’s U.S. Patent No. 9,138,432 (‘432 Patent) by submitting to the FDA an ANDA for a generic version of Fanapt ® Lupin filed counter claims for declaratory judgment of invalidity and noninfringement of seven of the Company’s method of treatment patents that are listed in the Approved Drug Products with Therapeutic Equivalence Evaluations ® On October 24, 2016, the Company entered into a License Agreement with Taro to resolve the Company’s patent litigation against Taro regarding Taro’s ANDA seeking approval of its generic version of Fanapt ® non-exclusive ® ® On December 7, 2016, the Company entered into a License Agreement with Apotex to resolve the Company’s patent litigation against Apotex regarding Apotex’s ANDA seeking approval of its generic version of Fanapt ® non-exclusive ® ® On February 26, 2016, Roxane filed suit against the Company in the U.S. District Court for the Southern District of Ohio (Ohio District Court). The suit sought a declaratory judgment of invalidity and noninfringement of the Method of Treatment Patents. The Company has not sued Roxane for infringing the Method of Treatment Patents. The Company filed a motion to dismiss this lawsuit for lack of personal jurisdiction or to transfer the lawsuit to the Delaware District Court. On December 20, 2016, the Ohio District Court ruled in the Company’s favor, dismissing Roxane’s suit without prejudice for lack of personal jurisdiction. On February 26, 2016, Roxane filed a Petition for Inter Partes |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data (Unaudited) | 17. Quarterly Financial Data (Unaudited) The following is a summary of quarterly financial data for the years ended December 31, 2017 and 2016: First Second Third Fourth (in thousands, except for per share amounts) Quarter Quarter Quarter Quarter Year Ended December 31, 2017 Revenues $ 37,415 $ 42,056 $ 41,336 $ 44,276 Gross profit (1) 32,958 37,095 36,379 39,053 Loss from operations (7,906 ) (1,924 ) (4,923 ) (2,150 ) Net loss (7,645 ) (1,534 ) (4,550 ) (1,838 ) Net loss per share, basic and diluted $ (0.17 ) $ (0.03 ) $ (0.10 ) $ (0.04 ) Year Ended December 31, 2016 Revenues $ 33,262 $ 36,029 $ 38,482 $ 38,244 Gross profit (1) 24,363 26,593 28,549 30,867 Loss from operations (12,475 ) (4,789 ) (653 ) (654 ) Net loss (12,358 ) (4,618 ) (430 ) (604 ) Net loss per share, basic and diluted $ (0.29 ) $ (0.11 ) $ (0.01 ) $ (0.01 ) (1) Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization. |
Business Organization and Pre25
Business Organization and Presentation (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Business organization | Business organization Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s portfolio includes the following products: • HETLIOZ ® Non-24-Hour (Non-24), ® Non-24 ® ® Non-24, • Fanapt ® ® ® ® ® • Tradipitant (VLY-686), neurokinin-1 (NK-1R) • VTR-297 • VQW-765 AQW-051), alpha-7 • Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors. |
Basis of Presentation | Basis of presentation The accompanying consolidated financial statements includes the accounts of Vanda Pharmaceuticals Inc. and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.). All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Management continually re-evaluates |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the consolidated balance sheets and consolidated statements of cash flows, cash equivalents represent highly-liquid investments with a maturity date of three months or less at the date of purchase. Cash and cash equivalents includes investments in money market funds with commercial banks and financial institutions, and commercial paper of high-quality corporate issuers. Restricted cash of $0.7 million and $0.8 million relating primarily to leases for office space is included in other current and other non-current |
Marketable Securities | Marketable Securities The Company classifies all of its marketable securities as available-for-sale Available-for-sale available-for-sale available-for-sale non-current. |
Inventory | Inventory Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out non-current. |
Intangible Assets | Intangible Assets Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as expense. Obligations for milestone payments to other pharmaceutical companies that may result in a capitalized intangible asset are recognized when it is deemed probable that the milestone event will occur. In the event a product has been approved by the FDA or an alternative future use exists for a product, patent and license costs are capitalized and amortized on a straight-line basis over the estimated useful economic life of the of the related product patents. For intangible assets related to HETLIOZ ® ® ® ® |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. The costs of leasehold improvements funded by or reimbursed by the lessor are capitalized and amortized as leasehold improvements along with a corresponding deferred rent liability. Depreciation of most property and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized using a straight-line basis over the lesser of the estimated useful lives of the assets or the terms of the related leases. The costs of additions and improvements are capitalized, and repairs and maintenance costs are charged to operations in the period incurred. Upon retirement or disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statement of operations for that period. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities The Company’s management is required to estimate accrued liabilities as part of the process of preparing financial statements. The estimation of accrued liabilities involves identifying services that have been performed on the Company’s behalf, and then estimating the level of service performed and the associated cost incurred for such services as of each balance sheet date in the financial statements. Accrued liabilities include research and development expenses, such as accrued costs under contracts with clinical monitors, data management organizations and investigators in conjunction with clinical trials, fees to contract manufacturers in conjunction with the production of clinical materials, consulting and professional fees, such as lawyers and fees for marketing and other commercialization activities, accrued compensation and employee benefits, such as accrued bonus, royalties payable under licensing agreements, and other accrued fees. Pursuant to management’s assessment of the services that have been performed on clinical trials and other contracts, the Company recognizes these expenses as the services are provided. Such management assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment. In the event that the Company does not identify certain costs that have begun to be incurred or the Company under- or over-estimates the level of services performed or the costs of such services, the Company’s reported expenses for such period would be too low or too high. |
Net Product Sales | Net Product Sales The Company’s net product sales consist of sales of HETLIOZ ® ® Year Ended December 31, ( in thousands ) 2017 2016 2015 HETLIOZ ® $ 89,978 $ 71,671 $ 44,302 Fanapt ® 75,105 74,346 65,623 $ 165,083 $ 146,017 $ 109,925 The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-15, Revenue Recognition—Products |
Major Customers | Major Customers HETLIOZ ® ® Year Ended December 31, Percent of Net Product Sales 2017 2016 2015 Distributor A 32 % 23 % 14 % Distributor B 15 % 16 % 18 % Distributor C 15 % 16 % 19 % Distributor D 12 % 15 % 17 % Distributor E 11 % 16 % 14 % Distributor F 10 % 1 % 0 % Distributor G — 9 % 12 % The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016: December 31, Percent of Accounts Receivable, Net 2017 2016 Distributor A 28 % 22 % Distributor B 18 % 19 % Distributor C 10 % 15 % Distributor D 21 % 25 % Distributor E 8 % 11 % |
Product Sales Discounts and Allowances | Product Sales Discounts and Allowances The Company’s product sales are recorded net of applicable discounts, rebates, chargebacks, service fees, co-pay co-pay Prompt-pay: Rebates: Chargebacks: non-profit Medicare Part D Coverage Gap: Service Fees: Co-payment co-payment Co-pay co-pay Product Returns: (in thousands) Balance at December 31, 2014 $ 85 Additions 986 Credits/payments (12 ) Balance at December 31, 2015 1,059 Additions 2,507 Credits/payments (486 ) Balance at December 31, 2016 3,080 Additions 5,978 Credits/payments (4,939 ) Balance at December 31, 2017 $ 4,119 |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold includes royalties payable, the cost of inventory sold, manufacturing and supply chain costs and product shipping and handling costs related to sales of HETLIOZ ® ® |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist primarily of fees for services provided by third parties in connection with the clinical trials, costs of contract manufacturing services, milestone payments, costs of materials used in clinical trials and research and development, costs for regulatory consultants and filings, depreciation of capital resources used to develop products, related facilities costs, and salaries, other employee-related costs and stock-based compensation for research and development personnel. The Company expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments related to license agreements are capitalized. Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with the Company’s research and development efforts and has no alternative future use. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses consist of salaries, stock-based compensation, facilities and third party expenses. Selling, general and administrative expenses are associated with the activities of the executive, finance, accounting, information technology, business development, commercial support, trade and distribution, sales, marketing, legal, medical affairs and human resource functions. Additionally, selling, general and administrative expenses included an estimate for the annual Patient Protection and Affordable Care fee. |
Stock-Based Compensation | Stock-Based Compensation Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company recognizes the expense over the award’s vesting period. The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. |
Advertising Expense | Advertising Expense The Company expenses the costs of advertising, including branded promotional expenses, as incurred. Branded advertising expenses, recorded in selling, general and administrative expenses, were $1.3 million, $1.4 million and $3.4 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Foreign Currency | Foreign Currency The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s international subsidiaries is the local currency. Assets and liabilities, including inter-company balances for which settlement is anticipated in the foreseeable future, denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Foreign currency equity balances are translated at historical rates. Revenues and expenses denominated in foreign currencies are translated at average exchange rates for the respective periods. Foreign currency translation adjustments are recorded in accumulated other comprehensive income. Transactions denominated in currencies other than subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the consolidated balance sheets related to these items will result in unrealized foreign currency transaction gains and losses based upon period-end |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted. Changes in ownership may limit the amount of NOL carryforwards that can be utilized in the future to offset taxable income. |
Non-Cash Investing and Financing Activities | Non-Cash Purchases of property and equipment accrued in current liabilities amounted to zero, $0.2 million and $0.2 million for each of the years ended December 31, 2017, 2016 and 2015, respectively. The acquisition of an intangible asset relating to HETLIOZ ® non-current |
Certain Risks and Uncertainties | Certain Risks and Uncertainties The Company’s products under development require approval from the FDA or other international regulatory agencies prior to commercial sales. There can be no assurance the products will receive the necessary clearance. If the Company is denied clearance or clearance is delayed, it may have a material adverse impact on the Company. The Company’s products are concentrated in rapidly-changing, highly-competitive markets, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. Any failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer requirements or changes in regulatory requirements or industry standards or any significant delays in the development or introduction of products or services could have a material adverse effect on the Company’s business, operating results and future cash flows. The Company depends on single source suppliers for critical raw materials for manufacturing, as well as other components required for the administration of its products. The loss of these suppliers could delay the clinical trials or prevent or delay commercialization of the products. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash, cash equivalents and marketable securities. The Company places its cash, cash equivalents and marketable securities with highly-rated financial institutions. At December 31, 2017, the Company maintained all of its cash, cash equivalents and marketable securities in three financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and the Company believes there is minimal risk of losses on such balances. |
Segment and Geographic Information | Segment and Geographic Information The Company operates in one reporting segment and, accordingly, no segment disclosures are presented herein. Foreign sales were not material for each of the years ended December 31, 2017, 2016 and 2015. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Restricted Cash beginning-of-period end-of-period In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting paid-in In February 2016, the FASB issued ASU 2016-02, Leases right-of-use In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers 2015-14, Revenue from Contracts with Customers 2016-08 Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue versus Net) 2016-10, Revenue from Contracts with Customers, identifying Performance Obligations and Licensing 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients 2014-09. 2016-08, 2016-10, 2016-12 2014-09 2015-14. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Net Sales by Product | The Company’s net product sales consist of sales of HETLIOZ ® ® Year Ended December 31, ( in thousands ) 2017 2016 2015 HETLIOZ ® $ 89,978 $ 71,671 $ 44,302 Fanapt ® 75,105 74,346 65,623 $ 165,083 $ 146,017 $ 109,925 |
Schedule of Major Customers that Represented More Than 10% of Total Revenues | The following table presents each major customer that represented more than 10% of total revenues for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, Percent of Net Product Sales 2017 2016 2015 Distributor A 32 % 23 % 14 % Distributor B 15 % 16 % 18 % Distributor C 15 % 16 % 19 % Distributor D 12 % 15 % 17 % Distributor E 11 % 16 % 14 % Distributor F 10 % 1 % 0 % Distributor G — 9 % 12 % |
Schedule of Major Customers that Represented More Than 10% of Accounts Receivable, Net | The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016: December 31, Percent of Accounts Receivable, Net 2017 2016 Distributor A 28 % 22 % Distributor B 18 % 19 % Distributor C 10 % 15 % Distributor D 21 % 25 % Distributor E 8 % 11 % |
Summary of Product Return Allowance | The following table summarizes activity for product returns as of and for the years ended December 31, 2017, 2016 and 2015: (in thousands) Balance at December 31, 2014 $ 85 Additions 986 Credits/payments (12 ) Balance at December 31, 2015 1,059 Additions 2,507 Credits/payments (486 ) Balance at December 31, 2016 3,080 Additions 5,978 Credits/payments (4,939 ) Balance at December 31, 2017 $ 4,119 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Basic and Diluted Net Income (Loss) Per Share of Common Stock | The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the years ended December 31, 2017, 2016, and 2015: Year Ended December 31, (in thousands, except for share and per share amounts) 2017 2016 2015 Numerator: Net loss $ (15,567 ) $ (18,010 ) $ (39,865 ) Denominator: Weighted average shares outstanding, basic and diluted 44,735,146 43,449,441 42,250,254 Net loss per share, basic and diluted: Basic $ (0.35 ) $ (0.41 ) $ (0.94 ) Diluted $ (0.35 ) $ (0.41 ) $ (0.94 ) Antidilutive securities excluded from calculations of diluted net income (loss) per share 3,136,515 4,943,797 5,660,199 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Available-for-Sale Marketable Securities | The following is a summary of the Company’s available-for-sale Gross Gross Fair December 31, 2017 Amortized Unrealized Unrealized Market (in thousands) Cost Gains Losses Value U.S. Treasury and government agencies $ 60,681 $ — $ (63 ) $ 60,618 Corporate debt 49,168 12 (12 ) 49,168 $ 109,849 $ 12 $ (75 ) $ 109,786 The following is a summary of the Company’s available-for-sale Gross Gross Fair December 31, 2016 Amortized Unrealized Unrealized Market (in thousands) Cost Gains Losses Value U.S. Treasury and government agencies $ 50,661 $ 3 $ (17 ) $ 50,647 Corporate debt 50,194 89 (16 ) 50,267 $ 100,855 $ 92 $ (33 ) $ 100,914 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Assets Measured at Fair Value on Recurring Basis | The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2017, as follows: Fair Value Measurement as of December 31, 2017 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs (in thousands) 2017 (Level 1) (Level 2) (Level 3) U.S. Treasury and government agencies 60,618 60,618 — — Corporate debt 53,164 — 53,164 — $ 113,782 $ 60,618 $ 53,164 $ — The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2016, as follows: Fair Value Measurement as of December 31, 2016 Using Quoted Prices in Significant Active Markets for Significant Other Unobservable December 31, Identical Assets Observable Inputs Inputs (in thousands) 2016 (Level 1) (Level 2) (Level 3) U.S. Treasury and government agencies $ 50,647 $ 50,647 $ — $ — Corporate debt 50,267 — 50,267 — $ 100,914 $ 50,647 $ 50,267 $ — |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory | Inventory consisted of the following as of December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Current assets Work-in-process $ 80 $ 17 Finished goods 760 762 $ 840 $ 779 Non-Current Raw materials $ 87 $ 127 Work-in-process 2,821 2,225 Finished goods 408 83 $ 3,316 $ 2,435 |
Prepaid Expenses and Other Cu31
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Prepaid Expenses, and Other Current Assets | The following is a summary of the Company’s prepaid expenses and other current assets as of December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 2,415 $ 2,397 Consulting and other professional fees 2,876 6,051 Prepaid royalties — 1,761 Other 2,712 1,579 $ 8,003 $ 11,788 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Property and Equipment-at Cost | The following is a summary of the Company’s property and equipment, at cost, as of December 31, 2017 and 2016: Estimated Useful Life December 31, (in thousands) (Years) 2017 2016 Computer and other equipment 3 $ 3,342 $ 2,426 Furniture and fixtures 5 - 7 1,929 1,412 Leasehold improvements 5 - 11 4,515 4,408 9,786 8,246 Accumulated depreciation and amortization (4,480 ) (3,231 ) $ 5,306 $ 5,015 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Intangible Assets | The following is a summary of the Company’s intangible assets as of December 31, 2017: December 31, 2017 Estimated Gross Net Useful Life Carrying Accumulated Carrying (in thousands) (Years) Amount Amortization Amount HETLIOZ ® May 2034 $ 33,000 $ 6,931 $ 26,069 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 34,872 $ 26,069 The following is a summary of the Company’s intangible assets as of December 31, 2016: December 31, 2016 Estimated Gross Net Useful Life Carrying Accumulated Carrying (in thousands) (Years) Amount Amortization Amount HETLIOZ ® January 2033 $ 33,000 $ 5,181 $ 27,819 Fanapt ® November 2016 27,941 27,941 — $ 60,941 $ 33,122 $ 27,819 |
Summary of Amortization Expense | Amortization expense for the years ended December 31, 2017, 2016 and 2015 was as follows: Year Ended December 31, (in thousands) 2017 2016 2015 HETLIOZ ® $ 1,750 $ 1,721 $ 2,922 Fanapt ® — 9,212 10,050 $ 1,750 $ 10,933 $ 12,972 |
Summary of Future Intangible Asset Amortization | The following is a summary of the future intangible asset amortization schedule as of December 31, 2017: (in thousands) Total 2018 2019 2020 2021 2022 Thereafter HETLIOZ ® $ 26,069 $ 1,545 $ 1,591 $ 1,591 $ 1,591 $ 1,591 $ 18,160 |
Accounts Payable and Accrued 34
Accounts Payable and Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Accounts Payable and Accrued Liabilities | The following is a summary of the Company’s accounts payable and accrued liabilities as of December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Research and development expenses $ 4,663 $ 3,024 Consulting and other professional fees 3,961 3,192 Compensation and employee benefits 5,323 4,291 Royalties payable 4,394 4,555 Other 1,994 1,134 $ 20,335 $ 16,196 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Minimum Annual Future Payments under Operating Leases and Subleases | The following is a summary of the minimum annual future payments under operating leases and subleases for office space as of December 31, 2017: Cash payments due by year (in thousands) Total 2018 2019 2020 2021 2022 Thereafter Operating leases $ 19,789 $ 2,311 $ 2,295 $ 2,351 $ 2,174 $ 2,187 $ 8,471 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Provision (Benefit) for Income Taxes | The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, (in thousands) 2017 2016 2015 Current: Federal $ — $ — $ — State 65 66 — Foreign (66 ) 142 Deferred: Federal — — — State — — Foreign 137 (104 ) — Provision for income taxes $ 136 $ 104 $ — |
Reconciliation Between Statutory Tax Rate and Effective Tax Rate | The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015: Year Ended December 31, 2017 2016 2015 Federal tax at statutory rate 35.0 % 35.0 % 35.0 % State taxes 1.7 % 0.8 % -0.1 % The U.S. Tax Cuts and Job Act (1) -262.6 % 0.0 % 0.0 % Change in valuation allowance - U.S. Tax Cuts and Jobs Act 262.6 % 0.0 % 0.0 % Other change in valuation allowance -47.8 % -38.4 % -25.4 % Research and development credit 9.0 % 3.8 % 1.5 % Orphan drug credit 6.3 % 7.6 % 1.6 % Section 162(m) limitation 8.1 % 0.0 % -5.7 % Other tax rate changes -2.6 % 3.9 % -0.3 % Change in state NOLs 5.1 % 0.0 % -1.4 % Stock-based compensation -13.0 % -12.5 % -5.1 % Other items -2.7 % -0.8 % -0.1 % Effective tax rate -0.9 % -0.6 % 0.0 % (1) The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate. |
Components of Deferred Tax Assets, Net, and Related Valuation Allowance | The following is a summary of the components of the Company’s deferred tax assets, net, and the related tax valuation allowance as of December 31, 2017 and 2016: December 31, (in thousands) 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 59,222 $ 84,177 Stock-based compensation 5,383 12,443 Accrued and deferred expenses 1,967 2,558 Research and development and orphan drug credit carryforwards 43,976 41,104 Intangible assets 3,745 5,477 Other 2,174 1,019 Total deferred tax assets 116,467 146,778 Deferred tax liabilities: Other (386 ) (666 ) Total deferred tax liabilities (386 ) (666 ) Deferred tax assets, net 116,081 146,112 Valuation allowance 116,110 146,012 Net deferred tax assets (liabilities) $ (29 ) $ 100 |
Summary of Changes in Tax Valuation Allowance | The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2017, 2016 and 2015: Balance at Balance at Beginning End of (in thousands) of Year Additions Reductions Year Year Ended: December 31, 2017 $ 146,012 $ 12,403 $ (42,305 ) $ 116,110 December 31, 2016 139,037 11,031 (4,056 ) 146,012 December 31, 2015 128,890 17,002 (6,855 ) 139,037 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Accumulated Balances Related to Each Component of Other Comprehensive Income (Loss) | The accumulated balances related to each component of other comprehensive income (loss) were as follows for the years ended December 31, 2017 and 2016: December 31, December 31, (in thousands) 2017 2016 Foreign currency translation $ 29 $ (1 ) Available-for-sale (63 ) 59 $ (34 ) $ 58 |
Equity Incentive Plans (Tables)
Equity Incentive Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of RSU Activity for 2006 Plan and 2016 Plan | The following is a summary of RSU activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015: Number of Weighted Shares Average Underlying Grant Date RSUs RSUs Fair Value Unvested at December 31, 2014 1,025,961 $ 9.94 Granted 417,000 11.51 Forfeited (189,187 ) 10.60 Vested (231,093 ) 7.96 Unvested at December 31, 2015 1,022,681 10.90 Granted 657,742 8.71 Forfeited (254,329 ) 10.38 Vested (287,666 ) 9.65 Unvested at December 31, 2016 1,138,428 10.07 Granted 857,336 14.57 Forfeited (275,613 ) 11.41 Vested (362,313 ) 9.78 Unvested at December 31, 2017 1,357,838 12.72 |
Stock-Based Compensation Expense | Stock-based compensation expense recognized for the years ended December 31, 2017, 2016 and 2015 was allocated as follows: Year Ended December 31, (in thousands) 2017 2016 2015 Research and development $ 1,152 $ 2,087 $ 2,269 Selling, general and administrative 9,313 6,456 5,692 $ 10,465 $ 8,543 $ 7,961 |
Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted | Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2017, 2016 and 2015 were as follows: Year Ended December 31, 2017 2016 2015 Expected dividend yield 0 % 0 % 0 % Weighted average expected volatility 57 % 57 % 60 % Weighted average expected term (years) 5.89 6.08 6.00 Weighted average risk-free rate 1.97 % 1.37 % 1.67 % |
2004 Plan | |
Summary of Option Activity Plan | The following is a summary of option activity for the 2004 Plan for the year ended December 31, 2015: Weighted Average Weighted Average Aggregate 2004 Plan Number of Exercise Price at Remaining Term Intrinsic (in thousands, except for share and per share amounts) Shares Grant Date (Years) Value Outstanding at December 31, 2014 652,810 $ 1.74 0.78 $ 8,212 Exercised (652,810 ) 1.74 6,129 Outstanding at December 31, 2015 — |
2006 Plan and 2016 Plan | |
Summary of Option Activity Plan | The following is a summary of option activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015: Weighted Average Weighted Average Aggregate 2006 and 2016 Plans Number of Exercise Price at Remaining Term Intrinsic (in thousands, except for share and per share amounts) Shares Grant Date (Years) Value Outstanding at December 31, 2014 6,227,112 $ 11.58 6.71 $ 28,523 Granted 1,056,500 11.74 Forfeited (496,854 ) 10.75 Expired (64,336 ) 25.69 Exercised (469,974 ) 7.02 2,594 Outstanding at December 31, 2015 6,252,448 11.87 6.16 7,498 Granted 866,011 8.43 Forfeited (392,700 ) 11.23 Expired (279,766 ) 17.38 Exercised (897,657 ) 8.63 4,264 Outstanding at December 31, 2016 5,548,336 11.62 5.58 32,453 Granted 643,000 14.44 Forfeited (290,729 ) 10.73 Expired (605,617 ) 29.87 Exercised (575,206 ) 9.13 3,140 Outstanding at December 31, 2017 4,719,784 10.03 5.63 24,421 Exercisable at December 31, 2017 3,540,804 9.35 4.73 20,715 Vested and expected to vest at December 31, 2017 4,589,591 9.94 5.56 24,129 |
Quarterly Financial Data (Una39
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data | The following is a summary of quarterly financial data for the years ended December 31, 2017 and 2016: First Second Third Fourth (in thousands, except for per share amounts) Quarter Quarter Quarter Quarter Year Ended December 31, 2017 Revenues $ 37,415 $ 42,056 $ 41,336 $ 44,276 Gross profit (1) 32,958 37,095 36,379 39,053 Loss from operations (7,906 ) (1,924 ) (4,923 ) (2,150 ) Net loss (7,645 ) (1,534 ) (4,550 ) (1,838 ) Net loss per share, basic and diluted $ (0.17 ) $ (0.03 ) $ (0.10 ) $ (0.04 ) Year Ended December 31, 2016 Revenues $ 33,262 $ 36,029 $ 38,482 $ 38,244 Gross profit (1) 24,363 26,593 28,549 30,867 Loss from operations (12,475 ) (4,789 ) (653 ) (654 ) Net loss (12,358 ) (4,618 ) (430 ) (604 ) Net loss per share, basic and diluted $ (0.29 ) $ (0.11 ) $ (0.01 ) $ (0.01 ) (1) Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization. |
Business Organization and Pre40
Business Organization and Presentation - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2017Segment | |
Organization and Summary of Significant Accounting Policies Disclosure [Line Items] | |
Number of operating segments | 1 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Summary Of Significant Accounting Policies [Line Items] | |||
Restricted cash, current and non-current | $ 0.7 | $ 0.8 | |
Percentage of insurance coverage gap allocated for prescription drugs under Medicare Part D | 50.00% | ||
Advertising expenses | $ 1.3 | 1.4 | $ 3.4 |
Purchases of property, plant and equipment and the related current liability | 0 | 0.2 | 0.2 |
Acquisition of intangible asset accrued in non-current liabilities | 25 | ||
Other Income | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Foreign currency transaction gains and losses | $ 0.1 | $ (0.2) | $ 0 |
Net Sales by Product (Detail)
Net Sales by Product (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue from External Customer [Line Items] | |||
Net product sales | $ 165,083 | $ 146,017 | $ 109,925 |
HETLIOZ | |||
Revenue from External Customer [Line Items] | |||
Net product sales | 89,978 | 71,671 | 44,302 |
Fanapt | |||
Revenue from External Customer [Line Items] | |||
Net product sales | $ 75,105 | $ 74,346 | $ 65,623 |
Schedule of Major Customers tha
Schedule of Major Customers that Represented More Than 10% of Total Revenues (Detail) - Customer Concentration Risk - Sales Revenue, Net | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Distributor A | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 32.00% | 23.00% | 14.00% |
Distributor B | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 15.00% | 16.00% | 18.00% |
Distributor C | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 15.00% | 16.00% | 19.00% |
Distributor D | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 12.00% | 15.00% | 17.00% |
Distributor E | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 11.00% | 16.00% | 14.00% |
Distributor F | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 10.00% | 1.00% | 0.00% |
Distributor G | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 9.00% | 12.00% |
Schedule of Major Customers t44
Schedule of Major Customers that Represented More Than 10% of Accounts Receivable, Net (Detail) - Credit Concentration Risk - Accounts Receivable | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Distributor A | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 28.00% | 22.00% |
Distributor B | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 18.00% | 19.00% |
Distributor C | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.00% | 15.00% |
Distributor D | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 21.00% | 25.00% |
Distributor E | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 8.00% | 11.00% |
Summary of Product Return Allow
Summary of Product Return Allowance (Detail) - Product Return Allowance - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Beginning balance | $ 3,080 | $ 1,059 | $ 85 |
Additions | 5,978 | 2,507 | 986 |
Credits/payments | (4,939) | (486) | (12) |
Ending balance | $ 4,119 | $ 3,080 | $ 1,059 |
Basic and Diluted Net Income (L
Basic and Diluted Net Income (Loss) Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||||||||||
Net loss | $ (1,838) | $ (4,550) | $ (1,534) | $ (7,645) | $ (604) | $ (430) | $ (4,618) | $ (12,358) | $ (15,567) | $ (18,010) | $ (39,865) |
Denominator: | |||||||||||
Weighted average shares outstanding, basic and diluted | 44,735,146 | 43,449,441 | 42,250,254 | ||||||||
Net loss per share, basic and diluted: | |||||||||||
Basic | $ (0.35) | $ (0.41) | $ (0.94) | ||||||||
Diluted | $ (0.35) | $ (0.41) | $ (0.94) | ||||||||
Antidilutive securities excluded from calculations of diluted net income (loss) per share | 3,136,515 | 4,943,797 | 5,660,199 |
Summary of Available-For-Sale M
Summary of Available-For-Sale Marketable Securities (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Schedule of Available-for-sale Securities [Line Items] | ||
Fair Market Value | $ 109,786 | $ 100,914 |
Current Investment | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 109,849 | 100,855 |
Gross Unrealized Gains | 12 | 92 |
Gross Unrealized Losses | (75) | (33) |
Fair Market Value | 109,786 | 100,914 |
Current Investment | U.S. Treasury and government agencies | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 60,681 | 50,661 |
Gross Unrealized Gains | 3 | |
Gross Unrealized Losses | (63) | (17) |
Fair Market Value | 60,618 | 50,647 |
Current Investment | Corporate debt | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 49,168 | 50,194 |
Gross Unrealized Gains | 12 | 89 |
Gross Unrealized Losses | (12) | (16) |
Fair Market Value | $ 49,168 | $ 50,267 |
Assets Measured at Fair Value o
Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 113,782 | $ 100,914 |
U.S. Treasury and government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 60,618 | 50,647 |
Corporate debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 53,164 | 50,267 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 60,618 | 50,647 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Treasury and government agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 60,618 | 50,647 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 53,164 | 50,267 |
Significant Other Observable Inputs (Level 2) | Corporate debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 53,164 | $ 50,267 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 113,782 | $ 100,914 |
Cash Equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 4,000 |
Inventory (Detail)
Inventory (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Work-in-process | $ 80 | $ 17 |
Finished goods | 760 | 762 |
Total | 840 | 779 |
Non-Current assets | ||
Raw materials | 87 | 127 |
Work-in-process | 2,821 | 2,225 |
Finished goods | 408 | 83 |
Total | $ 3,316 | $ 2,435 |
Summary of Prepaid Expenses and
Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid Expenses And Other Current Assets [Line Items] | ||
Research and development expenses | $ 2,415 | $ 2,397 |
Consulting and other professional fees | 2,876 | 6,051 |
Prepaid royalties | 1,761 | |
Other | 2,712 | 1,579 |
Prepaid expenses and other current assets | $ 8,003 | $ 11,788 |
Summary of Property and Equipme
Summary of Property and Equipment-at Cost (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 9,786 | $ 8,246 |
Accumulated depreciation and amortization | (4,480) | (3,231) |
Property and equipment, net | $ 5,306 | 5,015 |
Computer and Other Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 3 years | |
Property and equipment, gross | $ 3,342 | 2,426 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,929 | 1,412 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 5 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 7 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,515 | $ 4,408 |
Leasehold improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 5 years | |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (Years) | 11 years |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation expense | $ 1,234 | $ 935 | $ 582 |
Intangible Assets (Textual 2 -
Intangible Assets (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Milestone obligation under license agreement | $ 27,000 | |||
Milestone obligation under license agreement, non-current | $ 25,000 | |||
HETLIOZ | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Acquisition of intangible assets | $ 8,000 | |||
Intangible assets, estimated future useful life | 2034-05 | 2033-01 | ||
Cumulative worldwide sales milestone | $ 250,000 | |||
Milestone obligation under license agreement | 25,000 | |||
Milestone obligation under license agreement, non-current | $ 25,000 | |||
Intangible assets capitalized | $ 25,000 | $ 25,000 |
Intangible Assets (Textual 3 -
Intangible Assets (Textual 3 - Fanapt) - Additional Information (Detail) - Fanapt - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2009 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Acquisition of intangible assets | $ 12 | |||
Intangible assets, estimated useful life | 2016-11 | 2016-11 | ||
Assets acquired and recorded at fair value, Intangible re-acquired right | $ 15.9 |
Summary of Intangible Assets (D
Summary of Intangible Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 60,941 | $ 60,941 |
Accumulated Amortization | 34,872 | 33,122 |
Net Carrying Amount | $ 26,069 | $ 27,819 |
HETLIOZ | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, estimated future useful life | 2034-05 | 2033-01 |
Gross Carrying Amount | $ 33,000 | $ 33,000 |
Accumulated Amortization | 6,931 | 5,181 |
Net Carrying Amount | $ 26,069 | $ 27,819 |
Fanapt | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, estimated useful life | 2016-11 | 2016-11 |
Gross Carrying Amount | $ 27,941 | $ 27,941 |
Accumulated Amortization | $ 27,941 | $ 27,941 |
Summary of Amortization Expense
Summary of Amortization Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Intangible asset amortization | $ 1,750 | $ 10,933 | $ 12,972 |
HETLIOZ | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible asset amortization | $ 1,750 | 1,721 | 2,922 |
Fanapt | |||
Finite-Lived Intangible Assets [Line Items] | |||
Intangible asset amortization | $ 9,212 | $ 10,050 |
Summary of Future Intangible As
Summary of Future Intangible Asset Amortization (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Total | $ 26,069 | $ 27,819 |
HETLIOZ | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total | 26,069 | $ 27,819 |
2,018 | 1,545 | |
2,019 | 1,591 | |
2,020 | 1,591 | |
2,021 | 1,591 | |
2,022 | 1,591 | |
Thereafter | $ 18,160 |
Summary of Accounts Payable and
Summary of Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts Payable and Accrued Liabilities [Line Items] | ||
Research and development expenses | $ 4,663 | $ 3,024 |
Consulting and other professional fees | 3,961 | 3,192 |
Compensation and employee benefits | 5,323 | 4,291 |
Royalties payable | 4,394 | 4,555 |
Other | 1,994 | 1,134 |
Accounts payable and accrued liabilities | $ 20,335 | $ 16,196 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017USD ($)ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2011ft² | |
Commitments and Contingencies Disclosure [Line Items] | ||||
Rent expense | $ | $ 3.2 | $ 2.5 | $ 1.9 | |
Washington DC Leases and Sublease | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Leased square footage | 40,188 | 21,400 | ||
Expiration date of leases for office space | 2,026 | |||
Washington DC Leases and Sublease | Sublease | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Leased square footage | 9,928 | |||
Washington DC Lease Amendment | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Leased square footage | 30,260 | |||
Renewal term of lease agreement | 5 years | |||
London Lease | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Leased square footage | 2,880 | |||
Noncancellable lease term ending date | 2,021 | |||
Berlin Lease | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Leased square footage | 1,249 |
Summary of Minimum Annual Futur
Summary of Minimum Annual Future Payments Under Operating Leases and Subleases for Office Space (Detail) $ in Thousands | Dec. 31, 2017USD ($) |
Operating Leased Assets [Line Items] | |
Operating leases, Total | $ 19,789 |
Operating leases, 2018 | 2,311 |
Operating leases, 2019 | 2,295 |
Operating leases, 2020 | 2,351 |
Operating leases, 2021 | 2,174 |
Operating leases, 2022 | 2,187 |
Operating leases, Thereafter | $ 8,471 |
Commitments and Contingencies62
Commitments and Contingencies (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2017 | |
HETLIOZ | |||
Percentage of future sublicense fees payable to third-party | Mid-twenties | ||
HETLIOZ | |||
HETLIOZ | |||
Acquisition of intangible assets | $ 8 | ||
Milestone obligation under license agreement | $ 25 | ||
Royalty payable percentage on net sales | 10.00% | ||
Cumulative worldwide sales milestone | $ 250 | ||
Intangible assets capitalized | $ 25 | $ 25 |
Commitments and Contingencies63
Commitments and Contingencies (Textual 3 - Fanapt) - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fanapt | ||
Prepaid royalty | $ 1,761,000 | |
Royalty Rate for Annual Sales up to $200 million through November 2016 | ||
Fanapt | ||
Royalty percentage payable on net sales below annual threshold | 23.00% | |
Royalty Rate for Annual Sales up to $200 million through November 2016 | Maximum | ||
Fanapt | ||
Agreed upon sales threshold level for royalty rate | $ 200,000,000 | |
Royalty Rate for Annual Sales in Excess of $200 million through November 2016 | ||
Fanapt | ||
Royalty percentage payable on net sales above annual threshold | Mid-twenties | |
Royalty Rate for Annual Sales in Excess of $200 million through November 2016 | Maximum | ||
Fanapt | ||
Agreed upon sales threshold level for royalty rate | $ 200,000,000 | |
November 16,2016 through December 31,2019 | ||
Fanapt | ||
Royalty payable percentage on net sales | 3.00% | |
Prepaid royalty | $ 2,000,000 | |
Fanapt | ||
Fanapt | ||
Royalty payable percentage on net sales | 6.00% | |
Royalty payment period | 10 years |
Commitments and Contingencies64
Commitments and Contingencies (Textual 4 - Tradipitant) - Additional Information (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments and Contingencies [Line Items] | |
Milestone obligation under license agreement | $ 27,000 |
Tradipitant | |
Commitments and Contingencies [Line Items] | |
Future percentage of royalty payments based net sales | Low double digits |
Possible future milestone payment | $ 4,000 |
Milestone obligation under license agreement | 2,000 |
Tradipitant | Research and development | |
Commitments and Contingencies [Line Items] | |
Milestone obligation under license agreement | 2,000 |
Tradipitant | Development and Milestone Payments of Phase III Study Potentially Due to Third Party | |
Commitments and Contingencies [Line Items] | |
Possible future milestone payment | 2,000 |
Tradipitant | Development and Milestone Payment for First Marketing Authorization Potentially Due to Third Party | |
Commitments and Contingencies [Line Items] | |
Possible future milestone payment | 2,000 |
Tradipitant | Future Regulatory Approval and Sales Milestones | |
Commitments and Contingencies [Line Items] | |
Possible future milestone payment | $ 95,000 |
Commitments and Contingencies65
Commitments and Contingencies (Textual 5 - CFTR Activators and Inhibitors - Additional Information (Detail) - CFTR Activators and Inhibitors - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2017 | |
CFTR activators and inhibitors | ||
Milestone payment under license agreement | $ 1 | |
Possible future milestone payments | $ 46 | |
Tiered royalties payable on future net sales | Single-digit |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Line Items] | ||||
Provision for income taxes | $ 136 | $ 104 | ||
Income (loss) before income taxes | (15,431) | (17,906) | $ (39,865) | |
Pretax loss in U.S | (15,700) | (18,100) | ||
Pretax income from foreign subsidiaries | 300 | 200 | ||
Income tax benefit associated with the loss before income taxes | 0 | 0 | $ 0 | |
Net deferred tax assets | 100 | |||
Net deferred tax liability | 29 | |||
Net operating loss carryforwards | 59,222 | $ 84,177 | ||
Deferred tax assets related to U.S. federal research and development credits | $ 9,000 | |||
Net operating loss carryforwards beginning expiration year | 2,028 | |||
U.S. research and development credit beginning expiration year | 2,024 | |||
Orphan drug credit beginning expiration year | 2,030 | |||
Federal tax at statutory rate | 35.00% | 35.00% | 35.00% | |
Percentage at which certain U.S. federal deferred tax assets and liabilities remeasured | 21.00% | |||
U.S. Federal | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards | $ 49,000 | |||
Orphan Drug | ||||
Income Taxes [Line Items] | ||||
Net deferred tax assets | $ 35,000 | |||
Scenario, Forecast | ||||
Income Taxes [Line Items] | ||||
Federal tax at statutory rate | 21.00% | |||
District of Columbia | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards beginning expiration year | 2,031 | |||
Deferred tax assets relating to U.S. state NOL carryforwards | $ 10,000 | |||
Other States | ||||
Income Taxes [Line Items] | ||||
Net operating loss carryforwards beginning expiration year | 2,018 | |||
Non-current inventory and other | ||||
Income Taxes [Line Items] | ||||
Net deferred tax assets | $ 100 | |||
Other Non-current Liabilities | Maximum | ||||
Income Taxes [Line Items] | ||||
Net deferred tax liability | $ 100 |
Summary of Provision (Benefit)
Summary of Provision (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State | 65 | 66 | |
Foreign | (66) | 142 | |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | $ 0 |
Foreign | 137 | (104) | |
Provision for income taxes | $ 136 | $ 104 |
Reconciliation Between Statutor
Reconciliation Between Statutory Tax Rate and Effective Tax Rate (Detail) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Income Tax Rate Reconciliation [Line Items] | ||||
Federal tax at statutory rate | 35.00% | 35.00% | 35.00% | |
State taxes | 1.70% | 0.80% | (0.10%) | |
The U.S. Tax Cuts and Job Act | [1] | (262.60%) | 0.00% | 0.00% |
Change in valuation allowance - U.S. Tax Cuts and Jobs Act | 262.60% | 0.00% | 0.00% | |
Other change in valuation allowance | (47.80%) | (38.40%) | (25.40%) | |
Research and development credit | 9.00% | 3.80% | 1.50% | |
Orphan drug credit | 6.30% | 7.60% | 1.60% | |
Section 162(m) limitation | 8.10% | 0.00% | (5.70%) | |
Other tax rate changes | (2.60%) | 3.90% | (0.30%) | |
Change in state NOLs | 5.10% | 0.00% | (1.40%) | |
Stock-based compensation | (13.00%) | (12.50%) | (5.10%) | |
Other items | (2.70%) | (0.80%) | (0.10%) | |
Effective tax rate | (0.90%) | (0.60%) | 0.00% | |
[1] | The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate. |
Components of Deferred Tax Asse
Components of Deferred Tax Assets, Net and Related Valuation Allowance (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||||
Net operating loss carryforwards | $ 59,222 | $ 84,177 | ||
Stock-based compensation | 5,383 | 12,443 | ||
Accrued and deferred expenses | 1,967 | 2,558 | ||
Research and development and orphan drug credit carryforwards | 43,976 | 41,104 | ||
Intangible assets | 3,745 | 5,477 | ||
Other | 2,174 | 1,019 | ||
Total deferred tax assets | 116,467 | 146,778 | ||
Deferred tax liabilities: | ||||
Other | (386) | 666 | ||
Total deferred tax liabilities | (386) | (666) | ||
Deferred tax assets, net | 116,081 | 146,112 | ||
Valuation allowance | 116,110 | 146,012 | $ 139,037 | $ 128,890 |
Net deferred tax liabilities | $ (29) | |||
Net deferred tax assets | $ 100 |
Valuation Allowance Activity on
Valuation Allowance Activity on Deferred Tax Assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Valuation Allowance [Line Items] | |||
Balance at Beginning of Year | $ 146,012 | $ 139,037 | $ 128,890 |
Additions | 12,403 | 11,031 | 17,002 |
Reductions | (42,305) | (4,056) | (6,855) |
Balance at End of Year | $ 116,110 | $ 146,012 | $ 139,037 |
Summary of Accumulated Balances
Summary of Accumulated Balances Related to Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Foreign currency translation | $ 29 | $ (1) |
Available-for-sale securities | (63) | 59 |
Accumulated other comprehensive income (loss) | $ (34) | $ 58 |
Accumulated Other Comprehensi72
Accumulated Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reclassification Out of Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Reclassifications out of accumulated other comprehensive income (loss) | $ 0 | $ 0 | $ 0 |
Equity Incentive Plans (Textual
Equity Incentive Plans (Textual 1 - Equity Incentive Plans) - Additional Information (Detail) - shares | 12 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2016 | |
2006 Plan and 2016 Plan | Outstanding options and RSUs granted (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares subject to outstanding options and RSUs | 6,077,622 | |
2016 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares of common stock reserved for issuance | 4,700,000 | 2,000,000 |
Number of shares of common stock available for future grant | 3,168,565 | |
2016 Plan Amendment | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares of common stock reserved for issuance | 2,700,000 |
Equity Incentive Plans (Textu74
Equity Incentive Plans (Textual 2 Stock Option) - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share based compensation option awards contractual term | 10 years | ||
Portion of initial stock options granted to employees that vests on employee's first anniversary | 25.00% | ||
Portion of initial stock options granted to employees that vests ratably over three years after completion of first year of service | 75.00% | ||
Option awards vesting period, after completion of one year of service | 3 years | ||
Vesting period | 4 years | ||
Vesting period for initial stock options granted to directors | 4 years | ||
Vesting period for subsequent stock options granted to directors | 1 year | ||
Proceeds from exercise of employee stock options | $ 5,251 | $ 7,751 | $ 4,374 |
Options granted, weighted average fair value per share | $ 7.81 | $ 4.53 | $ 6.59 |
Service option awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expenses | $ 7,300 | ||
Unrecognized compensation expenses, weighted average period | 1 year 2 months 12 days |
Summary of Option Activity for
Summary of Option Activity for 2004 Plan (Detail) - 2004 Plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Beginning balance | 652,810 | |
Exercised | (652,810) | |
Weighted Average Remaining Term (Years) | ||
Weighted Average Remaining Term | 9 months 11 days | |
Ending balance | 652,810 | |
Aggregate Intrinsic Value | ||
Beginning balance | $ 8,212 | |
Exercised | $ 6,129 | |
Weighted Average Exercise Price at Grant Date | ||
Beginning balance | $ 1.74 | |
Exercised | $ 1.74 |
Summary of Option Activity fo76
Summary of Option Activity for 2006 Plan and the 2016 Plan (Detail) - 2006 Plan and 2016 Plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Shares | ||||
Beginning balance | 5,548,336 | 6,252,448 | 6,227,112 | |
Granted | 643,000 | 866,011 | 1,056,500 | |
Forfeited | (290,729) | (392,700) | (496,854) | |
Expired | (605,617) | (279,766) | (64,336) | |
Exercised | (575,206) | (897,657) | (469,974) | |
Ending balance | 4,719,784 | 5,548,336 | 6,252,448 | 6,227,112 |
Exercisable | 3,540,804 | |||
Vested and expected to vest at December 31, 2017 | 4,589,591 | |||
Weighted Average Exercise Price at Grant Date | ||||
Beginning balance | $ 11.62 | $ 11.87 | $ 11.58 | |
Granted | 14.44 | 8.43 | 11.74 | |
Forfeited | 10.73 | 11.23 | 10.75 | |
Expired | 29.87 | 17.38 | 25.69 | |
Exercised | 9.13 | 8.63 | 7.02 | |
Ending balance | 10.03 | $ 11.62 | $ 11.87 | $ 11.58 |
Exercisable | 9.35 | |||
Vested and expected to vest at December 31, 2017 | $ 9.94 | |||
Weighted Average Remaining Term (Years) | ||||
Weighted Average Remaining Term | 5 years 7 months 17 days | 5 years 6 months 29 days | 6 years 1 month 27 days | 6 years 8 months 16 days |
Exercisable | 4 years 8 months 23 days | |||
Vested and expected to vest at December 31, 2017 | 5 years 6 months 21 days | |||
Aggregate Intrinsic Value | ||||
Beginning balance | $ 32,453 | $ 7,498 | $ 28,523 | |
Exercised | 3,140 | 4,264 | 2,594 | |
Ending balance | 24,421 | $ 32,453 | $ 7,498 | $ 28,523 |
Exercisable | 20,715 | |||
Vested and expected to vest at December 31, 2017 | $ 24,129 |
Equity Incentive Plans (Textu77
Equity Incentive Plans (Textual 3 RSU) - Additional Information (Detail) - Restricted Stock Units (RSU) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period of RSU awards in equal installments | 4 years | ||
Unrecognized compensation expenses, weighted average period | 1 year 8 months 12 days | ||
Unrecognized compensation expenses related to unvested RSUs | $ 12.1 | ||
Grant date fair value of common stock vested, shares | 362,313 | 287,666 | 231,093 |
Grant date fair value of common stock vested | $ 3.5 |
Summary of RSU Activity Plan (D
Summary of RSU Activity Plan (Detail) - Restricted Stock Units (RSU) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares Unvested | |||
Beginning balance | 1,138,428 | 1,022,681 | 1,025,961 |
Granted | 857,336 | 657,742 | 417,000 |
Forfeited | (275,613) | (254,329) | (189,187) |
Vested | (362,313) | (287,666) | (231,093) |
Ending balance | 1,357,838 | 1,138,428 | 1,022,681 |
Weighted Average Price/Share Unvested | |||
Beginning balance | $ 10.07 | $ 10.90 | $ 9.94 |
Granted | 14.57 | 8.71 | 11.51 |
Forfeited | 11.41 | 10.38 | 10.60 |
Vested | 9.78 | 9.65 | 7.96 |
Ending balance | $ 12.72 | $ 10.07 | $ 10.90 |
Total Stock-Based Compensation
Total Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 10,465 | $ 8,543 | $ 7,961 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | 1,152 | 2,087 | 2,269 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Stock-based compensation expense | $ 9,313 | $ 6,456 | $ 5,692 |
Black-Scholes-Merton Option Pri
Black-Scholes-Merton Option Pricing Model for Stock Options Granted (Detail) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Payment Award Stock Options Valuation Assumptions [Line Items] | |||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Weighted average expected volatility | 57.00% | 57.00% | 60.00% |
Weighted average expected term (years) | 5 years 10 months 21 days | 6 years 29 days | 6 years |
Weighted average risk-free rate | 1.97% | 1.37% | 1.67% |
Employee Benefit Plan - Additio
Employee Benefit Plan - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Benefit Plans [Line Items] | |||
Defined contribution plan employer matching percent | 50.00% | ||
Defined contribution plan maximum employee contribution percent | 6.00% | ||
Defined contribution plan vesting period | 4 years | ||
Defined contribution plan matching amount | $ 0.8 | $ 0.4 | $ 0.3 |
Quarterly Financial Data (Detai
Quarterly Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Quarterly Financial Data [Line Items] | ||||||||||||
Revenues | $ 44,276 | $ 41,336 | $ 42,056 | $ 37,415 | $ 38,244 | $ 38,482 | $ 36,029 | $ 33,262 | $ 165,083 | $ 146,017 | $ 109,925 | |
Gross profit | [1] | 39,053 | 36,379 | 37,095 | 32,958 | 30,867 | 28,549 | 26,593 | 24,363 | |||
Loss from operations | (2,150) | (4,923) | (1,924) | (7,906) | (654) | (653) | (4,789) | (12,475) | (16,903) | (18,571) | (40,185) | |
Net loss | $ (1,838) | $ (4,550) | $ (1,534) | $ (7,645) | $ (604) | $ (430) | $ (4,618) | $ (12,358) | $ (15,567) | $ (18,010) | $ (39,865) | |
Net loss per share, basic and diluted | $ (0.04) | $ (0.10) | $ (0.03) | $ (0.17) | $ (0.01) | $ (0.01) | $ (0.11) | $ (0.29) | ||||
[1] | Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization. |