Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 02, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | VERACYTE, INC. | |
Entity Central Index Key | 1,384,101 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,039,843 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 41,195 | $ 59,219 |
Accounts receivable | 11,635 | 8,756 |
Supplies inventory | 3,760 | 3,475 |
Prepaid expenses and other current assets | 1,617 | 2,057 |
Restricted cash | 0 | 120 |
Total current assets | 58,207 | 73,627 |
Property and equipment, net | 10,281 | 11,480 |
Finite-lived intangible assets, net | 13,333 | 14,133 |
Goodwill | 1,057 | 1,057 |
Restricted cash | 603 | 603 |
Other assets | 178 | 134 |
Total assets | 83,659 | 101,034 |
Current liabilities: | ||
Accounts payable | 3,161 | 2,424 |
Accrued liabilities | 8,058 | 9,110 |
Total current liabilities | 11,219 | 11,534 |
Long-term debt | 24,997 | 24,918 |
Capital lease liability, net of current portion | 382 | 599 |
Deferred rent, net of current portion | 4,245 | 4,402 |
Total liabilities | 40,843 | 41,453 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.001 par value; 125,000,000 shares authorized, 33,977,840 and 33,762,278 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 34 | 34 |
Additional paid-in capital | 245,430 | 239,631 |
Accumulated deficit | (202,648) | (180,084) |
Total stockholders’ equity | 42,816 | 59,581 |
Total liabilities and stockholders’ equity | $ 83,659 | $ 101,034 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 125,000,000 | 125,000,000 |
Common stock, shares issued | 33,977,840 | 33,762,278 |
Common stock, shares outstanding | 33,977,840 | 33,762,278 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue | $ 17,519 | $ 18,603 | $ 52,357 | $ 46,828 |
Operating expenses: | ||||
Cost of revenue | 7,169 | 6,367 | 20,426 | 18,947 |
Research and development | 3,046 | 4,006 | 10,679 | 11,734 |
Selling and marketing | 7,885 | 7,087 | 23,215 | 22,416 |
General and administrative | 5,520 | 5,763 | 17,731 | 18,062 |
Intangible asset amortization | 267 | 266 | 800 | 800 |
Total operating expenses | 23,887 | 23,489 | 72,851 | 71,959 |
Loss from operations | (6,368) | (4,886) | (20,494) | (25,131) |
Interest expense | (815) | (799) | (2,423) | (1,951) |
Other income, net | 134 | 48 | 353 | 127 |
Net loss | (7,049) | (5,637) | (22,564) | (26,955) |
Comprehensive loss | $ (7,049) | $ (5,637) | $ (22,564) | $ (26,955) |
Net loss per common share, basic and diluted (in usd per share) | $ (0.21) | $ (0.20) | $ (0.67) | $ (0.97) |
Shares used to compute net loss per common share, basic and diluted | 33,946,748 | 27,916,819 | 33,881,705 | 27,865,100 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities | ||
Net loss | $ (22,564) | $ (26,955) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,839 | 2,602 |
Bad debt expense | 0 | 68 |
Loss on disposal of property and equipment | 0 | 12 |
Genzyme co-promotion fee amortization | 0 | (948) |
Stock-based compensation | 4,825 | 4,745 |
Conversion of accrued interest on long-term debt | 0 | 385 |
Amortization and write-off of debt discount and issuance costs | 79 | 146 |
Interest on debt balloon payment and prepayment penalty | 0 | 206 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,879) | (2,877) |
Supplies inventory | (285) | 351 |
Prepaid expenses and current other assets | 240 | 37 |
Other assets | (44) | (44) |
Accounts payable | 891 | (387) |
Accrued liabilities and deferred rent | (1,201) | (1,091) |
Net cash used in operating activities | (18,099) | (23,750) |
Investing activities | ||
Purchases of property and equipment | (1,455) | (3,760) |
Proceeds from sale of property and equipment | 440 | 0 |
Change in restricted cash | 120 | (2) |
Net cash used in investing activities | (895) | (3,762) |
Financing activities | ||
Proceeds from the issuance of long-term debt, net of debt issuance costs | 0 | 24,452 |
Payment of long-term debt | 0 | (5,000) |
Payment of end-of-term debt obligation and prepayment penalty | 0 | (288) |
Proceeds from the issuance of common stock in a public offering, net of costs | 200 | 0 |
Payment of capital lease liability | (204) | 0 |
Proceeds from the exercise of common stock options and employee stock purchases | 974 | 963 |
Net cash provided by financing activities | 970 | 20,127 |
Net decrease in cash and cash equivalents | (18,024) | (7,385) |
Cash and cash equivalents at beginning of period | 59,219 | 39,084 |
Cash and cash equivalents at end of period | 41,195 | 31,699 |
Supplementary cash flow information of non-cash investing and financing activities: | ||
Purchases of property and equipment included in accounts payable and accrued liabilities | $ 188 | $ 0 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Organization and Description of Business Veracyte, Inc. (“Veracyte” or the “Company”) was incorporated in the state of Delaware on August 15, 2006 as Calderome, Inc. Calderome operated as an incubator until early 2008. On March 4, 2008, the Company changed its name to Veracyte, Inc. The Company’s operations are based in South San Francisco, California and Austin, Texas, and it operates in one segment. Veracyte is a leading genomic diagnostics company that is fundamentally improving patient care by resolving diagnostic uncertainty with evidence that is trustworthy and actionable. The Company's products uniquely combine genomic technology, clinical science and machine learning to provide answers that give physicians and patients a clear path forward without risky, costly surgery that is often unnecessary. Since the Company's founding in 2008, it has commercialized three genomic tests that it believes are transforming diagnostics: Afirma Thyroid FNA Analysis - The Afirma genomic classifiers, specifically the Afirma Gene Expression Classifier, or GEC, and the recently commercialized Afirma Genomic Sequencing Classifier, or GSC, employ proprietary gene signatures to determine whether thyroid nodules previously classified by cytopathology as indeterminate can be reclassified as benign, thus enabling the patient to avoid an unnecessary surgery. The new Afirma GSC uniquely combines RNA sequencing and machine learning to leverage more enriched, previously undetectable genomic information. It can identify 30 percent more benign thyroid nodules among those deemed indeterminate following cytopathology. Afirma GSC also provides classifiers that can further guide surgery if cancer is found, including classifiers for medullary thyroid cancer, the BRAF V600E variant, and classifiers to identify RET/PTC1 and RET/PTC3 fusions, which are typically associated with cancer. Percepta Bronchial Genomic Classifier - The 23-gene Percepta classifier improves lung cancer screening and diagnosis by identifying patients at low risk of cancer among those whose lung nodules are not clearly benign or malignant following traditional evaluation. The Percepta classifier analyzes genomic changes that occur in the epithelial cells lining the airways, which we call the field of injury, of current or former smokers to assess a patient’s risk of having lung cancer, without the need to test the often-hard-to-reach nodule directly. Envisia Genomic Classifier - Commercialized in October 2016, the Envisia classifier is designed to improve physicians’ ability to differentiate idiopathic pulmonary fibrosis, or IPF, from other interstitial lung diseases, or ILD, without the need for invasive and potentially risky surgery. The Envisia classifier uses machine learning coupled with powerful, deep RNA sequencing to detect the presence or absence of usual interstitial pneumonia, or UIP, a classic diagnostic pattern whose presence is essential for the diagnosis of IPF. All of the Company's testing services are made available through its clinical reference laboratories located in South San Francisco, California and Austin, Texas, which are each certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA. Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed balance sheet as of September 30, 2017 , the condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016 , and the condensed statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed balance sheet at December 31, 2016 has been derived from audited financial statements. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full year or any other period. The accompanying interim period condensed financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Use of Estimates The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include: revenue recognition; contractual allowances; the useful lives of property and equipment; the recoverability of long-lived assets; the estimation of the fair value of intangible assets; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; and contingencies. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. Concentrations of Credit Risk and Other Risks and Uncertainties The majority of the Company’s cash and cash equivalents are deposited with one major financial institution in the United States. Deposits in this institution may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Several of the components of the Company’s sample collection kit and test reagents are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results. The Company is also subject to credit risk from its accounts receivable related to its sales. The Company generally does not perform evaluations of customers’ financial condition and generally does not require collateral. Through September 30, 2017 , most of the Company’s revenue has been derived from the sale of Afirma. To date, Afirma has been delivered primarily to physicians in the United States. The Company’s third-party payers in excess of 10% of revenue and their related revenue as a percentage of total revenue were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Medicare 26 % 23 % 26 % 27 % UnitedHealthcare 14 % 11 % 14 % 12 % 40 % 34 % 40 % 39 % The Company’s significant third-party payers and their related accounts receivable balance as a percentage of total accounts receivable were as follows: September 30, December 31, 2016 Medicare 17 % 18 % No other third-party payer represented more than 10% of the Company’s accounts receivable balances as of those dates. Restricted Cash The Company had deposits of $120,000 included in current assets as of December 31, 2016 , pledged for corporate credit cards and there was no such restricted amounts as of September 30, 2017 . The Company also had deposits of $603,000 included in long-term assets as of September 30, 2017 and December 31, 2016 , restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility. Revenue Recognition The Company recognizes revenue in accordance with the provision of ASC 954-605, Health Care Entities — Revenue Recognition ("ASC 954") . The Company’s revenue is generated from the provision of diagnostic services. The service is completed upon the delivery of test results to the prescribing physician, at which time the Company bills for the service. The Company recognizes revenue related to billings for tests delivered on an accrual basis when amounts that will ultimately be realized can be estimated. The estimates of amounts that will ultimately be realized require significant judgment by management. Until a contract has been negotiated with a commercial payer or governmental program, the Company's tests may or may not be covered by these entities’ existing reimbursement policies. In addition, patients do not enter into direct agreements with the Company that commit them to pay any portion of the cost of the tests in the event that their insurance declines to reimburse the Company. The Company may bill the patient directly for these amounts in the form of co-payments and co-insurance in accordance with their insurance carrier and health plans. In the absence of the ability to estimate the amount that will ultimately be realized for the Company’s services, revenue is recognized on the cash basis. Revenue recognized for the three and nine months ended September 30, 2017 and 2016 was as follows (in thousands of dollars): Three Months Ended September 30, Nine Months Ended September 30, 2017 % 2016 % 2017 % 2016 % Revenue recognized on the accrual basis $ 17,257 99 % $ 13,903 75 % $ 50,007 96 % $ 31,478 67 % Revenue recognized on the cash basis 262 1 % 4,700 25 % 2,350 4 % 15,350 33 % Total $ 17,519 100 % $ 18,603 100 % $ 52,357 100 % $ 46,828 100 % Prior to July 1, 2016, the Company accrued less than 50% of the billed Afirma genomic test volume per fiscal period. The Company believed it did not have a consistent enough payment history to accrue the remaining Afirma genomic classifier tests delivered to customers and, as noted above, recognized revenue on the cash basis for such tests. The Company has been analyzing the amounts received for tests performed since commercialization, and during the quarter ended September 30, 2016, sufficient information developed to support a reasonable estimate of the amount of revenue to accrue upon test delivery for a number of payers that had been previously recognized on the cash basis. As a result, starting in the quarter ended September 30, 2016, the Company began accruing substantially all of its billed Afirma genomic test volume. In determining the amount to accrue for a particular test, the Company considered factors such as payer coverage, whether there is a reimbursement contract between the payer and the Company, timeliness of payment, payment as a percentage of agreed upon rate (if applicable), amount paid per test and any current developments or changes that could impact reimbursement. As a result, the Company recognized $3.5 million of incremental revenue during the quarter ended September 30, 2016 upon test delivery that previously would not have been recognized until cash was received. Tests performed prior to July 1, 2016 that did not meet the Company’s accrual criteria at the time of delivery will continue to be recognized as revenue on the cash basis. In the quarter ended June 30, 2017, as a result of the related cash collections being higher than previously estimated and cash collection trends, the Company updated its revenue estimates and recognized an additional $1.0 million of revenue for certain tests performed in the six months ended December 31, 2016. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The Company will adopt the new revenue standard as of January 1, 2018 using the modified retrospective method. The Company has completed its assessment of the five steps of this ASU and believes that the adoption of this ASU will not result in a material cumulative catch-up adjustment under the modified retrospective method, or have a material impact on the Company's financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-2, Leases . This ASU is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The ASU will be effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited and early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its financial statements. In March 2016, the FASB issued ASU 2016-9, Compensation - Stock Compensation , related to the tax effects of share-based awards. The ASU requires that all the tax effects of share-based awards be recorded through the income statement, thereby simplifying the current guidance that requires excess tax benefits and certain excess tax deficiencies to be recorded in equity. This ASU also permits an election for the impact of forfeitures on the recognition of expense for share-based payment awards where forfeitures can be estimated or recognized when they occur. This ASU is effective for interim and annual periods beginning after December 15, 2016. The Company adopted this ASU as of January 1, 2017 and elected to continue using its forfeiture estimation method for share-based payment awards. This ASU was adopted prospectively and the impact of adoption on the Company's financial statements was not material. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash. This ASU requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU will be effective for interim and annual periods beginning after December 15, 2017. The Company does not anticipate that the adoption of this ASU will have a significant impact on its financial statements. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Net Loss Per Common Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury stock method. The following outstanding common stock equivalents have been excluded from diluted net loss per common share because their inclusion would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Shares of common stock subject to outstanding options 6,322,215 5,312,081 6,134,966 5,031,926 Employee stock purchase plan 25,481 29,435 31,944 34,262 Restricted stock units 70,000 — 59,945 — Total common stock equivalents 6,417,696 5,341,516 6,226,855 5,066,188 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities Accrued liabilities consisted of the following (in thousands of dollars): September 30, December 31, Accrued compensation expenses $ 4,966 $ 6,120 Accrued other 3,092 2,990 Total accrued liabilities $ 8,058 $ 9,110 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company recognizes its financial assets and liabilities at fair value. The carrying amounts of certain financial instruments of the Company, including cash and cash equivalents, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The carrying value of the Company’s debt approximates its fair value because the interest rate approximates market rates that the Company could obtain for debt with similar terms. The estimated fair value of the Company’s debt is estimated using the net present value of the payments, discounted at an interest rate that is consistent with market interest rates, which is a Level II input. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows: • Level I: Inputs which include quoted prices in active markets for identical assets and liabilities. • Level II: Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level III: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of the Company’s financial assets, which consist only of money market funds, was $40.7 million and $58.7 million as of September 30, 2017 and December 31, 2016 , respectively, and are Level I assets as described above. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases its headquarters and laboratory facilities in South San Francisco, California under a non-cancelable lease agreement for approximately 59,000 square feet. The lease began in June 2015 and ends in March 2026 and contains extension of lease term and expansion options. In February 2017, the Company relinquished certain expansion rights for a nominal fee. The Company had deposits of $603,000 included in long-term assets as of September 30, 2017 and December 31, 2016 , restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the South San Francisco facility. The Company also leases laboratory and office space in Austin, Texas under a lease that expires in January 2029 and includes options for expansion and early termination in 2025. The related cash security deposit of $139,000 as of September 30, 2017 and $75,000 as of December 31, 2016 is included in other assets in the Company’s condensed balance sheets. Future minimum lease payments under non-cancelable operating leases as of September 30, 2017 are as follows (in thousands of dollars): Year Ending December 31, Remainder of 2017 $ 539 2018 2,121 2019 2,227 2020 2,332 2021 2,401 Thereafter 11,856 Total minimum lease payments $ 21,476 The Company recognizes rent expense on a straight-line basis over the non-cancelable lease period. Rent expense was $469,000 and $457,000 for the three months ended September 30, 2017 and 2016 , respectively, and $ 1.4 million and $1.5 million for the nine months ended September 30, 2017 and 2016 , respectively. Contingencies From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company believes there is no litigation pending that could have, individually or in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit Agreement In March 2016, the Company entered into a credit agreement (the “Credit Agreement”) with Visium Healthcare Partners, LP (“Visium”). Under the Credit Agreement, two term loans were available to the Company with an aggregate principal amount of up to $40.0 million . The Company drew down the initial $25.0 million term loan (the “Term Loan”) on March 30, 2016, of which $5.0 million was used to pay the outstanding balance of the Company’s existing long-term debt, which was cancelled at that date. On or prior to June 30, 2017, the Company was permitted to request a second term loan of up to $15.0 million ; however, the Company did not draw down the second term loan and it expired. The Term Loan matures on March 31, 2022. The Term Loan bears interest at a fixed rate of 12.0% per annum, payable quarterly at the end of each March, June, September and December. No principal payments will be due during an interest-only period, commencing on the funding date for the Term Loan (the “Borrowing Date”) and continuing through and including March 31, 2020. The Company is obligated to repay the outstanding principal amount under the Term Loan in eight equal installments during the final two years under the Credit Agreement. For any quarterly interest payment through and including the 16t h interest payment date after the Borrowing Date, so long as no event of default has occurred and is then continuing, the Company may elect to pay interest in cash on the outstanding principal amount of the Term Loan at a fixed rate of 9.0% , with the remaining 3.0% of the 12.0% interest paid-in-kind by adding such paid-in-kind interest to the outstanding principal amount of the Term Loan. The Company elected to pay interest in-kind for the quarters ended June 30, 2016 and September 30, 2016 and has recorded a total of $385,000 of paid-in-kind interest through September 30, 2017 . The Company may prepay the outstanding principal amount under the Term Loan subject to a minimum of $5.0 million of principal amount or a whole multiple of $1.0 million in excess thereof plus accrued and unpaid interest and a prepayment premium. The prepayment premium will be assessed on the principal amount repaid and will equal (i) 24.0% less the aggregate amount of all interest payments in cash, if the prepayment is made on or prior to March 31, 2018, (ii) 4.0% , if the prepayment is made after March 31, 2018 and on or prior to March 31, 2019, (iii) 2.0% , if the prepayment is made after March 31, 2019 and on or prior to March 31, 2020, and (iv) 1.0% , if the prepayment is made after March 31, 2020 and on or prior to March 31, 2021. After March 31, 2021 there is no prepayment premium. The Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of its assets. The Credit Agreement contains customary representations, warranties and events of default, as well as affirmative and negative covenants. The negative covenants include, among other provisions, covenants that limit or restrict the Company’s ability to incur liens, make investments, incur indebtedness, merge with or acquire other entities, dispose of assets, make dividends or other distributions to holders of its equity interests, engage in any material new line of business or enter into certain transactions with affiliates, in each case subject to certain exceptions. To the extent the Company forms or acquires certain subsidiaries domiciled in the United States, those subsidiaries are required to be guarantors of the Company’s obligations under the Credit Agreement. As of September 30, 2017 , the Company was in compliance with the loan covenants. See Note 11. Subsequent Events for additional information. As of September 30, 2017 , the net debt obligation for borrowings made under the Credit Agreement was as follows (in thousands of dollars): September 30, 2017 Debt principal $ 25,385 Unamortized deferred debt issuance costs (388 ) Net debt obligation $ 24,997 Future principal payments under the Credit Agreement are as follows (in thousands of dollars): Year Ending December 31, 2020 $ 9,519 2021 12,693 2022 3,173 Total $ 25,385 Loan and Security Agreement In June 2013, the Company entered into a loan and security agreement as subsequently amended (“2013 Loan Agreement”) with a financial institution that provided for borrowings of up to $10.0 million in aggregate. Borrowings under the 2013 Loan Agreement totaled $5.0 million , which was outstanding at January 1, 2016 until March 30, 2016 when it was repaid upon the Company entering into the Credit Agreement discussed above. Interest Expense Interest expense consists of the following (in thousands of dollars): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Nominal interest $ 778 $ 772 $ 2,311 $ 1,600 Amortization and write-off of debt discount and debt issuance costs 27 27 79 145 Prepayment penalty — — — 50 End-of-term payment interest — — — 156 Interest on capital lease 10 — 33 — Total $ 815 $ 799 $ 2,423 $ 1,951 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Common Stock The Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2016 Stock options and restricted stock units issued and outstanding 6,318,932 5,251,832 Stock options and restricted stock units available for grant under stock option plans 1,102,427 887,724 Common stock available for the Employee Stock Purchase Plan 456,002 609,053 Total 7,877,361 6,748,609 |
Genzyme Co-Promotion Agreement
Genzyme Co-Promotion Agreement | 9 Months Ended |
Sep. 30, 2017 | |
Genzyme Co-promotion Agreement | |
Genzyme Co-Promotion Agreement | Genzyme Co-Promotion Agreement In January 2012, the Company and Genzyme Corporation (“Genzyme”) executed a co-promotion agreement for the co-exclusive rights and license to promote and market the Company’s Afirma thyroid diagnostic solution in the United States and in 40 named countries. In exchange, the Company received a $10.0 million upfront co-promotion fee from Genzyme in February 2012 which was deferred and amortized over the life of the agreement until the agreement was terminated effective September 9, 2016. Under the terms of the agreement, Genzyme received a percentage of U.S. cash receipts that the Company has received related to the Afirma solution as co-promotion fees. In February 2015, the Company entered into an ex-U.S. co-promotion agreement with Genzyme for the promotion of the Afirma solution with exclusivity in five countries outside the United States initially and in other countries agreed to from time to time. The agreement commenced on January 1, 2015 and continued until December 31, 2019, with extension of the agreement possible upon agreement of the parties. Pursuant to the agreement, the Company agreed to pay Genzyme 25% of net revenue from the sale of the Afirma solution in Brazil and Singapore over a five -year period commencing January 1, 2015. These payments have been immaterial for all periods presented. Effective July 6, 2017, the agreement was terminated. The Company incurred $1.8 million and $6.1 million in co-promotion expense, excluding the amortization of the upfront co-promotion fee, in the three and nine months ended September 30, 2016 , respectively, which is included in selling and marketing expenses in the condensed statements of operations and comprehensive loss. The Company had no outstanding obligations to Genzyme under the U.S. co-promotion agreement as of September 30, 2017 and December 31, 2016 . The Company amortized $227,000 and $948,000 of the $10.0 million upfront co-promotion fee in the three and nine months ended September 30, 2016 , respectively, which is reflected as a reduction to selling and marketing expenses in the condensed statements of operations and comprehensive loss. No such related costs were incurred during the three and nine months ended September 30, 2017 . |
Thyroid Cytopathology Partners
Thyroid Cytopathology Partners | 9 Months Ended |
Sep. 30, 2017 | |
Thyroid Cytopathology Partners | |
Thyroid Cytopathology Partners | Thyroid Cytopathology Partners In 2010, the Company entered into an arrangement with Pathology Resource Consultants, P.A. (“PRC”) to set up and manage a specialized pathology practice to provide testing services to the Company. There is no direct monetary compensation from the Company to PRC as a result of this arrangement. The Company’s service agreement is with the specialized pathology practice, Thyroid Cytopathology Partners (“TCP”), and was effective through December 31, 2015 , and thereafter automatically renews every year unless either party provides notice of intent not to renew at least 12 months prior to the end of the then-current term. Under the service agreement, the Company pays TCP based on a fixed price per test schedule, which is reviewed periodically for changes in market pricing. Subsequent to December 2012, an amendment to the service agreement allows TCP to sublease a portion of the Company’s facility in Austin, Texas. The Company does not have an ownership interest in or provide any form of financial or other support to TCP. The Company has concluded that TCP represents a variable interest entity and that the Company is not the primary beneficiary as it does not have the ability to direct the activities that most significantly impact TCP’s economic performance. Therefore, the Company does not consolidate TCP. All amounts paid to TCP under the service agreement are expensed as incurred and included in cost of revenue in the condensed statements of operations and comprehensive loss. The Company incurred $1.2 million and $1.3 million of expense for the three months ended September 30, 2017 and 2016 , respectively, and $3.6 million and $3.8 million for the nine months ended September 30, 2017 and 2016, respectively, in cytopathology testing and evaluation services expenses with TCP. The Company’s outstanding obligations to TCP for cytopathology testing services were $395,000 and $426,000 as of September 30, 2017 and December 31, 2016 , respectively, and are included in accounts payable on the accompanying condensed balance sheets. TCP reimburses the Company for its proportionate share of the Company’s rent and related operating expenses for the leased facility. TCP’s portion of rent and related operating expenses for the shared space at the Austin, Texas facility was $25,000 and $24,000 for the three months ended September 30, 2017 and 2016 , respectively, and $78,000 and $70,000 for the nine months ended September 30, 2017 and 2016 , respectively, and is included in other income, net in the Company’s condensed statements of operations and comprehensive loss. See Note 11. Subsequent Events for additional information. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company did not record a provision or benefit for income taxes during the three and nine months ended September 30, 2017 and 2016 . The Company continues to maintain a full valuation allowance against its net deferred tax assets. As of September 30, 2017 , the Company had unrecognized tax benefits of $2.5 million , none of which would currently affect the Company’s effective tax rate if recognized due to the Company’s net deferred tax assets being fully offset by a valuation allowance. The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing at September 30, 2017 will significantly increase or decrease within the next 12 months. There was no interest expense or penalties related to unrecognized tax benefits recorded through September 30, 2017 . A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position could require the use of cash. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Thyroid Cytopathology Partners On October 16, 2017, the Company amended and restated its service agreement with TCP. The agreement is effective through October 31, 2022, and thereafter automatically renews every year unless either party provides notice of intent not to renew at least 12 months prior to the end of the then-current term. In connection with amending and restating the TCP agreement, the Company’s arrangement with PRC was simultaneously assigned by PRC to TCP and immediately terminated, and the Company agreed to pay PRC a total of $1,750,000 over eight quarterly installments in exchange for TCP reducing the price per test it charges the Company during the term of the amended TCP agreement. Loan and Security Agreement On November 3, 2017, the Company entered into a loan and security agreement (the “Loan and Security Agreement”) with Silicon Valley Bank. In connection with the entry into the Loan and Security Agreement, the Company terminated the Credit Agreement with Visium, wherein all commitments were terminated, all liens were released and all outstanding principal and interest and fees accrued thereunder were repaid in the aggregate amount of $27.3 million . The Company expects to expense approximately $1.9 million in prepayment premium and debt issuance cost write-offs in the quarter ending December 31, 2017. The Loan and Security Agreement allows the Company to borrow up to $35.0 million , with a $25.0 million advance term loan (the “Term Loan Advance”) and a revolving line of credit of up to $10.0 million (the “Revolving Line of Credit”). The Term Loan Advance was advanced upon the closing of the Loan and Security Agreement. Borrowings under the Loan and Security Agreement mature in October 2022. The Term Loan Advance bears interest at a variable rate equal to (i) the thirty-day U.S. London Interbank Offer Rate (“LIBOR”) plus (ii) 4.20% , with a minimum rate of 5.43% per annum. Principal amounts outstanding under the Revolving Line of Credit bear interest at a variable rate equal to (i) LIBOR plus (ii) 3.50% , with a minimum rate of 4.70% per annum. The Company may prepay the outstanding principal amount under the Term Loan Advance plus accrued and unpaid interest and, if the Term Loan Advance is repaid in full, a prepayment premium. In addition, a final payment on the Term Loan Advance in the amount of $1.2 million is due upon the earlier of the maturity date of the Term Loan Advance or its payment in full. The Loan and Security Agreement contains customary representations, warranties, and events of default, as well as affirmative and negative covenants. The Company’s obligations under the Loan and Security Agreement are secured by substantially all of its assets (excluding intellectual property), subject to certain customary exceptions. The net proceeds from the Term Loan Advance were used towards the full repayment of the outstanding balance under the Credit Agreement. |
Organization and Description 17
Organization and Description of Business (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed balance sheet as of September 30, 2017 , the condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016 , and the condensed statements of cash flows for the nine months ended September 30, 2017 and 2016 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of its financial position, operating results and cash flows for the periods presented. The condensed balance sheet at December 31, 2016 has been derived from audited financial statements. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full year or any other period. The accompanying interim period condensed financial statements and related financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . |
Use of Estimates | Use of Estimates The preparation of unaudited interim financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include: revenue recognition; contractual allowances; the useful lives of property and equipment; the recoverability of long-lived assets; the estimation of the fair value of intangible assets; stock options; income tax uncertainties, including a valuation allowance for deferred tax assets; and contingencies. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and assumptions. |
Concentrations of Credit Risk and Other Risks and Uncertainties | Concentrations of Credit Risk and Other Risks and Uncertainties The majority of the Company’s cash and cash equivalents are deposited with one major financial institution in the United States. Deposits in this institution may exceed the amount of insurance provided on such deposits. The Company has not experienced any losses on its deposits of cash and cash equivalents. Several of the components of the Company’s sample collection kit and test reagents are obtained from single-source suppliers. If these single-source suppliers fail to satisfy the Company’s requirements on a timely basis, it could suffer delays in being able to deliver its diagnostic solutions, a possible loss of revenue, or incur higher costs, any of which could adversely affect its operating results. The Company is also subject to credit risk from its accounts receivable related to its sales. The Company generally does not perform evaluations of customers’ financial condition and generally does not require collateral. |
Restricted Cash | Restricted Cash The Company had deposits of $120,000 included in current assets as of December 31, 2016 , pledged for corporate credit cards and there was no such restricted amounts as of September 30, 2017 . The Company also had deposits of $603,000 included in long-term assets as of September 30, 2017 and December 31, 2016 , restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the Company’s South San Francisco facility. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with the provision of ASC 954-605, Health Care Entities — Revenue Recognition ("ASC 954") . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The Company will adopt the new revenue standard as of January 1, 2018 using the modified retrospective method. The Company has completed its assessment of the five steps of this ASU and believes that the adoption of this ASU will not result in a material cumulative catch-up adjustment under the modified retrospective method, or have a material impact on the Company's financial position or results of operations. In February 2016, the FASB issued ASU No. 2016-2, Leases . This ASU is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. The ASU will be effective for interim and annual periods beginning after December 15, 2018. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. Full retrospective application is prohibited and early adoption is permitted. The Company is currently evaluating the potential effect of this standard on its financial statements. In March 2016, the FASB issued ASU 2016-9, Compensation - Stock Compensation , related to the tax effects of share-based awards. The ASU requires that all the tax effects of share-based awards be recorded through the income statement, thereby simplifying the current guidance that requires excess tax benefits and certain excess tax deficiencies to be recorded in equity. This ASU also permits an election for the impact of forfeitures on the recognition of expense for share-based payment awards where forfeitures can be estimated or recognized when they occur. This ASU is effective for interim and annual periods beginning after December 15, 2016. The Company adopted this ASU as of January 1, 2017 and elected to continue using its forfeiture estimation method for share-based payment awards. This ASU was adopted prospectively and the impact of adoption on the Company's financial statements was not material. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash. This ASU requires that restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU will be effective for interim and annual periods beginning after December 15, 2017. The Company does not anticipate that the adoption of this ASU will have a significant impact on its financial statements. |
Organization and Description 18
Organization and Description of Business (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Revenue Recognition | |
Schedule of Revenue recognized when cash is received and on an accrual basis | Revenue recognized for the three and nine months ended September 30, 2017 and 2016 was as follows (in thousands of dollars): Three Months Ended September 30, Nine Months Ended September 30, 2017 % 2016 % 2017 % 2016 % Revenue recognized on the accrual basis $ 17,257 99 % $ 13,903 75 % $ 50,007 96 % $ 31,478 67 % Revenue recognized on the cash basis 262 1 % 4,700 25 % 2,350 4 % 15,350 33 % Total $ 17,519 100 % $ 18,603 100 % $ 52,357 100 % $ 46,828 100 % |
Revenue concentration risk | Revenue | |
Concentration Risk | |
Schedule of the Company's third-party payers as a percentage of total | The Company’s third-party payers in excess of 10% of revenue and their related revenue as a percentage of total revenue were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Medicare 26 % 23 % 26 % 27 % UnitedHealthcare 14 % 11 % 14 % 12 % 40 % 34 % 40 % 39 % |
Gross receivables concentration risk | Accounts receivable | |
Concentration Risk | |
Schedule of the Company's third-party payers as a percentage of total | The Company’s significant third-party payers and their related accounts receivable balance as a percentage of total accounts receivable were as follows: September 30, December 31, 2016 Medicare 17 % 18 % |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | The following outstanding common stock equivalents have been excluded from diluted net loss per common share because their inclusion would be anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Shares of common stock subject to outstanding options 6,322,215 5,312,081 6,134,966 5,031,926 Employee stock purchase plan 25,481 29,435 31,944 34,262 Restricted stock units 70,000 — 59,945 — Total common stock equivalents 6,417,696 5,341,516 6,226,855 5,066,188 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands of dollars): September 30, December 31, Accrued compensation expenses $ 4,966 $ 6,120 Accrued other 3,092 2,990 Total accrued liabilities $ 8,058 $ 9,110 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Future minimum lease payments under non-cancelable operating leases as of September 30, 2017 are as follows (in thousands of dollars): Year Ending December 31, Remainder of 2017 $ 539 2018 2,121 2019 2,227 2020 2,332 2021 2,401 Thereafter 11,856 Total minimum lease payments $ 21,476 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of net debt obligation | As of September 30, 2017 , the net debt obligation for borrowings made under the Credit Agreement was as follows (in thousands of dollars): September 30, 2017 Debt principal $ 25,385 Unamortized deferred debt issuance costs (388 ) Net debt obligation $ 24,997 |
Schedule of future principal payments under the Credit agreement | Future principal payments under the Credit Agreement are as follows (in thousands of dollars): Year Ending December 31, 2020 $ 9,519 2021 12,693 2022 3,173 Total $ 25,385 |
Schedule of interest expense on debt | Interest expense consists of the following (in thousands of dollars): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Nominal interest $ 778 $ 772 $ 2,311 $ 1,600 Amortization and write-off of debt discount and debt issuance costs 27 27 79 145 Prepayment penalty — — — 50 End-of-term payment interest — — — 156 Interest on capital lease 10 — 33 — Total $ 815 $ 799 $ 2,423 $ 1,951 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of reserved shares of common stock for issuance | The Company had reserved shares of common stock for issuance as follows: September 30, December 31, 2016 Stock options and restricted stock units issued and outstanding 6,318,932 5,251,832 Stock options and restricted stock units available for grant under stock option plans 1,102,427 887,724 Common stock available for the Employee Stock Purchase Plan 456,002 609,053 Total 7,877,361 6,748,609 |
Organization and Description 24
Organization and Description of Business - Operating Segments (Details) | 9 Months Ended |
Sep. 30, 2017segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Organization and Description 25
Organization and Description of Business - Credit Risk (Details) - item | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentrations of Credit Risk and Other Risks and Uncertainties | |||||
Number of major financial institutions with which the company's cash and cash equivalents are deposited | 1 | 1 | |||
Revenue | Revenue concentration risk | |||||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||||
Concentrations of credit risk (as a percent) | 40.00% | 34.00% | 40.00% | 39.00% | |
Revenue | Revenue concentration risk | Medicare | |||||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||||
Concentrations of credit risk (as a percent) | 26.00% | 23.00% | 26.00% | 27.00% | |
Revenue | Revenue concentration risk | UnitedHealthcare | |||||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||||
Concentrations of credit risk (as a percent) | 14.00% | 11.00% | 14.00% | 12.00% | |
Accounts receivable | Gross receivables concentration risk | Medicare | |||||
Concentrations of Credit Risk and Other Risks and Uncertainties | |||||
Concentrations of credit risk (as a percent) | 17.00% | 18.00% |
Organization and Description 26
Organization and Description of Business - Restricted Cash and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Restricted Cash | ||
Cash reserved to cover liabilities associated with Merger | $ 0 | $ 120 |
Long term deposit consisting of letter of credit serving as security for lease | 603 | 603 |
Headquarters and laboratory facility, South San Francisco, Lease expiring 2016 | ||
Restricted Cash | ||
Cash reserved to cover liabilities associated with Merger | 120 | |
Headquarters and laboratory facilities, South San Francisco, Lease signed April 2015 | ||
Restricted Cash | ||
Long term deposit consisting of letter of credit serving as security for lease | $ 603 | $ 603 |
Organization and Description 27
Organization and Description of Business - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue Recognition | |||||
Revenue recognized when cash is received | $ 17,257 | $ 13,903 | $ 50,007 | $ 31,478 | |
Revenue recognized on accrual basis, percentage | 99.00% | 75.00% | 96.00% | 67.00% | |
Revenue recognized on an accrual basis | $ 262 | $ 4,700 | $ 2,350 | $ 15,350 | |
Revenue recognized received in cash, percentage | 1.00% | 25.00% | 4.00% | 33.00% | |
Total | $ 17,519 | $ 18,603 | $ 52,357 | $ 46,828 | |
Revenue, percent | 100.00% | 100.00% | 100.00% | 100.00% | |
Accrued Income Receivable | |||||
Revenue Recognition | |||||
Total | $ 3,500 | $ 1,000 | |||
Afirma Gene Expression Classifier | Maximum | |||||
Revenue Recognition | |||||
Revenue recognized on accrual basis, percentage | 50.00% |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||||
Total common stock equivalents (in shares) | 6,417,696 | 5,341,516 | 6,226,855 | 5,066,188 |
Shares of common stock subject to outstanding options | ||||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||||
Total common stock equivalents (in shares) | 6,322,215 | 5,312,081 | 6,134,966 | 5,031,926 |
Employee stock purchase plan | ||||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||||
Total common stock equivalents (in shares) | 25,481 | 29,435 | 31,944 | 34,262 |
Restricted stock units | ||||
Outstanding shares of common stock equivalents that have been excluded from diluted net loss per common share | ||||
Total common stock equivalents (in shares) | 70,000 | 0 | 59,945 | 0 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued compensation expenses | $ 4,966 | $ 6,120 |
Accrued other | 3,092 | 2,990 |
Total accrued liabilities | $ 8,058 | $ 9,110 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
Recurring | Level I | Money market funds | ||
Fair value measurements | ||
Financial Assets | $ 40.7 | $ 58.7 |
Commitments and Contingencies31
Commitments and Contingencies (Details) ft² in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)ft² | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Future minimum lease payments under non-cancelable operating leases | |||||
2,017 | $ 539 | $ 539 | |||
2,018 | 2,121 | 2,121 | |||
2,019 | 2,227 | 2,227 | |||
2,020 | 2,332 | 2,332 | |||
2,021 | 2,401 | 2,401 | |||
Thereafter | 11,856 | 11,856 | |||
Total minimum lease payments | 21,476 | 21,476 | |||
Facilities rent expense | 469 | $ 457 | $ 1,400 | $ 1,500 | |
Headquarters and laboratory facilities, South San Francisco, Lease signed April 2015 | |||||
Operating Leases | |||||
Amount of space leased | ft² | 59 | ||||
Security deposit | 603 | $ 603 | $ 603 | ||
Laboratory facilities, Austin, Texas | Other assets | |||||
Operating Leases | |||||
Security deposit | $ 139 | $ 139 | $ 75 |
Debt (Details)
Debt (Details) | Mar. 30, 2016USD ($) | Mar. 31, 2016USD ($)loan | Dec. 31, 2014 | Jun. 30, 2013USD ($) | Sep. 30, 2017USD ($)installment | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)installment | Sep. 30, 2016USD ($) | Jun. 30, 2017USD ($) |
Debt | |||||||||
Repayment of long-term debt | $ 0 | $ 5,000,000 | |||||||
Paid-in-kind interest | 0 | 385,000 | |||||||
Interest Expense, Debt [Abstract] | |||||||||
Nominal interest | $ 778,000 | $ 772,000 | 2,311,000 | 1,600,000 | |||||
Amortization and write-off of debt discount and debt issuance costs | 27,000 | 27,000 | 79,000 | 145,000 | |||||
Prepayment penalty | 0 | 0 | 0 | 50,000 | |||||
End-of-term payment interest | 0 | 0 | 0 | 156,000 | |||||
Interest on capital lease | 10,000 | 0 | 33,000 | 0 | |||||
Total | $ 815,000 | $ 799,000 | $ 2,423,000 | $ 1,951,000 | |||||
Line of Credit | Visium | |||||||||
Debt | |||||||||
Number of term loans | loan | 2 | ||||||||
Maximum borrowing capacity | $ 40,000,000 | ||||||||
Interest rate (as a percent) | 12.00% | 12.00% | |||||||
Number of installments | installment | 8 | 8 | |||||||
Term of debt with equal quarterly installments | 2 years | ||||||||
Rate for which Company may elect to pay interest in cash (as a percent) | 0.090 | 0.090 | |||||||
Remaining percentage for which interest is paid-in-kind | 0.030 | 0.030 | |||||||
Paid-in-kind interest | $ 385,000 | ||||||||
Prepayment allowed | 5,000,000 | ||||||||
Whole multiple in excess of minimum prepayment | $ 1,000,000 | ||||||||
Prepayment premium for prepayment made on or prior to March 31, 2018 (as a percent) | 0.24 | ||||||||
Prepayment premium for prepayment made after March 31, 2018 and on or prior to March 31, 2019 (as a percent) | 0.04 | ||||||||
Prepayment premium for prepayment made after March 31, 2019 and on or prior to March 31, 2020 (as a percent) | 0.02 | ||||||||
Prepayment premium for prepayment made after March 31, 2020 and on or prior to March 31, 2021 (as a percent) | 0.01 | ||||||||
Debt principal | 25,385,000 | $ 25,385,000 | |||||||
Unamortized deferred debt issuance costs | (388,000) | (388,000) | |||||||
Net debt obligation | 24,997,000 | 24,997,000 | |||||||
Future principal payments | |||||||||
2,020 | 9,519,000 | 9,519,000 | |||||||
2,021 | 12,693,000 | 12,693,000 | |||||||
2,022 | 3,173,000 | 3,173,000 | |||||||
Total | $ 25,385,000 | $ 25,385,000 | |||||||
Line of Credit | Visium | Initial Term Loan | |||||||||
Debt | |||||||||
Drawn down initial term loan | $ 25,000,000 | ||||||||
Repayment of long-term debt | $ 5,000,000 | ||||||||
Line of Credit | Visium | Second Term Loan | |||||||||
Debt | |||||||||
Maximum borrowing capacity | $ 15,000,000 | ||||||||
Term Loans | |||||||||
Debt | |||||||||
Maximum borrowing capacity | $ 10,000,000 | ||||||||
Prepayment premium for prepayment made after March 31, 2021 (as a percent) | 0 | ||||||||
Future principal payments | |||||||||
Amount drawn down | $ 5,000,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - shares | Sep. 30, 2017 | Dec. 31, 2016 |
Common Stock | ||
Options issued and outstanding (in shares) | 6,318,932 | 5,251,832 |
Total number of shares reserved for issuance | 7,877,361 | 6,748,609 |
Shares of common stock subject to outstanding options | ||
Common Stock | ||
Shares available for issuance | 1,102,427 | 887,724 |
ESPP | ||
Common Stock | ||
Shares available for issuance | 456,002 | 609,053 |
Genzyme Co-Promotion Agreement
Genzyme Co-Promotion Agreement (Details) | Jan. 01, 2015 | Feb. 29, 2012USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) | Feb. 28, 2015country | Jan. 31, 2012country |
Genzyme Co-promotion Agreement | ||||||||
Genzyme co-promotion fee amortization | $ 0 | $ 948,000 | ||||||
Co-promotion agreement | Genzyme | ||||||||
Genzyme Co-promotion Agreement | ||||||||
Genzyme co-promotion fee amortization | $ 227,000 | 948,000 | ||||||
Co-promotion agreement | Genzyme | Accrued liabilities | ||||||||
Genzyme Co-promotion Agreement | ||||||||
Co-promotion expenses | $ 0 | $ 0 | ||||||
Afirma thyroid diagnostic solution co-promotion agreement | Genzyme | ||||||||
Genzyme Co-promotion Agreement | ||||||||
Number of countries outside United States for exclusive promotion under the agreement | country | 40 | |||||||
Co-promotion fee received from Genzyme | $ 10,000,000 | |||||||
Ex-U.S. Co-Promotion Agreement | Genzyme | ||||||||
Genzyme Co-promotion Agreement | ||||||||
Number of countries outside United States for exclusive promotion under the agreement | country | 5 | |||||||
Co-promotion fee paid as a percentage of net revenue | 25.00% | |||||||
Period of agreement | 5 years | |||||||
Selling and marketing | Co-promotion agreement | Genzyme | ||||||||
Genzyme Co-promotion Agreement | ||||||||
Co-promotion expenses | $ 1,800,000 | $ 6,100,000 |
Thyroid Cytopathology Partners
Thyroid Cytopathology Partners (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Thyroid Cytopathology Partners | |||||
Outstanding obligations | $ 3,161 | $ 3,161 | $ 2,424 | ||
Thyroid Cytopathology Partners | |||||
Thyroid Cytopathology Partners | |||||
Notice of intent not to renew period | 12 months | ||||
Expenses for cytopathology testing and evaluation services | $ 1,200 | $ 1,300 | 3,600 | $ 3,800 | |
Outstanding obligations | 395 | 395 | $ 426 | ||
Reduction to rent expense for TCP's portion of costs for subleased space | $ 25 | $ 24 | $ 78 | $ 70 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefit | $ 2,500,000 |
Interest expense or penalties related to unrecognized tax benefits | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) | Nov. 03, 2017USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Oct. 16, 2017USD ($)installment | Mar. 31, 2016USD ($) |
Subsequent Event [Line Items] | ||||||
Repayment of long-term debt | $ 0 | $ 5,000,000 | ||||
Thyroid Cytopathology Partners | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Contract termination fee | $ 1,750,000 | |||||
Payment installments for contract termination Fee | installment | 8 | |||||
Visium | Line of Credit | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ 40,000,000 | |||||
Interest rate (as a percent) | 12.00% | |||||
Visium | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Repayment of long-term debt | $ 27,300,000 | |||||
Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | 35,000,000 | |||||
Secured Debt | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | 25,000,000 | |||||
Balloon payment to be paid | 1,200,000 | |||||
Revolving Credit Facility | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ 10,000,000 | |||||
London Interbank Offered Rate (LIBOR) | Secured Debt | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Basis spread on variable rate | 4.20% | |||||
London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Basis spread on variable rate | 3.50% | |||||
Minimum [Member] | London Interbank Offered Rate (LIBOR) | Secured Debt | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Interest rate (as a percent) | 5.43% | |||||
Minimum [Member] | London Interbank Offered Rate (LIBOR) | Revolving Credit Facility | Silicon Valley Bank | Line of Credit | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Interest rate (as a percent) | 4.70% | |||||
Scenario, Forecast | Visium | ||||||
Subsequent Event [Line Items] | ||||||
Payments of debt extinguishment costs | $ 1,900,000 |