DEI_Document
DEI Document | 3 Months Ended | |
Mar. 31, 2014 | 8-May-14 | |
Document Information [Abstract] | ' | ' |
Entity Registrant Name | 'ACUCELA INC. | ' |
Entity Central Index Key | '0001400482 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Amendment Flag | 'false | ' |
Entity Common Stock, Shares Outstanding | ' | 35,640,996 |
Balance_Sheets
Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $68,821 | $13,994 |
Investments | 55,359 | 14,947 |
Accounts receivable from collaborations | 15,253 | 10,262 |
Deferred tax asset | 1,116 | 1,114 |
Prepaid expenses and other current assets | 1,781 | 1,964 |
Total current assets | 142,330 | 42,281 |
Property and equipment, net | 984 | 1,112 |
Long-term investments | 48,531 | 3,478 |
Long-term deferred tax asset | 1,195 | 1,280 |
Deferred offering costs | 0 | 5,548 |
Other assets | 344 | 349 |
Total assets | 193,384 | 54,048 |
Current liabilities | ' | ' |
Current maturities of contingently convertible debt, related party | 0 | 12,000 |
Accounts payable | 1,314 | 754 |
Accrued liabilities | 5,290 | 6,579 |
Accrued compensation | 1,211 | 3,269 |
Deferred rent and lease incentives | 245 | 267 |
Total current liabilities | 8,060 | 22,869 |
Commitments | ' | ' |
Long-term deferred rent, lease incentives, and others | 7 | 55 |
Total long-term liabilities | 7 | 55 |
Shareholders' equity | ' | ' |
Common Stock, Value, Outstanding | 185,976 | 3,654 |
Additional Paid in Capital | 2,862 | 2,728 |
Accumulated Other Comprehensive Income (Loss), Net of Tax | -115 | -7 |
Retained Earnings (Accumulated Deficit) | -3,406 | -3,460 |
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest | 185,317 | 31,124 |
Liabilities and Equity | $193,384 | $54,048 |
Series A Convertible Preferred Stock | ' | ' |
Shareholders' equity | ' | ' |
Preferred Stock, No Par Value | $0 | $2,051 |
Series B Convertible Preferred Stock | ' | ' |
Shareholders' equity | ' | ' |
Preferred Stock, No Par Value | $0 | $13,387 |
Series C Convertible Preferred Stock | ' | ' |
Shareholders' equity | ' | ' |
Preferred Stock, No Par Value | $0 | $12,771 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Class of Stock [Line Items] | ' | ' |
Common Stock, Par or Stated Value Per Share | $0 | $0 |
Common stock, shares authorized | 100,000,000 | 60,000,000 |
Common Stock, Shares, Issued | 35,640,000 | 11,971,000 |
Common Stock, Shares, Outstanding | 35,640,000 | 11,971,000 |
Series A Convertible Preferred Stock | ' | ' |
Class of Stock [Line Items] | ' | ' |
Preferred Stock, Par or Stated Value Per Share | $0 | $0 |
Preferred Stock, Shares Authorized | 0 | 2,734,000 |
Preferred Stock, Shares Issued | 0 | 2,734,000 |
Preferred Stock, Shares Outstanding | 0 | 2,734,000 |
Preferred Stock, Liquidation Preference, Value | ' | $2,051 |
Series B Convertible Preferred Stock | ' | ' |
Class of Stock [Line Items] | ' | ' |
Preferred Stock, Par or Stated Value Per Share | $0 | $0 |
Preferred Stock, Shares Authorized | 0 | 17,900,000 |
Preferred Stock, Shares Issued | 0 | 17,900,000 |
Preferred Stock, Shares Outstanding | 0 | 17,900,000 |
Preferred Stock, Liquidation Preference, Value | ' | 13,425 |
Series C Convertible Preferred Stock | ' | ' |
Class of Stock [Line Items] | ' | ' |
Preferred Stock, Par or Stated Value Per Share | $0 | $0 |
Preferred Stock, Shares Authorized | 0 | 31,818,000 |
Preferred Stock, Shares Issued | 0 | 11,807,000 |
Preferred Stock, Shares Outstanding | 0 | 11,807,000 |
Preferred Stock, Liquidation Preference, Value | ' | $12,988 |
Statements_of_Income
Statements of Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Income Statement [Abstract] | ' | ' |
Revenues from collaborations | $10,546 | $15,980 |
Expenses | ' | ' |
Research and development | 7,970 | 8,128 |
General and administrative | 2,361 | 2,132 |
Total expenses | 10,331 | 10,260 |
Income from operations | 215 | 5,720 |
Other income (expense), net: | ' | ' |
Interest income | 44 | 18 |
Interest expense | -13 | -30 |
Other expense, net | -4 | -4 |
Total other income (expense), net | 27 | -16 |
Income before income tax | 242 | 5,704 |
Income tax expense | -188 | -1,993 |
Net income | 54 | 3,711 |
Net income attributable to participating securities | 0 | 2,712 |
Net income attributable to common shareholders | $54 | $999 |
Earnings Per Share [Abstract] | ' | ' |
Net income per share, Basic | $0 | $0.08 |
Net income per share, Diluted | $0 | $0.08 |
Weighted average shares, Basic | 23,799 | 11,944 |
Weighted average shares, Diluted | 24,159 | 12,198 |
Statements_of_Comprehensive_Lo
Statements of Comprehensive (Loss) Income Statement (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net Income | $54 | $3,711 |
Other comprehensive (loss) income | ' | ' |
Net unrealized loss on securities, net of tax | -108 | -2 |
Comprehensive (loss) income | ($54) | $3,709 |
Statements_of_Comprehensive_Lo1
Statements of Comprehensive (Loss) Income (Parenthetical) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net unrealized loss on securities, tax | $58 | $0 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash flows from operating activities | ' | ' |
Net Income | $54 | $3,711 |
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract] | ' | ' |
Depreciation and amortization | 128 | 123 |
Stock-based compensation | 134 | 172 |
Amortization of premium/discount on marketable securities | 118 | 38 |
Deferred taxes | 143 | 1,280 |
Increase (Decrease) in Other Operating Assets and Liabilities, Net [Abstract] | ' | ' |
Accounts receivable from collaborations | -4,991 | 1,181 |
Prepaid expenses and other assets | 183 | 176 |
Accounts payable | 560 | 785 |
Accrued liabilities | -1,289 | 470 |
Accrued compensation | -2,058 | -1,264 |
Deferred rent and lease incentives | -70 | -65 |
Deferred revenue from collaborations | 0 | 4,730 |
Other assets | 5 | 1 |
Net cash provided by (used in) operating activities | -7,083 | 11,338 |
Cash flows from investing activities | ' | ' |
Purchases of marketable securities available for sale | -92,701 | -4,413 |
Maturities of marketable securities available for sale | 6,950 | 2,000 |
Additions to property and equipment | 0 | -327 |
Net cash used in investing activities | -85,751 | -2,740 |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of common stock | 149,206 | 217 |
Payments for deferred offering costs | -1,545 | -247 |
Excess tax benefit from stock-based compensation | 0 | 123 |
Net cash provided by financing activities | 147,661 | 93 |
Cash and Cash Equivalents, Period Increase (Decrease) [Abstract] | ' | ' |
Increase in cash and cash equivalents | 54,827 | 8,691 |
Cash and cash equivalents - beginning of period | 13,994 | 16,639 |
Cash and cash equivalents - end of period | 68,821 | 25,330 |
Supplemental disclosure | ' | ' |
Deferred offering costs | 5,548 | ' |
Conversion of preferred stock upon IPO | 28,209 | ' |
Conversion of contingently convertible debt, related party, upon IPO | $12,000 | ' |
Description_of_Business
Description of Business | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Description of Business | ' |
Description of Business | |
Acucela Inc. (“we,” “our” and “us”) is a clinical-stage biotechnology company that specializes in discovering and developing novel therapeutics to treat and slow the progression of sight-threatening ophthalmic diseases impacting millions of individuals worldwide. We focus on developing oral products based on our proprietary visual cycle modulation, or VCM, compounds to address a variety of retinal diseases, primarily age-related macular degeneration, or AMD, diabetic retinopathy, or DR, and diabetic macular edema, or DME, and potentially Stargardt disease, retinitis pigmentosa and retinopathy of prematurity. Our product candidates are designed to address the root cause of these diseases by reducing toxic by-products and oxidative damage as well as protecting the retina from light damage. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Significant Accounting Policies | ' |
Significant Accounting Policies | |
Unaudited Interim Financial Information | |
We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with the audited financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2013 Annual Report on Form 10-K. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. | |
Segments | |
We operate in one segment, pharmaceutical product development. All of our significant assets are located in the United States. During the three months ended March 31, 2014 and 2013, all of our revenue was generated in the United States. | |
Initial Public Offering | |
On February 13, 2014, we completed our initial public offering ("IPO") whereby 9,200,000 shares of common stock were sold to the public at a price of $17.72 per share. We received aggregate proceeds of $142.0 million from the initial public offering ("IPO"), net of underwriters’ discounts and commissions, and offering expenses. Upon the closing of the IPO, all shares of our outstanding convertible preferred stock automatically converted into 10,813,867 shares of common stock and $12.0 million of outstanding principal underlying a convertible note that we issued to SBI Holdings, Inc. in May 2006, automatically converted into 3,636,365 shares of common stock. | |
Investments | |
Investments are composed of commercial paper, corporate debt securities, certificates of deposit, and government-backed securities. Investments with original maturities longer than three months and remaining maturities of less than one year are classified as short-term investments. We consider our investments as available-for-sale. Available-for-sale securities are stated at fair value as of each balance sheet date based on market quotes, and unrealized gains and losses are reflected as a net amount under the caption of accumulated other comprehensive loss. Premiums or discounts arising at acquisition are amortized into earnings. | |
We periodically evaluate whether declines in fair values of our investments below their cost are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss, as well as whether it is more likely than not that we will hold the investment until recovery of its amortized cost basis. Realized gains and losses are calculated using the specific identification method. Realized gains and losses and declines in value judged to be other-than-temporary are recorded within the statements of income under the caption other income (expense). | |
Concentration of Credit Risk | |
All of our accounts receivable, as of March 31, 2014 and December 31, 2013, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co. Ltd., or Otsuka, a global pharmaceutical company based in Japan. There was no allowance for doubtful accounts for the periods presented, as we believe all outstanding amounts will be paid based on our contractual arrangements with Otsuka and history of successful collections thereunder and collateral is not required. Revenue recognized for the three month periods ended March 31, 2014 and 2013 consist of amounts derived from our collaboration agreements with Otsuka. | |
Deferred Offering Costs | |
External costs we incurred directly attributable our public offering were deferred and recorded as noncurrent assets as of December 31, 2013, and were offset against the proceeds of the 2014 IPO. | |
Income Taxes | |
We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have already been recognized in the financial statements or tax returns. Excess tax benefits associated with stock option exercises and other equity awards are credited to shareholders' equity. Deferred tax liabilities and assets are based on the difference between financial statement carrying amounts and the tax basis of assets and liabilities, operating loss, and tax credit carryforwards and are measured using enacted tax rates expected to be in effect in the years the differences or carryforwards are anticipated to be recovered or settled. A valuation allowance is established when we believe that it is more likely than not that benefits of the deferred tax assets will not be realized. The Company had no uncertain tax positions as of March 31, 2014 and December 31, 2013. |
Cash_Cash_Equivalents_and_Inve
Cash, Cash Equivalents and Investments | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Cash, Cash Equivalents, and Investments | ' | |||||||||||||||
Cash, Cash Equivalents and Investments | ||||||||||||||||
Cash, cash equivalents and investments at March 31, 2014 and December 31, 2013 include all cash, money market funds, municipal bonds, corporate debt securities, commercial paper and certificates of deposit. We consider our investments as available-for-sale. Available-for-sale securities are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: | ||||||||||||||||
Level 1—Quoted prices in active markets for identical assets and liabilities, | ||||||||||||||||
Level 2—Inputs other than Level 1 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, and | ||||||||||||||||
Level 3—Unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions. | ||||||||||||||||
We measure the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold any cash, cash equivalents, or investments categorized as Level 3 as of March 31, 2014 or December 31, 2013. | ||||||||||||||||
Cash and cash equivalents and investments as of March 31, 2014 and December 31, 2013 consisted of the following (in thousands): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 785 | $ | — | $ | — | $ | 785 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 58,183 | — | — | 58,183 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 38,793 | 4 | (5 | ) | 38,792 | |||||||||||
Corporate debt securities | 61,888 | 2 | (157 | ) | 61,733 | |||||||||||
Municipal bonds | 615 | — | — | 615 | ||||||||||||
Certificates of deposit | 12,623 | — | (20 | ) | 12,603 | |||||||||||
$ | 172,887 | $ | 6 | $ | (182 | ) | $ | 172,711 | ||||||||
December 31, 2013 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 868 | $ | — | $ | — | $ | 868 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 12,501 | — | — | 12,501 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 1,099 | 1 | — | 1,100 | ||||||||||||
Corporate debt securities | 12,101 | — | (4 | ) | 12,097 | |||||||||||
Municipal bonds | 625 | — | — | 625 | ||||||||||||
Certificates of deposit | 5,235 | 2 | (9 | ) | 5,228 | |||||||||||
$ | 32,429 | $ | 3 | $ | (13 | ) | $ | 32,419 | ||||||||
As of March 31, 2014, $42.9 million of corporate debt securities and $5.6 million of certificates of deposit mature in greater than one year, but less than two years. All other investment securities held at March 31, 2014 mature within 12 months. | ||||||||||||||||
Unrealized losses as of March 31, 2014 are related to changes in interest rates and it is more likely than not that we will hold these securities until a recovery of the cost basis occurs. No investments have been in a loss position for more than 12 months. |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments | ' |
Commitments | |
Our contractual commitments, which consist of noncancelable operating leases for corporate office and laboratory space, have not changed from the commitments and obligations disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013, outside of the normal course of business. |
Net_Income_Per_Share
Net Income Per Share | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Net Income Per Share | ' | |||||||
Net Income Per Share | ||||||||
Net income per share attributable to common shareholders is presented in conformity with the two-class method required for participating securities for periods in which we have net income. Prior to the IPO, all series of convertible preferred stock were considered to be participating securities, as the holders were entitled to participate in any dividends prior and in preference to dividends declared or paid on the common stock. Undistributed earnings allocated to these participating securities were subtracted from net income in determining net income attributable to common shareholders. | ||||||||
Immediately prior to the closing of our IPO, all outstanding shares of preferred stock were converted to common. We issued 9,200,000 shares of common stock in the IPO. In addition, 3,636,365 shares of common stock were issued upon the conversion of the contingently convertible debt held by a related party. As a result, as of March 31, 2014, common stock is our only outstanding class of capital stock. | ||||||||
Basic net income per share is calculated by dividing net income attributable to common shareholders by the weighted average number of shares outstanding for the period. Diluted net income per share is calculated by dividing net income attributable to common shareholders by the weighted average number of shares of the common stock outstanding and other dilutive securities outstanding during the period. The potential dilutive shares of our common stock include the exercise of outstanding stock options that are dilutive. | ||||||||
The following tables reconcile the numerator and denominator used to calculate diluted net income per share for the periods presented (in thousands): | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Numerator: | ||||||||
Net income attributable to common shareholders | $ | 54 | $ | 999 | ||||
Denominator: | ||||||||
Weighted average shares outstanding—basic | 23,799 | 11,944 | ||||||
Dilutive effect of stock options | 360 | 254 | ||||||
Weighted average shares outstanding—diluted | 24,159 | 12,198 | ||||||
Collaboration_and_License_Agre
Collaboration and License Agreements | 3 Months Ended |
Mar. 31, 2014 | |
Revenue Recognition [Abstract] | ' |
Collaboration and License Agreements | ' |
Collaboration and License Agreements | |
During the three months ended March 31, 2013, we received and recognized as revenue the $5.0 million milestone payment associated with the initiation of the Phase 2b/3 clinical trial related to emixustat. No development or net sales milestones were achieved during the three months ended March 31, 2014. During the three months ended March 31, 2014 and 2013, we recognized $10.5 million and $11.9 million, respectively, of revenues in performance of the emixustat agreement. | |
During the three months ended March 31, 2014 and 2013, we recognized $0.0 million and $3.1 million, respectively, of revenue associated with rebamipide clinical development activities. The Rebamipide Agreement was terminated during the three months ended September 30, 2013. During the three months ended March 31, 2014 and 2013, we recognized $0.0 million and $0.9 million, respectively, of revenue associated with OPA-6566 for glaucoma clinical development activities. | |
Continued Involvement of the CEO | |
The Company’s collaboration arrangements with Otsuka require the continuing involvement of our CEO, Dr. Ryo Kubota. In the event of the departure of Dr. Kubota from the Company or a change in his role or responsibilities with the Company, the arrangements are subject to termination, at the option of Otsuka. For each agreement, this provision expires upon the approval of the NDA for the first indication in the United States. |
Strategic_Restructuring
Strategic Restructuring | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Restructuring and Related Activities [Abstract] | ' | |||
Strategic Restructuring | ' | |||
Strategic Restructuring | ||||
In October 2013, we announced a plan to reduce expenses, including a workforce reduction, as a result of the termination of the Rebamipide Agreement. The plan resulted in a reduction in force of approximately 35% of our total workforce, or approximately 30 employees, effective January 1, 2014. | ||||
As a result of this workforce reduction, we recorded cumulative to date through March 31, 2014 $1.0 million in general and administrative expense, related to severance, other termination benefits, and outplacement services. Expense recorded in the three months ended March 31, 2014 was not material. The following table summarizes the utilization of the restructuring liability (in thousands): | ||||
Severance and Other Termination Benefits | ||||
Balance, December 31, 2013 | $ | 966 | ||
Cash payments | (808 | ) | ||
Adjustments | (8 | ) | ||
Balance, March 31, 2014 | $ | 150 | ||
Shareholders_Equity
Shareholders' Equity | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Statement of Stockholders' Equity [Abstract] | ' | |||||||
Shareholders' Equity | ' | |||||||
Shareholders’ Equity | ||||||||
Common Stock | ||||||||
Our certificate of incorporation, as amended and restated, authorizes us to issue 100,000,000 shares of common stock without par value. | ||||||||
In February 2014, upon the closing of our IPO, all shares of our outstanding convertible preferred stock automatically converted into 10,813,867 shares of common stock. We issued 9,200,000 shares of common stock for aggregate proceeds of $142.0 million from the IPO, net of underwriters’ discounts and commissions, and offering expenses. In addition, upon the closing of the IPO, $12,000,000 of outstanding principal underlying a convertible note that we issued to SBI Holdings, Inc. in May 2006 automatically converted into 3,636,365 shares of common stock, after an intermediate conversion into Series C preferred shares. The number of shares issued upon conversion was determined by dividing the principal of the note by $3.30. | ||||||||
Changes in Accumulated Other Comprehensive Loss (in thousands): | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Beginning balance | $ | (7 | ) | $ | — | |||
Current period other comprehensive loss, net of tax | (108 | ) | (2 | ) | ||||
Ending balance | $ | (115 | ) | $ | (2 | ) | ||
The changes in accumulated other comprehensive loss relate to unrealized holding gains and losses in available-for-sale securities. |
RelatedParty_Transactions
Related-Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related-Party Transactions | ' |
Related-Party Transactions | |
Peter Kresel, M.B.A., a member of the Board, received payment from us for consulting services and reimbursement of direct expenses. Mr. Kresel’s payments for consulting services and expense reimbursements were $30,000 and $36,000 during the three months ended March 31, 2014 and 2013, respectively. | |
SBI Holdings, Inc. (a related party), one of our shareholders, was the holder for our contingently convertible debt. In connection with our IPO, the contingently convertible debt automatically converted into 3,636,365 shares of common stock (see Note 8). |
Income_Taxes_Notes
Income Taxes (Notes) | 3 Months Ended |
Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
Income Taxes | |
Effective tax rates were 78% and 35% in 2014 and 2013, respectively. The difference between the U.S. federal statutory rate of 34% and our effective tax rate in 2014 was due primarily to permanent differences in book and tax earnings for stock options, meals and entertainment, and other miscellaneous items. In 2013 there was no individual items representing a greater than 5% impact on the effective tax rate. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Accounting Policies [Abstract] | ' |
Unaudited Interim Financial Information | ' |
Unaudited Interim Financial Information | |
We have prepared the accompanying financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These financial statements should be read in conjunction with the audited financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2013 Annual Report on Form 10-K. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. | |
Segments | ' |
Segments | |
We operate in one segment, pharmaceutical product development. All of our significant assets are located in the United States. During the three months ended March 31, 2014 and 2013, all of our revenue was generated in the United States. | |
Initial Public Offering | ' |
Initial Public Offering | |
On February 13, 2014, we completed our initial public offering ("IPO") whereby 9,200,000 shares of common stock were sold to the public at a price of $17.72 per share. We received aggregate proceeds of $142.0 million from the initial public offering ("IPO"), net of underwriters’ discounts and commissions, and offering expenses. Upon the closing of the IPO, all shares of our outstanding convertible preferred stock automatically converted into 10,813,867 shares of common stock and $12.0 million of outstanding principal underlying a convertible note that we issued to SBI Holdings, Inc. in May 2006, automatically converted into 3,636,365 shares of common stock. | |
Investments | ' |
Investments | |
Investments are composed of commercial paper, corporate debt securities, certificates of deposit, and government-backed securities. Investments with original maturities longer than three months and remaining maturities of less than one year are classified as short-term investments. We consider our investments as available-for-sale. Available-for-sale securities are stated at fair value as of each balance sheet date based on market quotes, and unrealized gains and losses are reflected as a net amount under the caption of accumulated other comprehensive loss. Premiums or discounts arising at acquisition are amortized into earnings. | |
We periodically evaluate whether declines in fair values of our investments below their cost are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss, as well as whether it is more likely than not that we will hold the investment until recovery of its amortized cost basis. Realized gains and losses are calculated using the specific identification method. Realized gains and losses and declines in value judged to be other-than-temporary are recorded within the statements of income under the caption other income (expense). | |
Cash, cash equivalents and investments at March 31, 2014 and December 31, 2013 include all cash, money market funds, municipal bonds, corporate debt securities, commercial paper and certificates of deposit. We consider our investments as available-for-sale. Available-for-sale securities are stated at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: | |
Level 1—Quoted prices in active markets for identical assets and liabilities, | |
Level 2—Inputs other than Level 1 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, and | |
Level 3—Unobservable inputs in which there is little or no market data available, which requires us to develop our own assumptions. | |
We measure the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. | |
Concentration of Credit Risk | ' |
Concentration of Credit Risk | |
All of our accounts receivable, as of March 31, 2014 and December 31, 2013, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co. Ltd., or Otsuka, a global pharmaceutical company based in Japan. There was no allowance for doubtful accounts for the periods presented, as we believe all outstanding amounts will be paid based on our contractual arrangements with Otsuka and history of successful collections thereunder and collateral is not required. Revenue recognized for the three month periods ended March 31, 2014 and 2013 consist of amounts derived from our collaboration agreements with Otsuka. | |
Deferred Offering Costs | ' |
Deferred Offering Costs | |
External costs we incurred directly attributable our public offering were deferred and recorded as noncurrent assets as of December 31, 2013, and were offset against the proceeds of the 2014 IPO. | |
Income Taxes | ' |
Income Taxes | |
We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have already been recognized in the financial statements or tax returns. Excess tax benefits associated with stock option exercises and other equity awards are credited to shareholders' equity. Deferred tax liabilities and assets are based on the difference between financial statement carrying amounts and the tax basis of assets and liabilities, operating loss, and tax credit carryforwards and are measured using enacted tax rates expected to be in effect in the years the differences or carryforwards are anticipated to be recovered or settled. A valuation allowance is established when we believe that it is more likely than not that benefits of the deferred tax assets will not be realized. The Company had no uncertain tax positions as of March 31, 2014 and December 31, 2013. |
Cash_Cash_Equivalents_and_Inve1
Cash, Cash Equivalents and Investments (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||||||
Schedule of Cash and Cash Equivalents and Investments | ' | |||||||||||||||
Cash and cash equivalents and investments as of March 31, 2014 and December 31, 2013 consisted of the following (in thousands): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 785 | $ | — | $ | — | $ | 785 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 58,183 | — | — | 58,183 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 38,793 | 4 | (5 | ) | 38,792 | |||||||||||
Corporate debt securities | 61,888 | 2 | (157 | ) | 61,733 | |||||||||||
Municipal bonds | 615 | — | — | 615 | ||||||||||||
Certificates of deposit | 12,623 | — | (20 | ) | 12,603 | |||||||||||
$ | 172,887 | $ | 6 | $ | (182 | ) | $ | 172,711 | ||||||||
December 31, 2013 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 868 | $ | — | $ | — | $ | 868 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 12,501 | — | — | 12,501 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 1,099 | 1 | — | 1,100 | ||||||||||||
Corporate debt securities | 12,101 | — | (4 | ) | 12,097 | |||||||||||
Municipal bonds | 625 | — | — | 625 | ||||||||||||
Certificates of deposit | 5,235 | 2 | (9 | ) | 5,228 | |||||||||||
$ | 32,429 | $ | 3 | $ | (13 | ) | $ | 32,419 | ||||||||
Net_Income_Per_Share_Tables
Net Income Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | ' | |||||||
The following tables reconcile the numerator and denominator used to calculate diluted net income per share for the periods presented (in thousands): | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Numerator: | ||||||||
Net income attributable to common shareholders | $ | 54 | $ | 999 | ||||
Denominator: | ||||||||
Weighted average shares outstanding—basic | 23,799 | 11,944 | ||||||
Dilutive effect of stock options | 360 | 254 | ||||||
Weighted average shares outstanding—diluted | 24,159 | 12,198 | ||||||
Strategic_Restructuring_Tables
Strategic Restructuring (Tables) | 3 Months Ended | |||
Mar. 31, 2014 | ||||
Restructuring and Related Activities [Abstract] | ' | |||
Summary of the Utilization of the Restructuring Liability | ' | |||
The following table summarizes the utilization of the restructuring liability (in thousands): | ||||
Severance and Other Termination Benefits | ||||
Balance, December 31, 2013 | $ | 966 | ||
Cash payments | (808 | ) | ||
Adjustments | (8 | ) | ||
Balance, March 31, 2014 | $ | 150 | ||
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Statement of Stockholders' Equity [Abstract] | ' | |||||||
Changes in Accumulated Other Comprehensive Loss | ' | |||||||
Changes in Accumulated Other Comprehensive Loss (in thousands): | ||||||||
Three months ended March 31, | ||||||||
2014 | 2013 | |||||||
Beginning balance | $ | (7 | ) | $ | — | |||
Current period other comprehensive loss, net of tax | (108 | ) | (2 | ) | ||||
Ending balance | $ | (115 | ) | $ | (2 | ) |
Significant_Accounting_Policie2
Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2013 | Feb. 13, 2014 | Feb. 13, 2014 | |
Common Stock | Common Stock | |||
IPO | ||||
Conversion of Stock [Line Items] | ' | ' | ' | ' |
Initial Public Offering, shares issued | ' | ' | 9,200,000 | ' |
Initial Public Offering, price per share | ' | ' | $17.72 | ' |
Proceeds from IPO | ' | ' | $142,000,000 | ' |
Number of shares issued on conversion of preferred stock | ' | ' | ' | 10,813,867 |
Debt Conversion [Line Items] | ' | ' | ' | ' |
Convertible debt face amount | 12,000,000 | ' | ' | ' |
Allowance for doubtful accounts receivable | 0 | 0 | ' | ' |
Uncertain tax positions | $0 | $0 | ' | ' |
Cash_Cash_Equivalents_and_Inve2
Cash, Cash Equivalents and Investments (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Cash | $785,000 | $868,000 |
Amortized Cost | 172,887,000 | 32,429,000 |
Gross Unrealized Holding Gains | 6,000 | 3,000 |
Gross Unrealized Holding Losses | -182,000 | -13,000 |
Fair Value | 172,711,000 | 32,419,000 |
Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 58,183,000 | 12,501,000 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding Losses | 0 | 0 |
Commercial paper | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 38,793,000 | 1,099,000 |
Gross Unrealized Holding Gains | 4,000 | 1,000 |
Gross Unrealized Holding Losses | -5,000 | 0 |
Securities maturing from year one to year two | 5,600,000 | ' |
Corporate debt securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 61,888,000 | 12,101,000 |
Gross Unrealized Holding Gains | 2,000 | 0 |
Gross Unrealized Holding Losses | -157,000 | -4,000 |
Securities maturing from year one to year two | 42,900,000 | ' |
Municipal bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 615,000 | 625,000 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding Losses | 0 | 0 |
Certificates of deposit | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Amortized Cost | 12,623,000 | 5,235,000 |
Gross Unrealized Holding Gains | 0 | 2,000 |
Gross Unrealized Holding Losses | -20,000 | -9,000 |
Level 1 Securities | Money market funds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Fair Value | 58,183,000 | 12,501,000 |
Level 2 Securities | Commercial paper | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Fair Value | 38,792,000 | 1,100,000 |
Level 2 Securities | Corporate debt securities | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Fair Value | 61,733,000 | 12,097,000 |
Level 2 Securities | Municipal bonds | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Fair Value | 615,000 | 625,000 |
Level 2 Securities | Certificates of deposit | ' | ' |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ' | ' |
Fair Value | $12,603,000 | $5,228,000 |
Net_Income_Per_Share_Details
Net Income Per Share (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Feb. 13, 2014 | Feb. 13, 2014 |
Common Stock | Affiliated Entity | |||
Common Stock | ||||
IPO | ||||
Class of Stock [Line Items] | ' | ' | ' | ' |
Initial Public Offering, shares issued | ' | ' | 9,200,000 | ' |
Number of Shares Issued through Debt Conversion | ' | ' | ' | 3,636,365 |
Net income attributable to common shareholders | $54 | $999 | ' | ' |
Weighted average shares outstanding - basic | 23,799,000 | 11,944,000 | ' | ' |
Dilutive effect of stock options | 360,000 | 254,000 | ' | ' |
Weighted average shares outstanding - diluted | 24,159,000 | 12,198,000 | ' | ' |
Collaboration_and_License_Agre1
Collaboration and License Agreements (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Revenue Recognition, Milestone Method [Line Items] | ' | ' |
Revenues from collaborations | $10,546,000 | $15,980,000 |
Collaborative Arrangement, Product | ' | ' |
Revenue Recognition, Milestone Method [Line Items] | ' | ' |
Revenues from collaborations | 10,500,000 | 11,900,000 |
Collaborative Arrangement, Product | Emixustat | ' | ' |
Revenue Recognition, Milestone Method [Line Items] | ' | ' |
Milestone method, revenue recognized | 0 | 5,000,000 |
Collaborative Arrangement, Product | Rebamipide | ' | ' |
Revenue Recognition, Milestone Method [Line Items] | ' | ' |
Revenues from collaborations | 0 | 3,100,000 |
Collaborative Arrangement, Product | OPA-6566 | ' | ' |
Revenue Recognition, Milestone Method [Line Items] | ' | ' |
Revenues from collaborations | $0 | $900,000 |
Strategic_Restructuring_Detail
Strategic Restructuring (Details) (USD $) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | |
Employee | |||
Restructuring Cost and Reserve [Line Items] | ' | ' | ' |
Workforce reduction, percentage | ' | 35.00% | ' |
Number of positions eliminated | ' | 30 | ' |
Restructuring Costs | ' | ' | $1,000,000 |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Cash payments | -808,000 | ' | ' |
Adjustments | -8,000 | ' | ' |
Employee Severance | ' | ' | ' |
Restructuring Reserve [Roll Forward] | ' | ' | ' |
Balance, March 31, 2014 | $150,000 | 966,000 | $150,000 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2014 | Mar. 31, 2013 | Feb. 13, 2014 | Dec. 31, 2013 | Feb. 13, 2014 | Feb. 13, 2014 | Feb. 13, 2014 | Mar. 31, 2014 | Feb. 13, 2014 | |
Common Stock | Common Stock | Affiliated Entity | Affiliated Entity | Affiliated Entity | |||||
IPO | IPO | Convertible Debt | Convertible Debt | ||||||
Common Stock | IPO | IPO | |||||||
Conversion of Stock [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, shares authorized | 100,000,000 | ' | 100,000,000 | 60,000,000 | ' | ' | ' | ' | ' |
Number of shares issued on conversion of preferred stock | ' | ' | ' | ' | ' | 10,813,867 | ' | ' | ' |
Initial Public Offering, shares issued | ' | ' | ' | ' | 9,200,000 | ' | ' | ' | ' |
Proceeds from IPO | ' | ' | ' | ' | $142,000,000 | ' | ' | ' | ' |
Convertible debt face amount | 12,000,000 | ' | ' | ' | ' | ' | ' | 12,000,000 | ' |
Number of Shares Issued through Debt Conversion | ' | ' | ' | ' | ' | ' | 3,636,365 | ' | ' |
Debt conversion price | ' | ' | ' | ' | ' | ' | ' | ' | $3.30 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Beginning balance | -7,000 | 0 | ' | ' | ' | ' | ' | ' | ' |
Current period other comprehensive loss, net of tax | -108,000 | -2,000 | ' | ' | ' | ' | ' | ' | ' |
Ending balance | ($115,000) | ($2,000) | ' | ' | ' | ' | ' | ' | ' |
RelatedParty_Transactions_Deta
Related-Party Transactions (Details) (USD $) | 3 Months Ended | 0 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Feb. 13, 2014 |
Management | Management | Common Stock | |
IPO | |||
Affiliated Entity | |||
Related Party Transaction [Line Items] | ' | ' | ' |
Related Party Transaction, Expenses from Transactions with Related Party | $30 | $36 | ' |
Debt Conversion, Converted Instrument, Shares Issued | ' | ' | 3,636,365 |
Income_Taxes_Details
Income Taxes (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' |
Effective income tax rate | 78.00% | 35.00% | ' |
Federal statutory income tax rate | 34.00% | ' | ' |
Effective tax rate reconciliation, disclosure threshold | ' | ' | 5.00% |