Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ACUCELA INC. | |
Entity Central Index Key | 1400482 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Entity Common Stock, Shares Outstanding | 36,456,986 |
CONDENSED_BALANCE_SHEETS
CONDENSED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $18,422 | $18,778 |
Investments | 94,292 | 85,008 |
Accounts receivable from collaborations | 4,912 | 5,285 |
Deferred tax asset | 0 | 61 |
Prepaid expenses and other current assets | 2,601 | 2,582 |
Total current assets | 120,227 | 111,714 |
Property and equipment, net | 992 | 742 |
Long-term investments | 73,935 | 84,033 |
Long-term deferred tax asset | 0 | 42 |
Other assets | 435 | 435 |
Total assets | 195,589 | 196,966 |
Current liabilities: | ||
Accounts payable | 1,010 | 441 |
Accrued liabilities | 5,387 | 4,176 |
Accrued compensation | 1,415 | 1,683 |
Deferred revenue from collaborations | 5,411 | 6,231 |
Deferred rent and lease incentives | 104 | 25 |
Total current liabilities | 13,327 | 12,556 |
Commitments and contingencies (Note 4) | ||
Long-term deferred rent, lease incentives, and others | 1,211 | 47 |
Total long-term liabilities | 1,211 | 47 |
Shareholders’ equity: | ||
Common stock, no par value, 100,000 shares authorized as of March 31, 2015 and December 31, 2014; issued and outstanding, 35,809 shares as of March 31, 2015 and December 31, 2014 | 186,591 | 186,589 |
Additional paid-in capital | 3,943 | 3,601 |
Accumulated other comprehensive loss | -77 | -361 |
Accumulated deficit | -9,406 | -5,466 |
Total shareholders’ equity | 181,051 | 184,363 |
Total liabilities and shareholders’ equity | $195,589 | $196,966 |
CONDENSED_BALANCE_SHEETS_Paren
CONDENSED BALANCE SHEETS (Parenthetical) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Equity [Abstract] | ||
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 35,809 | 35,809 |
Common stock, shares outstanding | 35,809 | 35,809 |
CONDENSED_STATEMENTS_OF_OPERAT
CONDENSED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Revenue from collaborations | $7,215 | $10,546 |
Expenses: | ||
Research and development | 5,866 | 7,970 |
General and administrative | 5,508 | 2,361 |
Total expenses | 11,374 | 10,331 |
Income (loss) from operations | -4,159 | 215 |
Other income (expense), net: | ||
Interest income | 238 | 44 |
Interest expense | 0 | -13 |
Other expense, net | -19 | -4 |
Total other income, net | 219 | 27 |
Income (loss) before income tax | -3,940 | 242 |
Income tax expense | 0 | -188 |
Net income (loss) | ($3,940) | $54 |
Net income (loss) per share | ||
Basic (in dollars per share) | ($0.11) | $0 |
Diluted (in dollars per share) | ($0.11) | $0 |
Weighted average shares | ||
Basic (shares) | 35,809 | 23,799 |
Diluted (shares) | 35,809 | 24,159 |
CONDENSED_STATEMENTS_OF_COMPRE
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | ($3,940) | $54 |
Other comprehensive income (loss): | ||
Net unrealized gain (loss) on securities, net of tax of $0 and $58 | 284 | -108 |
Comprehensive loss | ($3,656) | ($54) |
CONDENSED_STATEMENTS_OF_COMPRE1
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Statement of Comprehensive Income [Abstract] | ||
Net unrealized gain (loss) on securities, tax expense (benefit) | $0 | ($58) |
CONDENSED_STATEMENTS_OF_CASH_F
CONDENSED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities | ||
Net income (loss) | ($3,940) | $54 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 120 | 128 |
Stock-based compensation | 342 | 134 |
Amortization of premium/discount on marketable securities | 561 | 118 |
Deferred taxes | 103 | 143 |
Changes in operating assets and liabilities: | ||
Accounts receivable from collaborations | 373 | -4,991 |
Prepaid expenses and other current assets | -19 | 183 |
Accounts payable | 569 | 560 |
Accrued liabilities | 1,211 | -1,289 |
Accrued compensation | -268 | -2,058 |
Deferred rent and lease incentives | 1,243 | -70 |
Deferred revenue from collaborations | -820 | 0 |
Other assets | 0 | 5 |
Net cash used in operating activities | -525 | -7,083 |
Cash flows from investing activities | ||
Purchases of marketable securities available for sale | -22,483 | -92,701 |
Maturities of marketable securities available for sale | 23,020 | 6,950 |
Net additions to property and equipment | -370 | 0 |
Net cash provided by (used in) investing activities | 167 | -85,751 |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 2 | 149,206 |
Payments for deferred offering costs | 0 | -1,545 |
Net cash provided by financing activities | 2 | 147,661 |
(Decrease) increase in cash and cash equivalents | -356 | 54,827 |
Cash and cash equivalents—beginning of period | 18,778 | 13,994 |
Cash and cash equivalents—end of period | 18,422 | 68,821 |
Supplemental disclosure | ||
Unpaid deferred offering costs | 0 | 5,548 |
Conversion of convertible preferred stock upon IPO | 0 | 28,209 |
Conversion of contingently convertible debt, related party, upon IPO | $0 | $12,000 |
Business_and_Basis_of_Presenta
Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation |
Business | |
Acucela Inc. (“we,” “our” and “us”) is a clinical-stage biotechnology company that specializes in discovering and developing novel drug candidates to potentially treat and slow the progression of sight-threatening ophthalmic diseases affecting millions of individuals worldwide. In 2008, we and Otsuka Pharmaceutical Co., Ltd. (“Otsuka”) entered into a definitive agreement to co-develop emixustat hydrochloride ("emixustat"), our lead investigational compound which is currently being evaluated in a Phase 2b/3 clinical trial in patients with geographic atrophy associated with dry AMD. | |
Special Shareholders Meeting | |
On May 1, 2015, at a special shareholders meeting (the "Special Meeting"), our shareholders approved the two shareholder proposals that removed all of the members of our Board of Directors (other than Dr. Kubota) and elected the following new members to our Board of Directors: Yoshitaka Kitao, Dr. Shiro Mita, Eisaku Nakamura and Robert Takeuchi. In addition, on May 1, 2015, at the initial meeting of the new Board of Directors, our founder and former chief executive officer, Dr. Kubota, was appointed as our President and Chief Executive Officer, replacing Brian O'Callaghan, who resigned effective on May 3, 2015. | |
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 2015. 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 2014 Annual Report on Form 10-K. | |
Use of Estimates | |
The preparation of financial statements in conformity with 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, 2015 and 2014, all revenue was generated in the United States. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies |
Cash and Cash Equivalents and Investments | |
We consider investments in highly liquid instruments purchased with an original maturity at purchase of three months or less to be cash equivalents. The amounts are recorded at cost, which approximates fair value. Our cash equivalents consist of money market funds at March 31, 2015 and money market funds and certificates of deposit at December 31, 2014. | |
We have classified our entire investment portfolio, which consists of corporate debt securities, commercial paper and certificates of deposit, 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). | |
We consider an investment with a maturity greater than twelve months from the balance sheet date as long-term and a maturity less than twelve months as short-term at the balance sheet date. | |
Concentration of Credit Risk | |
Our accounts receivable, as of March 31, 2015 and December 31, 2014, consist of amounts due from our collaborations with Otsuka. 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, 2015 and 2014 consist of amounts derived from our collaboration agreements with Otsuka. | |
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 stockholders' 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. |
Cash_and_Cash_Equivalents_and_
Cash and Cash Equivalents and Investments | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Cash and Cash Equivalents and Investments | Cash and Cash Equivalents and Investments | |||||||||||||||
Cash, cash equivalents and investments at March 31, 2015 and December 31, 2014 include all cash, money market funds, 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 financial instruments categorized as Level 3 as of March 31, 2015 or December 31, 2014. | ||||||||||||||||
Cash and cash equivalents and investments as of March 31, 2015 and December 31, 2014 consisted of the following (in thousands): | ||||||||||||||||
March 31, 2015 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 1,190 | $ | — | $ | — | $ | 1,190 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 17,232 | — | — | 17,232 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 4,998 | 1 | — | 4,999 | ||||||||||||
U.S. Government agencies | 2,000 | 2 | — | 2,002 | ||||||||||||
Corporate debt securities | 147,137 | 15 | (153 | ) | 146,999 | |||||||||||
Certificates of deposit | 14,220 | 8 | (1 | ) | 14,227 | |||||||||||
$ | 186,777 | $ | 26 | $ | (154 | ) | $ | 186,649 | ||||||||
December 31, 2014 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 767 | $ | — | $ | — | $ | 767 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 17,771 | — | — | 17,771 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 15,992 | 2 | (1 | ) | 15,993 | |||||||||||
Corporate debt securities | 131,586 | — | (398 | ) | 131,188 | |||||||||||
Certificates of deposit | 22,115 | 4 | (19 | ) | 22,100 | |||||||||||
$ | 188,231 | $ | 6 | $ | (418 | ) | $ | 187,819 | ||||||||
As of March 31, 2015, $3.6 million of certificates of deposit, $68.3 million of corporate debt securities and $2.0 million of U.S. government agencies mature in greater than one year, but less than two years. There were no investments which were in an unrealized loss position for a period of twelve months or more. All other investment securities held at March 31, 2015 mature within 12 months. | ||||||||||||||||
Market values were determined for each individual security in the investment portfolio. The declines in value of certain of these investments are primarily related to changes in interest rates and are considered to be temporary in nature. We evaluate, among other things, the duration and extent to which the fair value of a security is less than its cost, the financial condition of the issuer, and our intent to sell, or whether it is more likely than not we will be required to sell the security before recovery of the amortized cost basis. We do not consider these investments to be other-than-temporarily impaired as of March 31, 2015. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Commitments | |
In addition to the contractual commitments, which consist of operating leases for corporate office and laboratory space, disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we have not incurred any additional contractual obligations or commitments outside of the normal course of business other than the following: | |
Former CEO Severance | |
Under Mr. O'Callaghan's employment agreement, dated October 14, 2014, the termination of Mr. O’Callaghan’s employment without Cause or for Good Reason (as such terms are defined in his employment agreement), entitles him to receive 18 months of salary, up to 18 months of the premiums for him and his family to obtain health benefit coverage provided under our COBRA program, and a pro-rated portion of his annual bonus (“the CEO severance amounts”). Mr. O'Callaghan resigned his position as our President and Chief Executive Officer, effective on May 3, 2015. The CEO severance amounts, totaling approximately $0.9 million in cash, were paid on May 11, 2015. In addition, pursuant to the terms of the 2014 Equity Plan, as amended, the vesting of his 712,480 options and 356,410 restricted stock units was accelerated such that all of his equity awards were fully vested as of May 3, 2015. | |
Severance and Change in Effective Control Agreements | |
On March 24, 2015, our Board of Directors approved the terms of a Severance and Change in Effective Control Agreement to be entered into with each member of our management team and certain other employees. The Severance and Change in Effective Control Agreement provides that if the employee terminates for any reason or for no reason (including disability), voluntarily resigns for good reason (as defined in the agreement), or the employee dies, and the termination occurs within the six month period following a Qualifying Change in Effective Control (as defined in the Severance and Change in Effective Control Agreements), the employee will be entitled to an amount equal to the sum of six months of his or her monthly base salary, plus 50% of the employee’s annual target bonus for 2015, plus the premiums required to continue the employee’s group health care coverage for a period of six months following termination, which will be “grossed up” to cover taxes. The Severance and Change in Effective Control Agreements terminate upon the earlier of November 1, 2015 or the employee’s termination date (unless the termination is within six months following a Qualifying Change in Effective Control). On May 1, 2015, as a result of the actions taken by our shareholders at the Special Meeting, a Qualifying Change in Effective Control was deemed to have taken place under the terms of the Severance and Change in Effective Control Agreements. Potential payments under the agreements total approximately $1.5 million. | |
Retention Pool | |
On February 24, 2015, the compensation committee of the board of directors approved the creation of a pool of $600,000 to be distributed at the discretion of the Committee to employees who remain employed with us on December 31, 2015. Allocations of the pool will not be determined until the fourth quarter of 2015. | |
Special Shareholders' Meeting Expenses | |
Dr. Kubota and SBI Holding have incurred certain fees and expenses in preparation for the May 1, 2015 Special Shareholders’ meeting. A committee of the Board of Directors has been appointed to evaluate these expenses to determine if the expenses, or a portion thereof, should be reimbursed by the Company. The committee has not yet met, nor have they received documentation pertaining to these expenses. As a result, no accrual has been recorded for these expenses in the financial statements as of March 31, 2015. | |
Litigation | |
From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently a party to any material legal proceedings, and to our knowledge none is threatened. There can be no assurance that future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our financial position, results of operations or cash flows. |
Net_Income_Loss_Per_Share
Net Income (Loss) Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Net Income (Loss) Per Share | Net Income (Loss) Per Share | |||||||
Immediately prior to the closing of our IPO, all outstanding shares of preferred stock were converted to common stock. 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, 2015, common stock is our only outstanding class of capital stock. | ||||||||
Basic net income (loss) per share is calculated by dividing net income by the weighted average number of shares outstanding for the period. Diluted net income (loss) per share is calculated by dividing net income (loss) 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 and restricted stock units. | ||||||||
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, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net income (loss) | $ | (3,940 | ) | $ | 54 | |||
Denominator: | ||||||||
Weighted-average shares outstanding—basic (shares) | 35,809 | 23,799 | ||||||
Dilutive effect of stock options and RSUs (shares) | — | 360 | ||||||
Weighted average shares outstanding—diluted (shares) | 35,809 | 24,159 | ||||||
For the three months ended March 31, 2015, 63,232 stock options and RSUs were excluded from the calculation of diluted net income (loss) per share because the impact was anti-dilutive. |
Collaboration_and_License_Agre
Collaboration and License Agreements | 3 Months Ended |
Mar. 31, 2015 | |
Revenue Recognition [Abstract] | |
Collaboration and License Agreements | Collaboration and License Agreements |
During the three months ended March 31, 2015 and 2014, we recognized $7.2 million and $10.5 million, respectively, of revenues in performance of the Emixustat Agreement. | |
Continued Involvement of the CEO | |
The Company’s collaboration arrangements with Otsuka require the continuing involvement of our Chief Executive Officer and President, 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 New Drug Application, or "NDA", for the first indication in the United States. |
Shareholders_Equity
Shareholders' Equity | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Stockholders' Equity Note [Abstract] | ||||||||
Shareholders' Equity | Shareholders’ Equity | |||||||
Changes in Accumulated Other Comprehensive Loss (in thousands): | ||||||||
Three months ended March 31, | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | (361 | ) | $ | (7 | ) | ||
Current period other comprehensive gain (loss), net of tax | 284 | (108 | ) | |||||
Ending balance | $ | (77 | ) | $ | (115 | ) | ||
The changes in accumulated other comprehensive loss relate to unrealized holding gains and losses in available-for-sale securities. |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
Effective tax rates were 0% and 78% in 2015 and 2014, respectively. In the first quarter of 2015, we recorded a full valuation allowance against the remaining deferred tax asset resulting in an increase to our taxes receivable. 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. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition. Under the new revenue recognition model, a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendment may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the transition alternatives and impact on our financial statements. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
Equity Awards | |
On April 23, 2015, we granted 9,500 restricted stock units to employees. On May 1, 2015, we granted 358,692 restricted stock units to our Chief Financial Officer. We also granted 358,692 shares and 118,369 shares, respectively, of restricted stock to our Chief Operating Officer and our Chief Business Officer, which shares are subject to repurchase over a four-year period if such officers are terminated, with 75% of the restricted stock subject to repurchase through May 1, 2016 and the remaining thereafter on a decreasing percentage on a monthly pro rata basis over the following three years, terminating on May 1, 2019. On May 1, 2015, we also granted our Chief Business Officer options to purchase 240,323 shares of our common stock. | |
Amendments to Equity Incentive Plans and Share-based Awards | |
On March 24, 2015, our Board of Directors approved amendments to outstanding equity awards granted under our 2002 Stock Option and Restricted Stock Plan, our 2012 Equity Incentive Plan, and our 2014 Equity Incentive Plan to our employees, executive officers and non-employee members of our Board. The amendments provide that for employees and executive officers, if we undergo a change in control and their employment is terminated without Cause or for Good Reason (as such terms are defined in the Severance and Change in Effective Control Agreements), then any unvested portion of the awards held by employees and executives will become immediately vested. | |
In addition, our employees, executive officers and non-employee members of our Board will be permitted to exercise their awards up to twelve months after their termination. The modifications required acceptance by the option holders, and those acceptances were obtained in April 2015. We expect to recognize incremental stock-based compensation expense in the second quarter of 2015 related to the modification of these awards. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with 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, 2015 and 2014, all revenue was generated in the United States. |
Cash and Cash Equivalents | We consider investments in highly liquid instruments purchased with an original maturity at purchase of three months or less to be cash equivalents. The amounts are recorded at cost, which approximates fair value. Our cash equivalents consist of money market funds at March 31, 2015 and money market funds and certificates of deposit at December 31, 2014. |
Investments | We have classified our entire investment portfolio, which consists of corporate debt securities, commercial paper and certificates of deposit, 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). | |
We consider an investment with a maturity greater than twelve months from the balance sheet date as long-term and a maturity less than twelve months as short-term at the balance sheet date. | |
Concentration of Credit Risk | Our accounts receivable, as of March 31, 2015 and December 31, 2014, consist of amounts due from our collaborations with Otsuka. 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, 2015 and 2014 consist of amounts derived from our collaboration agreements with Otsuka. |
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 stockholders' 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. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. This ASU amends the existing accounting standards for revenue recognition. Under the new revenue recognition model, a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The amendment may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the transition alternatives and impact on our financial statements. |
Cash_and_Cash_Equivalents_and_1
Cash and Cash Equivalents and Investments (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||
Schedule of Cash and Cash Equivalents and Investments | Cash and cash equivalents and investments as of March 31, 2015 and December 31, 2014 consisted of the following (in thousands): | |||||||||||||||
March 31, 2015 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 1,190 | $ | — | $ | — | $ | 1,190 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 17,232 | — | — | 17,232 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 4,998 | 1 | — | 4,999 | ||||||||||||
U.S. Government agencies | 2,000 | 2 | — | 2,002 | ||||||||||||
Corporate debt securities | 147,137 | 15 | (153 | ) | 146,999 | |||||||||||
Certificates of deposit | 14,220 | 8 | (1 | ) | 14,227 | |||||||||||
$ | 186,777 | $ | 26 | $ | (154 | ) | $ | 186,649 | ||||||||
December 31, 2014 | ||||||||||||||||
Amortized | Gross Unrealized | Fair | ||||||||||||||
Cost | Holding | Holding | Value | |||||||||||||
Gains | Losses | |||||||||||||||
Cash | $ | 767 | $ | — | $ | — | $ | 767 | ||||||||
Level 1 Securities: | ||||||||||||||||
Money market funds | 17,771 | — | — | 17,771 | ||||||||||||
Level 2 Securities: | ||||||||||||||||
Commercial paper | 15,992 | 2 | (1 | ) | 15,993 | |||||||||||
Corporate debt securities | 131,586 | — | (398 | ) | 131,188 | |||||||||||
Certificates of deposit | 22,115 | 4 | (19 | ) | 22,100 | |||||||||||
$ | 188,231 | $ | 6 | $ | (418 | ) | $ | 187,819 | ||||||||
Net_Income_Loss_Per_Share_Tabl
Net Income (Loss) Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | 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, | ||||||||
2015 | 2014 | |||||||
Numerator: | ||||||||
Net income (loss) | $ | (3,940 | ) | $ | 54 | |||
Denominator: | ||||||||
Weighted-average shares outstanding—basic (shares) | 35,809 | 23,799 | ||||||
Dilutive effect of stock options and RSUs (shares) | — | 360 | ||||||
Weighted average shares outstanding—diluted (shares) | 35,809 | 24,159 | ||||||
Shareholders_Equity_Tables
Shareholders' Equity (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Stockholders' Equity Note [Abstract] | ||||||||
Changes in Accumulated Other Comprehensive Loss | Changes in Accumulated Other Comprehensive Loss (in thousands): | |||||||
Three months ended March 31, | ||||||||
2015 | 2014 | |||||||
Beginning balance | $ | (361 | ) | $ | (7 | ) | ||
Current period other comprehensive gain (loss), net of tax | 284 | (108 | ) | |||||
Ending balance | $ | (77 | ) | $ | (115 | ) |
Cash_and_Cash_Equivalents_and_2
Cash and Cash Equivalents and Investments (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash | $1,190 | $767 |
Amortized Cost | 186,777 | 188,231 |
Gross Unrealized Holding Gains | 26 | 6 |
Gross Unrealized Holding Losses | -154 | -418 |
Fair Value | 186,649 | 187,819 |
Level 1 Securities | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 17,232 | 17,771 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding Losses | 0 | 0 |
Fair Value | 17,232 | 17,771 |
Level 2 Securities | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 4,998 | 15,992 |
Gross Unrealized Holding Gains | 1 | 2 |
Gross Unrealized Holding Losses | 0 | -1 |
Fair Value | 4,999 | 15,993 |
Level 2 Securities | US Government agencies | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 2,000 | |
Gross Unrealized Holding Gains | 2 | |
Gross Unrealized Holding Losses | 0 | |
Fair Value | 2,002 | |
Level 2 Securities | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 147,137 | 131,586 |
Gross Unrealized Holding Gains | 15 | 0 |
Gross Unrealized Holding Losses | -153 | -398 |
Fair Value | 146,999 | 131,188 |
Level 2 Securities | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 14,220 | 22,115 |
Gross Unrealized Holding Gains | 8 | 4 |
Gross Unrealized Holding Losses | -1 | -19 |
Fair Value | $14,227 | $22,100 |
Cash_and_Cash_Equivalents_and_3
Cash and Cash Equivalents and Investments (Narrative) (Details) (USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Certificates of deposit | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | $3.60 |
Corporate debt securities | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | 68.3 |
US Government agencies | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | $2 |
Commitments_and_Contingencies_
Commitments and Contingencies (Narrative) (Details) (USD $) | 0 Months Ended | ||||
In Millions, except Share data, unless otherwise specified | Mar. 24, 2015 | 3-May-15 | Oct. 14, 2014 | Feb. 24, 2015 | 11-May-15 |
Property Subject to or Available for Operating Lease [Line Items] | |||||
Percent of employee’s annual target bonus for 2015 | 50.00% | ||||
Potential payments under equity award agreement | $1.50 | ||||
Retention pool | 0.6 | ||||
2014 Equity Plan [Member] | Subsequent Event | |||||
Property Subject to or Available for Operating Lease [Line Items] | |||||
Options vested | 712,480 | ||||
2014 Equity Plan [Member] | Restricted Stock Units (RSUs) | Subsequent Event | |||||
Property Subject to or Available for Operating Lease [Line Items] | |||||
Equity instruments other than options, vested | 356,410 | ||||
Chief Executive Officer | |||||
Property Subject to or Available for Operating Lease [Line Items] | |||||
Severance term | 18 months | ||||
Severance benefit term | 18 months | ||||
Chief Executive Officer | Subsequent Event | |||||
Property Subject to or Available for Operating Lease [Line Items] | |||||
Severance escrow, funded amount | $0.90 |
Net_Income_Loss_Per_Share_Deta
Net Income (Loss) Per Share (Details) (USD $) | 3 Months Ended | 1 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Feb. 28, 2014 |
Class of Stock [Line Items] | |||
Net income (loss) | ($3,940) | $54 | |
Weighted-average shares outstanding—basic (shares) | 35,809,000 | 23,799,000 | |
Dilutive effect of stock options and RSUs (shares) | 0 | 360,000 | |
Weighted average shares outstanding—diluted (shares) | 35,809,000 | 24,159,000 | |
Antidilutive securities excluded from the calculation of diluted net income (loss) per share | 63,232 | ||
Common Stock | |||
Class of Stock [Line Items] | |||
IPO, shares issued | 9,200,000 | ||
Common Stock | Affiliated Entity | IPO | |||
Class of Stock [Line Items] | |||
Number of shares issued through debt conversion | 3,636,365 |
Collaboration_and_License_Agre1
Collaboration and License Agreements (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Revenue Recognition, Milestone Method [Line Items] | ||
Revenue from collaborations | $7,215 | $10,546 |
Collaborative Arrangement, Product | ||
Revenue Recognition, Milestone Method [Line Items] | ||
Revenue from collaborations | $7,200 | $10,500 |
Shareholders_Equity_Changes_in
Shareholders' Equity (Changes in AOCI) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning balance | ($361) | ($7) |
Current period other comprehensive gain (loss), net of tax | 284 | -108 |
Ending balance | ($77) | ($115) |
Income_Taxes_Narrative_Details
Income Taxes (Narrative) (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 0.00% | 78.00% | |
Statutory rate | 34.00% |
Subsequent_Events_Details
Subsequent Events (Details) (Subsequent Event) | 0 Months Ended | |
1-May-15 | Apr. 23, 2015 | |
Chief Business Officer | ||
Subsequent Event [Line Items] | ||
Granted | 240,323 | |
Restricted Stock Units (RSUs) | Employee | ||
Subsequent Event [Line Items] | ||
Equity instruments, granted | 9,500 | |
Restricted Stock Units (RSUs) | Chief Financial Officer | ||
Subsequent Event [Line Items] | ||
Equity instruments, granted | 358,692 | |
Restricted Stock | Chief Operating Officer | ||
Subsequent Event [Line Items] | ||
Equity instruments, granted | 358,692 | |
Restricted Stock | Chief Business Officer | ||
Subsequent Event [Line Items] | ||
Equity instruments, granted | 118,369 | |
Restricted Stock | Chief Operating Officer and Chief Business Officer | ||
Subsequent Event [Line Items] | ||
Share-based compensation, vesting period | 4 years | |
Restricted Stock | Chief Operating Officer and Chief Business Officer | Through May 1, 2016 [Member] | ||
Subsequent Event [Line Items] | ||
Percent of repurchase | 75.00% |