Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ACUCELA INC. | |
Entity Central Index Key | 1,400,482 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 36,503,120 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 8,167 | $ 18,778 |
Investments | 100,175 | 85,008 |
Accounts receivable from collaborations | 11,266 | 5,285 |
Deferred tax asset | 0 | 61 |
Prepaid expenses and other current assets | 2,771 | 2,582 |
Total current assets | 122,379 | 111,714 |
Property and equipment, net | 938 | 742 |
Long-term investments | 57,203 | 84,033 |
Long-term deferred tax asset | 0 | 42 |
Other assets | 314 | 435 |
Total assets | 180,834 | 196,966 |
Current liabilities: | ||
Accounts payable | 473 | 441 |
Accrued liabilities | 4,390 | 4,176 |
Accrued compensation | 2,157 | 1,683 |
Deferred revenue from collaborations | 0 | 6,231 |
Deferred rent and lease incentives | 130 | 25 |
Total current liabilities | $ 7,150 | $ 12,556 |
Commitments and contingencies (Note 4) | ||
Long-term deferred rent, lease incentives, and others | $ 1,140 | $ 47 |
Total long-term liabilities | 1,140 | 47 |
Shareholders’ equity: | ||
Common stock, no par value, 100,000 shares authorized as of September 30, 2015 and December 31, 2014; 36,496 and 35,809 shares issued and outstanding as of September 30, 2015 and December 31, 2014 | 189,611 | 186,589 |
Additional paid-in capital | 5,977 | 3,601 |
Accumulated other comprehensive loss | (350) | (361) |
Accumulated deficit | (22,694) | (5,466) |
Total shareholders’ equity | 172,544 | 184,363 |
Total liabilities and shareholders’ equity | $ 180,834 | $ 196,966 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - shares shares in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Equity [Abstract] | ||
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 36,496 | 35,809 |
Common stock, shares outstanding | 36,496 | 35,809 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenue from collaborations | $ 7,128 | $ 8,119 | $ 21,524 | $ 27,751 |
Expenses: | ||||
Research and development | 6,255 | 5,503 | 17,764 | 19,974 |
General and administrative | 4,722 | 2,430 | 21,772 | 7,272 |
Total expenses | 10,977 | 7,933 | 39,536 | 27,246 |
Income (loss) from operations | (3,849) | 186 | (18,012) | 505 |
Other income (expense), net: | ||||
Interest income | 300 | 152 | 802 | 316 |
Interest expense | 0 | (1) | 0 | (15) |
Other income (expense), net | (2) | (5) | (21) | 30 |
Total other income, net | 298 | 146 | 781 | 331 |
Income (loss) before income tax | (3,551) | 332 | (17,231) | 836 |
Income tax benefit (expense) | 1 | (1,868) | 3 | (2,247) |
Net loss | $ (3,550) | $ (1,536) | $ (17,228) | $ (1,411) |
Net loss per share | ||||
Basic (in dollars per share) | $ (0.10) | $ (0.04) | $ (0.48) | $ (0.04) |
Diluted (in dollars per share) | $ (0.10) | $ (0.04) | $ (0.48) | $ (0.04) |
Weighted average shares | ||||
Basic (shares) | 36,491 | 35,707 | 36,183 | 31,876 |
Diluted (shares) | 36,491 | 35,707 | 36,183 | 31,876 |
CONDENSED STATEMENTS OF COMPREH
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (3,550) | $ (1,536) | $ (17,228) | $ (1,411) |
Other comprehensive income (loss): | ||||
Net unrealized gain (loss) on securities | (127) | 11 | 11 | (87) |
Comprehensive loss | $ (3,677) | $ (1,525) | $ (17,217) | $ (1,498) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (17,228) | $ (1,411) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 299 | 379 |
Stock-based compensation | 6,538 | 445 |
Amortization net of premium/discount on marketable securities | 1,743 | 723 |
Deferred taxes | 103 | 2,248 |
Loss on disposal of fixed assets | 30 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable from collaborations | (5,981) | 4,670 |
Prepaid expenses and other current assets | 79 | 246 |
Accounts payable | 32 | (472) |
Accrued liabilities | 214 | (3,219) |
Accrued compensation | 474 | (2,254) |
Deferred rent and lease incentives | 1,198 | (199) |
Deferred revenue from collaborations | (6,231) | 9,928 |
Other assets | 121 | (68) |
Net cash provided by (used in) operating activities | (18,609) | 11,016 |
Cash flows from investing activities | ||
Purchases of marketable securities available for sale | (62,322) | (152,524) |
Maturities of marketable securities available for sale | 71,985 | 28,462 |
Net additions to property and equipment | (525) | (4) |
Net cash provided by (used in) investing activities | 9,138 | (124,066) |
Cash flows from financing activities | ||
Repurchase of restricted stock units for tax withholdings | (1,142) | 0 |
Proceeds from issuance of common stock | 2 | 149,783 |
Payments for deferred offering costs | 0 | (1,545) |
Excess tax benefit from stock-based compensation | 0 | 79 |
Net cash provided by (used in) financing activities | (1,140) | 148,317 |
Increase (decrease) in cash and cash equivalents | (10,611) | 35,267 |
Cash and cash equivalents—beginning of period | 18,778 | 13,994 |
Cash and cash equivalents—end of period | 8,167 | 49,261 |
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 Presentat
Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | Business and Basis of Presentation Business Acucela Inc. ("the Company",“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 age-related macular degeneration ("AMD"). 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 full 2015 fiscal year. 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. Prior year presentation of cash flows includes a re-classification to conform with the current year presentation of purchased interest on marketable securities. 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 and nine months ended September 30, 2015 and 2014 , all revenue was generated in the United States. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, 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 and nine month periods ended September 30, 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 I
Cash and Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Cash and Cash Equivalents and Investments | Cash and Cash Equivalents and Investments Cash, cash equivalents and investments at September 30, 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 September 30, 2015 or December 31, 2014. Cash and cash equivalents and investments as of September 30, 2015 and December 31, 2014 consisted of the following (in thousands): September 30, 2015 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 547 $ — $ — $ — $ 547 Level 1 Securities: Money market funds 7,620 — — — 7,620 Level 2 Securities: U.S. government agencies 240 1 — — 241 Corporate debt securities 151,096 4 (325 ) (85 ) 150,690 Certificates of deposit 6,440 8 — (1 ) 6,447 $ 165,943 $ 13 $ (325 ) $ (86 ) $ 165,545 December 31, 2014 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos 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 September 30, 2015 , $1.0 million of certificates of deposit, $56.0 million of corporate debt securities and $0.2 million of U.S. government agencies mature in greater than one year, but less than two years. All other investment securities held at September 30, 2015 mature within 12 months. We do not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of our amortized cost basis, which may be maturity. 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 September 30, 2015 . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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: Severance and Change in Effective Control Agreements On March 24, 2015, our Board of Directors approved the terms of the Severance and Change in Effective Control Agreements entered into with each member of our then current management team and certain other employees (the "Change in Control Agreements"). The Change in Control Agreements provide 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 Change in 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 Change in 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 a special meeting of shareholders, a Qualifying Change in Effective Control was deemed to have taken place under the terms of the Change in Control Agreements. As of September 30, 2015 , payments totaling $1.6 million have been made under this plan and payments totaling an additional $0.2 million were accrued. Retention Pool On February 24, 2015, the compensation committee of the Board of Directors approved the creation of a pool of $0.6 million of which we accrued approximately $0.4 million through September 30, 2015 to be distributed at the discretion of the compensation 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. Ryo Kubota and SBI Holdings, Inc., our two largest shareholders, incurred certain fees and expenses totaling approximately $0.8 million in preparation for the May 1, 2015 special shareholders’ meeting. Our Board of Directors appointed a special committee (the "Special Committee") consisting entirely of independent directors to evaluate these expenses to determine if the expenses, or a portion thereof, should be reimbursed by the Company. The Special Committee met on June 8, 2015 and concluded that the reimbursement of these expenses was appropriate. Accordingly, the income statement for the nine months ended September 30, 2015 reflects these expenses. 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 | 9 Months Ended |
Sep. 30, 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 September 30, 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 September 30, Nine months ended September 30, 2015 2014 2015 2014 Numerator: Net income (loss) $ (3,550 ) $ (1,536 ) $ (17,228 ) $ (1,411 ) Denominator: Weighted-average shares outstanding—basic (shares) 36,491 35,707 36,183 31,876 Dilutive effect of stock options and RSUs (shares) — — — — Weighted average shares outstanding—diluted (shares) 36,491 35,707 36,183 31,876 For the three and nine months ended September 30, 2015 , 108,285 and 71,051 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 Agree
Collaboration and License Agreements | 9 Months Ended |
Sep. 30, 2015 | |
Revenue Recognition [Abstract] | |
Collaboration and License Agreements | Collaboration and License Agreements During the three and nine months ended September 30, 2015 and 2014 , we recognized $7.1 million and $8.1 million , respectively, and $21.5 million and $27.7 million , respectively, of revenues in performance of our collaborative co-development agreement with Otsuka. Continued Involvement of the CEO The Company’s collaboration arrangements with Otsuka require the continuing involvement of our President and Chief Executive Officer, 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 and Share-
Shareholders’ Equity and Share-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Shareholders’ Equity and Share-Based Compensation [Abstract] | |
Shareholders’ Equity and Share-Based Compensation | Shareholders’ Equity and Share-Based Compensation Changes in Accumulated Other Comprehensive Loss (in thousands): Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Beginning balance $ (223 ) $ (105 ) $ (361 ) $ (7 ) Current period other comprehensive gain (loss), net of tax (127 ) 11 11 (87 ) Ending balance $ (350 ) $ (94 ) $ (350 ) $ (94 ) The changes in accumulated other comprehensive loss relate to unrealized holding gains and losses in available-for-sale securities. 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; 358,692 shares of restricted stock to our Chief Operating Officer; and, 118,369 shares of restricted stock and 240,323 options to our Chief Business Officer, respectively. Incentive equity grants are subject to a four year vesting, with 25% vesting on the first employment anniversary and the remaining 75% on a monthly pro rata basis over the ensuing three years, with the options and restricted stock units fully vesting four years from the grant date. The options, restricted stock awards and the restricted stock units are subject to accelerated vesting in the event of a change of control and termination of employment under certain circumstances. On July 2, 2015, at a special meeting of our Board of Directors, the Board approved grants of 64,650 restricted stock units to current employees and 4,200 restricted stock units to newly hired employees with grant dates ranging from May 31, 2015 through to December 31, 2015 to vest annually over four years based on their respective anniversary hire dates. In addition, our Board of Directors appointed a Chief Strategy Officer and approved a grant to such officer, effective September 1, 2015 of 365,276 restricted stock units, which was equal to 1% of the Company's outstanding common stock on July 2, 2015 on a fully diluted basis. On August 4, 2015, our Board of Directors appointed a new Executive Vice President of Translational Medicine and a new Executive Vice President of Legal Affairs and approved grants of 127,847 restricted stock units (equal to 0.35% of the outstanding common stock on July 2, 2015 on a fully diluted basis) to each officer effective August 17, 2015 and August 24, 2015, respectively. The restricted stock units granted to our Chief Strategy Officer, our Executive Vice President of Legal Affairs and our Executive Vice President of Translational Medicine are subject to a four year vesting, with 25% vesting on the first employment anniversary and the remaining 75% on a monthly pro rata basis over the ensuing three years, with the restricted stock units fully vesting four years from the employment anniversary date. 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 (collectively, the "Plans") to our employees, executive officers and non-employee members of our Board of Directors. The amendments provided that for employees and executive officers, if their employment is terminated without Cause or for Good Reason (as such terms are defined in the Change in Control Agreements) following qualifying change in control of the Company, then any unvested portion of the awards held by such terminated employees and executives will become immediately vested. In addition, our employees, executive officers and non-employee members of our Board of Directors 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. It was determined that the events of the May 1, 2015 Special Shareholders Meeting constituted a Qualifying Change in Control as defined in the Plans. Accordingly, the vesting of options previously granted to our former non-employee directors was accelerated such that these equity awards were fully vested as of May 1, 2015. General and administrative expense related to the modification of these options and related to the acceleration of vesting in the second quarter of 2015 was not material. Vesting of Restricted Stock Units During the three months ended September 30, 2015 , employees subject to the Change in Control Agreements became vested in 20,350 shares of restricted stock units. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Due to our continuing losses, we had an effective tax rate of zero for the three and nine months ended September 30, 2015 , which differed from the statutory tax rate due to a full valuation allowance against our deferred tax assets. In the three and nine months ended September 30, 2014, effective tax rates were 563% and 269% , respectively. The difference between the U.S. federal statutory rate of 34% and our effective tax rate in 2014 was due primarily to the provision of a partial valuation allowance related to deferred tax assets for which we do not anticipate future realization and permanent differences in book and tax earnings for stock options, meals and entertainment, and other miscellaneous items. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 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 was delayed to permit adoption one year later and is effective in the first quarter of 2017. Early adoption is not permitted. The standard 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. |
Former CEO Severance
Former CEO Severance | 9 Months Ended |
Sep. 30, 2015 | |
Former CEO Severance [Abstract] | |
Former CEO Severance | 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 were defined in his employment agreement), entitled him to receive 18 months of salary, up to 18 months of the premiums for 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 Incentive 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. In connection with the option modifications discussed in Note 7, Shareholders' Equity and Share-based Compensation, in April 2015, Mr. O'Callaghan's 712,480 options were modified to extend the post-termination exercise period from three months to twelve months. The Company recognized stock compensation expense of $2.6 million related to the accelerated vesting of his options in connection with his termination. In addition, pursuant to the terms of the 2014 Equity Incentive Plan, as amended, the vesting of his 356,410 RSUs was accelerated such that these equity awards were fully vested as of May 3, 2015. We recognized general and administrative expense of approximately $2.0 million related to these RSUs in the nine months ended September 30, 2015. |
Significant Accounting Polici17
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
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 full 2015 fiscal year. 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. Prior year presentation of cash flows includes a re-classification to conform with the current year presentation of purchased interest on marketable securities. |
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 and nine months ended September 30, 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 September 30, 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 September 30, 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 and nine month periods ended September 30, 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 was delayed to permit adoption one year later and is effective in the first quarter of 2017. Early adoption is not permitted. The standard 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 and18
Cash and Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Cash and Cash Equivalents and Investments | Cash and cash equivalents and investments as of September 30, 2015 and December 31, 2014 consisted of the following (in thousands): September 30, 2015 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 547 $ — $ — $ — $ 547 Level 1 Securities: Money market funds 7,620 — — — 7,620 Level 2 Securities: U.S. government agencies 240 1 — — 241 Corporate debt securities 151,096 4 (325 ) (85 ) 150,690 Certificates of deposit 6,440 8 — (1 ) 6,447 $ 165,943 $ 13 $ (325 ) $ (86 ) $ 165,545 December 31, 2014 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos 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 (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, Nine months ended September 30, 2015 2014 2015 2014 Numerator: Net income (loss) $ (3,550 ) $ (1,536 ) $ (17,228 ) $ (1,411 ) Denominator: Weighted-average shares outstanding—basic (shares) 36,491 35,707 36,183 31,876 Dilutive effect of stock options and RSUs (shares) — — — — Weighted average shares outstanding—diluted (shares) 36,491 35,707 36,183 31,876 |
Shareholders_ Equity and Shar20
Shareholders’ Equity and Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Shareholders’ Equity and Share-Based Compensation [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | Changes in Accumulated Other Comprehensive Loss (in thousands): Three months ended September 30, Nine months ended September 30, 2015 2014 2015 2014 Beginning balance $ (223 ) $ (105 ) $ (361 ) $ (7 ) Current period other comprehensive gain (loss), net of tax (127 ) 11 11 (87 ) Ending balance $ (350 ) $ (94 ) $ (350 ) $ (94 ) |
Business and Basis of Present21
Business and Basis of Presentation (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2015segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 1 |
Cash and Cash Equivalents and22
Cash and Cash Equivalents and Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash | $ 547 | $ 767 |
Amortized Cost | 165,943 | 188,231 |
Gross Unrealized Holding Gains | 13 | 6 |
Gross Unrealized Holding Losses Less than 12 mos | (325) | (418) |
Gross Unrealized Holding Losses 12 mos or Longer | (86) | 0 |
Fair Value | 165,545 | 187,819 |
Level 1 Securities | Money market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 7,620 | 17,771 |
Gross Unrealized Holding Gains | 0 | 0 |
Gross Unrealized Holding Losses Less than 12 mos | 0 | 0 |
Gross Unrealized Holding Losses 12 mos or Longer | 0 | 0 |
Fair Value | 7,620 | 17,771 |
Level 2 Securities | Commercial paper | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 15,992 | |
Gross Unrealized Holding Gains | 2 | |
Gross Unrealized Holding Losses Less than 12 mos | (1) | |
Gross Unrealized Holding Losses 12 mos or Longer | 0 | |
Fair Value | 15,993 | |
Level 2 Securities | US Government agencies | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 240 | |
Gross Unrealized Holding Gains | 1 | |
Gross Unrealized Holding Losses Less than 12 mos | 0 | |
Gross Unrealized Holding Losses 12 mos or Longer | 0 | |
Fair Value | 241 | |
Level 2 Securities | Corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 151,096 | 131,586 |
Gross Unrealized Holding Gains | 4 | 0 |
Gross Unrealized Holding Losses Less than 12 mos | (325) | (398) |
Gross Unrealized Holding Losses 12 mos or Longer | (85) | 0 |
Fair Value | 150,690 | 131,188 |
Level 2 Securities | Certificates of deposit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Amortized Cost | 6,440 | 22,115 |
Gross Unrealized Holding Gains | 8 | 4 |
Gross Unrealized Holding Losses Less than 12 mos | 0 | (19) |
Gross Unrealized Holding Losses 12 mos or Longer | (1) | 0 |
Fair Value | $ 6,447 | $ 22,100 |
Cash and Cash Equivalents and23
Cash and Cash Equivalents and Investments (Narrative) (Details) $ in Millions | Sep. 30, 2015USD ($) |
Certificates of deposit | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | $ 1 |
Corporate debt securities | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | 56 |
US Government agencies | |
Schedule of Available-for-sale Securities [Line Items] | |
Securities maturing from year one to year two | $ 0.2 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Millions | Mar. 24, 2015 | Sep. 30, 2015 | Feb. 24, 2015 |
Related Party Transaction [Line Items] | |||
Percent of employee’s annual target bonus for 2015 | 50.00% | ||
Payments under equity award agreement | $ 1.6 | ||
Accrued payments under equity award agreement | 0.2 | ||
Retention pool | $ 0.6 | ||
Retention pool, accrued amount | 0.4 | ||
Dr. Kubota and SBI Holding | |||
Related Party Transaction [Line Items] | |||
Costs and expenses, related party | $ 0.8 |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 28, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Class of Stock [Line Items] | |||||
Net income (loss) | $ (3,550) | $ (1,536) | $ (17,228) | $ (1,411) | |
Weighted-average shares outstanding—basic (shares) | 36,491,000 | 35,707,000 | 36,183,000 | 31,876,000 | |
Dilutive effect of stock options and RSUs (shares) | 0 | 0 | 0 | 0 | |
Weighted average shares outstanding—diluted (shares) | 36,491,000 | 35,707,000 | 36,183,000 | 31,876,000 | |
Antidilutive securities excluded from the calculation of diluted net income (loss) per share | 108,285 | 71,051 | |||
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 Agr26
Collaboration and License Agreements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue Recognition, Milestone Method [Line Items] | ||||
Revenue from collaborations | $ 7,128 | $ 8,119 | $ 21,524 | $ 27,751 |
Collaborative Arrangement, Product | ||||
Revenue Recognition, Milestone Method [Line Items] | ||||
Revenue from collaborations | $ 7,100 | $ 8,100 | $ 21,500 | $ 27,700 |
Shareholders_ Equity and Shar27
Shareholders’ Equity and Share-Based Compensation (Changes in AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||||
Beginning balance | $ (223) | $ (105) | $ (361) | $ (7) |
Current period other comprehensive gain (loss), net of tax | (127) | 11 | 11 | (87) |
Ending balance | $ (350) | $ (94) | $ (350) | $ (94) |
Shareholders_ Equity and Shar28
Shareholders’ Equity and Share-Based Compensation (Narrative) (Details) - shares | Sep. 01, 2015 | Aug. 04, 2015 | Jul. 02, 2015 | May. 01, 2015 | Apr. 23, 2015 | Sep. 30, 2015 |
Chief Business Officer | ||||||
Class of Stock [Line Items] | ||||||
Options granted | 240,323 | |||||
Restricted Stock Units (RSUs) | ||||||
Class of Stock [Line Items] | ||||||
Vested units | 20,350 | |||||
Restricted Stock Units (RSUs) | Employee | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 64,650 | 9,500 | ||||
Restricted Stock Units (RSUs) | Chief Financial Officer | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 358,692 | |||||
Restricted Stock Units (RSUs) | New Hires | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 4,200 | |||||
Restricted Stock Units (RSUs) | Employees and New Hires | ||||||
Class of Stock [Line Items] | ||||||
Share-based compensation, vesting period | 4 years | |||||
Restricted Stock Units (RSUs) | Chief Strategy Officer | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 365,276 | |||||
Percent of outstanding common stock granted | 1.00% | |||||
Restricted Stock Units (RSUs) | New Executive Vice President of Translational Medicine and a New Executive Vice President of Legal Affairs | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 127,847 | |||||
Percent of outstanding common stock granted | 0.35% | |||||
Restricted Stock Units (RSUs) | Chief Strategy Officer, Executive Vice President of Legal Affairs and Executive Vice President of Translational Medicine | ||||||
Class of Stock [Line Items] | ||||||
Share-based compensation, vesting period | 4 years | |||||
Restricted Stock Units (RSUs) | Chief Strategy Officer, Executive Vice President of Legal Affairs and Executive Vice President of Translational Medicine | On the First Employment Anniversary | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 25.00% | |||||
Restricted Stock Units (RSUs) | Chief Strategy Officer, Executive Vice President of Legal Affairs and Executive Vice President of Translational Medicine | On a Monthly Pro Rata Basis Over the Next Three Years | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 75.00% | |||||
Restricted Stock | Chief Operating Officer | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 358,692 | |||||
Restricted Stock | Chief Business Officer | ||||||
Class of Stock [Line Items] | ||||||
Equity instruments, granted | 118,369 | |||||
Employee Stock Option | ||||||
Class of Stock [Line Items] | ||||||
Share-based compensation, vesting period | 4 years | |||||
Employee Stock Option | On the First Employment Anniversary | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 25.00% | |||||
Employee Stock Option | On a Monthly Pro Rata Basis Over the Next Three Years | ||||||
Class of Stock [Line Items] | ||||||
Vesting percentage | 75.00% |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 0.00% | 563.00% | 0.00% | 269.00% |
Statutory rate | 34.00% | 34.00% |
Former CEO Severance (Details)
Former CEO Severance (Details) - USD ($) $ in Thousands | May. 03, 2015 | Oct. 14, 2014 | Apr. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | May. 11, 2015 |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||
General and administrative expense | $ 4,722 | $ 2,430 | $ 21,772 | $ 7,272 | ||||
Restricted Stock Units (RSUs) | ||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||
Vested units | 20,350 | |||||||
General and administrative expense | $ 2,000 | |||||||
Chief Executive Officer | ||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||
Severance term | 18 months | |||||||
Severance benefit term | 18 months | |||||||
Severance escrow, funded amount | $ 900 | |||||||
Vested options | 712,480 | |||||||
Options modified | 712,480 | |||||||
Incremental compensation cost | $ 2,600 | |||||||
Chief Executive Officer | Restricted Stock Units (RSUs) | ||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||||||
Vested units | 356,410 |