Kubota Pharmaceutical (KBBTF) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 28, 2016
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	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		37,832,830

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 6,601	$ 5,088
Investments	112,189	106,922
Accounts receivable from collaborations	1,832	6,140
Prepaid expenses and other current assets	1,834	2,051
Total current assets	122,456	120,201
Property and equipment, net	786	920
Long-term investments	29,097	54,515
Other assets	1,318	314
Total assets	153,657	175,950
Current liabilities:
Accounts payable	55	207
Accrued liabilities	1,914	3,138
Accrued compensation	2,512	2,457
Deferred revenue from collaborations	0	2,467
Deferred rent and lease incentives	155	143
Total current liabilities	4,636	8,412
Commitments and contingencies
Long-term deferred rent, lease incentives, and others	989	1,104
Total long-term liabilities	989	1,104
Shareholders’ equity:
Common stock, no par value, 100,000 shares authorized as of September 30, 2016 and December 31, 2015; 37,826 and 36,517 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively	206,375	197,984
Accumulated other comprehensive loss	(50)	(575)
Accumulated deficit	(58,293)	(30,975)
Total shareholders’ equity	148,032	166,434
Total liabilities and shareholders’ equity	$ 153,657	$ 175,950

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Sep. 30, 2016	Dec. 31, 2015
Equity [Abstract]
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	37,826,000	36,517,000
Common stock, shares outstanding	37,826,000	36,517,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Revenue from collaborations	$ 711	$ 7,128	$ 7,341	$ 21,524
Expenses:
Research and development	4,008	6,255	17,329	17,764
General and administrative	4,053	4,722	18,409	21,772
Total expenses	8,061	10,977	35,738	39,536
Loss from operations	(7,350)	(3,849)	(28,397)	(18,012)
Other income (expense), net:
Interest income	344	300	1,051	802
Other income (expense), net	30	(2)	45	(21)
Total other income, net	374	298	1,096	781
Loss before income tax	(6,976)	(3,551)	(27,301)	(17,231)
Income tax benefit (expense)	0	1	(17)	3
Net loss	$ (6,976)	$ (3,550)	$ (27,318)	$ (17,228)
Net loss per share
Basic (in dollars per share)	$ (0.18)	$ (0.10)	$ (0.73)	$ (0.48)
Diluted (in dollars per share)	$ (0.18)	$ (0.10)	$ (0.73)	$ (0.48)
Weighted average shares
Basic (shares)	37,625	36,491	37,300	36,183
Diluted (shares)	37,625	36,491	37,300	36,183

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (6,976)	$ (3,550)	$ (27,318)	$ (17,228)
Other comprehensive income (loss):
Net unrealized gain (loss) on securities, net of tax	(117)	(127)	525	11
Comprehensive loss	$ (7,093)	$ (3,677)	$ (26,793)	$ (17,217)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net loss	$ (27,318)	$ (17,228)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	220	299
Stock-based compensation	5,034	6,538
Amortization, net, of premium/discount on marketable securities	1,058	1,743
Deferred taxes	0	103
Loss on disposal of fixed assets	0	30
Changes in operating assets and liabilities:
Accounts receivable from collaborations	4,308	(5,981)
Prepaid expenses and other current assets	249	79
Accounts payable	(152)	32
Accrued liabilities	(1,224)	214
Accrued compensation	55	474
Deferred rent and lease incentives	(103)	1,198
Deferred revenue from collaborations	(2,467)	(6,231)
Other assets	(1,004)	121
Net cash used in operating activities	(21,344)	(18,609)
Cash flows from investing activities
Purchases of marketable securities available for sale	(68,733)	(62,322)
Maturities of marketable securities available for sale	88,319	71,985
Net additions to property and equipment	(86)	(525)
Net cash provided by investing activities	19,500	9,138
Cash flows from financing activities
Value of equity awards withheld for tax liability	(8,005)	(1,142)
Proceeds from issuance of common stock	11,362	2
Net cash provided by (used in) financing activities	3,357	(1,140)
Increase (decrease) in cash and cash equivalents	1,513	(10,611)
Cash and cash equivalents—beginning of period	5,088	18,778
Cash and cash equivalents—end of period	$ 6,601	$ 8,167

Business and Basis of Presentat

Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business and Basis of Presentation	Business and Basis of Presentation Business Acucela Inc. is a clinical stage ophthalmology company that specializes in identifying and developing novel therapeutics to treat and slow the progression of sight-threatening ophthalmic disorders affecting millions of people worldwide. The Company has a broad product candidate portfolio of multiple technologies in the preclinical and clinical development stages intended to provide solutions to ophthalmic disorders affecting millions of people worldwide. The Company is pursuing development of its product candidates for indications such as age related macular degeneration, cataracts, diabetic retinopathy and orphan, blinding retinal diseases such as retinitis pigmentosa and Stargardt disease which primarily affects young adults. References in this report to the "Company,", "we", "our" and "us" refer to Acucela Inc. and its subsidiaries. Redomicile Transaction In March 2016, we announced our intention to pursue a corporate reorganization of the Company by conducting a triangular merger, pursuant to which the ultimate parent company holding the operations of the Company would be domiciled in Japan. Such transaction is referred to as the Redomicile Transaction. If consummated, the Redomicile Transaction would result in the Company’s shareholders holding shares in Acucela Japan KK, or Acucela Japan, a Japanese joint stock corporation and the Company’s wholly-owned subsidiary. At the conclusion of the Redomicile Transaction, the official name of Acucela Japan will become Kubota Pharmaceutical Holdings Co., Ltd, or Kubota Holdings. Consummation of the Redomicile Transaction would be subject to several conditions, including the approval of the Redomicile Transaction by a majority of the Company’s common stock shareholders entitled to vote on the Redomicile Transaction, which approval was obtained at the Company’s annual meeting held in Seattle, Washington on October 18, 2016; the registration with the U.S. Securities and Exchange Commission, or SEC, of the shares of Acucela Japan to be distributed in the Redomicile Transaction. Should the Redomicile Transaction be consummated, Acucela Inc. would merge with and into Acucela North America Inc., or US Merger Co, a Washington corporation and wholly-owned subsidiary of Acucela Japan. US Merger Co would continue as the surviving corporation. In connection with the Redomicile Transaction, the Tokyo Stock Exchange, or the TSE, has approved the listing of the common stock of Kubota Holdings on the Mothers market of the TSE under the code “4596.” We anticipate that the final trading date of our common stock on the TSE will be November 25, 2016 (Japan Standard Time) and that Kubota Holdings’ common stock will be listed and commence trading on the TSE Mothers market on December 6, 2016 (Japan Standard Time). While we anticipate to complete the Redomicile Transaction on December 1, 2016 (Japan Standard Time), there is no assurance that we will be able to complete the Redomicile Transaction in a timely manner, if at all, or achieve the expected benefits we expect to see. Please refer to the Registration Statement on Form S-4 (Registration No. 333-210469) filed by Acucela Japan KK on March 30, 2016, as amended on August 12, 2016, for further details regarding the Redomicile Transaction. Basis of Presentation Unaudited Interim Financial Information We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements. The condensed consolidated financial statements as of September 30, 2016 and September 30, 2015 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 2016 fiscal year. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2015 Annual Report on Form 10-K. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Acucela Japan KK, which was organized under the laws of Japan on December 11, 2015. Through the period ended September 30, 2016 , Acucela Japan KK has not commenced operations. We eliminate all intercompany balances and transactions in consolidation. Presentation of the balance sheet The prior year presentation of the balance sheet includes a re-classification to conform with the current year presentation of common stock. 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 condensed consolidated 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, 2016 and 2015 , all revenue was generated in the United States.

Significant Accounting Policies

Significant Accounting Policies	9 Months Ended
	Sep. 30, 2016
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 cash and money market funds. We have classified our entire investment portfolio, which consists of corporate debt securities, commercial paper, securities issued by U.S. government agencies 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 income (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 12 months from the balance sheet date as long-term and with a maturity less than 12 months from the balance sheet date as short-term. Concentration of Credit Risk Our accounts receivable, as of September 30, 2016 and December 31, 2015, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co., Ltd, or 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. Collateral is not required under our arrangement with Otsuka. Revenue recognized for the three and nine months ended September 30, 2016 and 2015 consist of amounts derived from our collaboration agreements with Otsuka. Fair Value We measure and report at fair value our cash equivalents and investment securities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The carrying amounts reflected in the balance sheets for accounts receivable and accounts payable approximate fair value due to their short-term nature. Stock-Based Compensation Stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized on a straight line basis as expense, less estimated forfeitures, over the requisite service period, which is generally the vesting period. The fair value of stock options under our equity-based incentive plans, or the Equity Plans, are calculated using the Black-Scholes option pricing model. This model requires us to make assumptions to determine expected risk-free interest rates, stock price volatility, dividend yield, and weighted-average option term. We recognize stock-based compensation expense over the period from the date of grant to the date when the award is no longer contingent on either the employee providing additional services to the Company or the market price of the Company’s common stock reaching a certain level, for a specified minimum period of time (the vesting period). Any unexercised options expire in ten years. We estimate the fair value of each grant as a single award and amortize that value on a straight-line basis into compensation expense over the option’s vesting period. The fair value of restricted stock units and restricted stock awards is equal to the market price of Acucela's stock on the date of grant. We amortize that value on a straight line basis into compensation expense, over the restricted share’s vesting period. Research and Development Costs Research and development costs include salaries paid to clinical development staff and scientists, fees paid to external service providers and to contract research organizations to conduct research and development activities. Costs may also include laboratory supplies, license fees, consulting, travel, fees paid to third parties involved in research and development activities, and an allocated portion of certain general and administrative costs. These research and development costs are expensed as incurred. Non-refundable advance payments for goods or services with characteristics that will be used or rendered for future research and development activities, pursuant to an executory contractual arrangement, are deferred and capitalized, assuming the straight-line method. Capitalized research and development activities are evaluated each reporting period, to assess recoverability of the asset. We expense payments to acquire contractual rights to licensed technology as incurred, when the future economic benefit may be foreseen, but cannot be measured with any degree of certainty. Refundable advance payments are recorded as a refundable deposit. In the event the fee becomes nonrefundable, it is capitalized or expensed, based on the certainty of any future economic benefit. Income Taxes We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have already been recognized in the financial statements or tax returns. Excess tax benefits associated with stock option exercises and other equity awards are credited to shareholders' equity. Deferred tax liabilities and assets are based on the difference between financial statement carrying amounts and the tax basis of assets and liabilities, operating loss, and tax credit carryforwards and are measured using enacted tax rates expected to be in effect in the years the differences or carryforwards are anticipated to be recovered or settled. A valuation allowance is established when we believe that it is more likely than not that benefits of the deferred tax assets will not be realized.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Adoption of ASU 2014-09 can be done using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. In August 2015, FASB issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date: Topic 606 (ASU 2015-14) that deferred the effective date of ASU 2014-09 by one year. In April 2016, FASB issued Accounting Standards Update No. 2016-10 Revenue from Contracts with Customers - Identifying Performance Obligations and Licenses: Topic 606 (ASU 2016-10) that clarified accounting for licenses of intellectual property as well as identification of the distinct performance obligations of a contract. In May 2016, FASB issued Accounting Standards Update No. 2016-12 Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients: Topic 606 (ASU 2016-12) which did not change core principles but clarified the guidance on assessing collectability, presenting sales taxes, measuring non cash consideration, and certain transition matters. Application of the new revenue standard, as amended, is required for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently evaluating the potential impact of the pending adoption of ASU 2014-09 on our consolidated financial statements. In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU requires the management to determine whether substantial doubt exists regarding the entity’s going concern presumption, which generally refers to an entity’s ability to meet its obligations as they become due. If substantial doubt exists but is not alleviated by management’s plan, the footnotes must specifically state that “there is substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued.” In addition, if substantial doubt exists, regardless of whether such doubt was alleviated, entities must disclose (a) principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans, if any); (b) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (c) management’s plans that are intended to mitigate the conditions or events that raise substantial doubt, or that did alleviate substantial doubt, about the entity’s ability to continue as a going concern. If substantial doubt has not been alleviated, these disclosures should become more extensive in subsequent reporting periods as additional information becomes available. In the period that substantial doubt no longer exists (before or after considering management’s plans), management should disclose how the principal conditions and events that originally gave rise to substantial doubt have been resolved. The ASU applies prospectively to all entities for annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption the provisions of ASU 2014-15 to have a significant impact on our results of operations, financial position or cash flow. In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of our deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on our Consolidated Balance Sheet. We do not plan to early adopt ASU 2015-17. In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02). The new guidance is intended to increase transparency and comparability for organizations by recognizing lease assets and liabilities on the balance sheet and requiring additional financial disclosure on leasing arrangements. This amendment is primarily designed to address lessee accounting for operating leases and require lessees to account for all leases as assets and liabilities on the balance sheet. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018 including interim reporting periods within those fiscal years. We are currently evaluating the potential impact of the pending adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation: Topic 718 (ASU 2016-09): Improvements to Employee Share Based Accounting. The new guidance is intended to simplify the accounting for share based payment award transactions. The amendments in the update include the following aspects for share based accounting: accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, minimum statutory tax withholding requirements, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016 including interim reporting periods within those fiscal years. We are currently evaluating the potential impact of the pending adoption of ASU 2016-09 on our consolidated financial statements. Other than noted above, we do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements Under FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, 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. Cash, cash equivalents and investments at September 30, 2016 and December 31, 2015 include all cash, money market funds, corporate debt securities, U.S. government agency securities, commercial paper and certificates of deposit. We measure the fair value of money market funds based on quoted prices in active markets for identical assets or liabilities. We consider our investments in corporate debt securities, U.S. government agency securities, commercial paper and certificates of deposit as available-for-sale. Available-for-sale securities are stated at fair value. Available for sale securities were valued either based on recent trades 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, 2016 or December 31, 2015 . The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): September 30, 2016 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 1,518 $ — $ — $ — $ 1,518 Level 1 Securities: Money market funds 5,083 — — — 5,083 Level 2 Securities: Commercial Paper 24,347 2 (19 ) — 24,330 U.S. government agencies 24,295 7 (5 ) — 24,297 Corporate debt securities 90,054 24 (39 ) (27 ) 90,012 Certificates of deposit 2,640 7 — — 2,647 $ 147,937 $ 40 $ (63 ) $ (27 ) $ 147,887 December 31, 2015 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 3,856 $ — $ — $ — $ 3,856 Level 1 Securities: Money market funds 1,232 — — — 1,232 Level 2 Securities: U.S. government agencies 10,020 — (37 ) — 9,983 Corporate debt securities 144,352 — (435 ) (96 ) 143,821 Certificates of deposit 7,640 1 (7 ) (1 ) 7,633 $ 167,100 $ 1 $ (479 ) $ (97 ) $ 166,525 As of September 30, 2016 , $1.4 million of certificates of deposit, $11.9 million of corporate debt securities and $15.7 million of U.S. government agency securities, mature in greater than one year, but less than two years. All other investment securities held as of September 30, 2016 mature within 12 months. We do not intend to sell the investments and it is not more likely than not that we 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, 2016 .

Shareholders_ Equity and Share-

Shareholders’ Equity and Share-Based Compensation	9 Months Ended
	Sep. 30, 2016
Shareholders’ Equity and Share-Based Compensation [Abstract]
Shareholders’ Equity and Share-Based Compensation	Shareholders’ Equity and Share-Based Compensation Changes in Accumulated Other Comprehensive Income (Loss) (in thousands): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning balance $ 67 $ (223 ) $ (575 ) $ (361 ) Current period other comprehensive income (loss), net of tax (117 ) (127 ) 525 11 Ending balance $ (50 ) $ (350 ) $ (50 ) $ (350 ) The changes in accumulated other comprehensive income (loss) relate to unrealized holding gains and losses in available-for-sale securities. Equity Awards During the three months ended March 31, 2016, the board of directors, or Board, approved the grant of 937,800 options, of which 780,000 options were granted to Dr. Kubota, our CEO, 30,000 options to each of the four non-employee directors of the Board and 37,800 options to new employees. The grant to Dr. Kubota included 390,000 options that will vest over a three -year period, with 33% vesting after one year and 67% vesting on a monthly pro rata basis thereafter. Dr. Kubota was also granted an additional 390,000 options that are market-based awards which fully vested as of March 31, 2016. The option grants to the four non-employee directors of the Board vest in equal monthly installments over four years from the grant date. The option grants to new employees are subject to a four year vesting period, with 25% of the option vesting after one year and the remaining 75% of the options vesting on a monthly pro rata basis over the ensuing three years. During the three months ended June 30, 2016, the Board approved the grant of 62,000 options to new employees. The grants are subject to a four year vesting period, with 25% of the option vesting after one year and the remaining 75% of the options vesting on a monthly pro rata basis over the ensuing three years. On July 12, 2016, the Board approved the grant of 225,000 options, of which 120,000 options were granted to our Executive Vice President of Research and Development, 25,000 options were granted to each of the four non-employee directors of the Board and 5,000 options to a new employee. For the grant to our Executive Vice President of Research and Development, 7,500 options vested on September 1, 2016. Thereafter, 2,500 options will vest on the first day of each month, such that the options are fully vested as of June 1, 2020. The option grants to the four non-employee directors of the Board vest in equal monthly installments over four years from the grant date. Vesting of Restricted Stock Units During the three and nine months ended September 30, 2016, employees became vested in 179,956 and 499,495 shares of restricted stock units, net of taxes, respectively.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Due to our continuing losses, we had an effective tax rate of 0% for the three and nine months ended September 30, 2016 and 2015 , which differed from the U.S. federal statutory tax rate of 34% , due to a full valuation allowance against our deferred tax assets.

Collaboration and License Agree

Collaboration and License Agreements	9 Months Ended
	Sep. 30, 2016
Revenue Recognition [Abstract]
Collaboration and License Agreements	Collaboration and License Agreements Collaboration with Otsuka During the three months ended September 30, 2016 and 2015 , we recognized $0.7 million and $7.1 million , respectively, of revenues in performance of our collaborative co-development agreement with Otsuka. During the nine months ended September 30, 2016 and 2015 , we recognized $7.3 million and $21.5 million , respectively, of revenues in performance of our collaborative co-development agreement with Otsuka. Termination of the Emixustat Agreement and OPA-6566 Agreement with Otsuka Pharmaceutical We received written notice from Otsuka on June 13, 2016, stating that Otsuka had elected to terminate in their entirety the Co-Development and Commercialization Agreement by and between the Company and Otsuka, dated September 4, 2008, or the Emixustat Agreement, and the Development and Collaboration Agreement by and between the Company and Otsuka, dated September 15, 2010, or the OPA-6566 Agreement. In accordance with the terms of the respective agreements, the terminations of the Emixustat Agreement and the OPA-6566 Agreement were effective on June 27, 2016, or the Termination Date. Otsuka’s written notice stated that its decision to terminate was based on the recently announced trial results from our Phase 2b/3 study of Emixustat in patients with geographic atrophy secondary to dry age-related macular degeneration, or AMD. Otsuka’s terminations of the Emixustat Agreement and the OPA-6566 Agreement were in accordance with the terms of such agreements without modification or amendment thereto. Pursuant to the terms of the Emixustat Agreement, the Company and Otsuka agreed to co-develop and commercialize Emixustat, our compound, for the dry form of AMD and for other potential indications in the United States, Canada, and Mexico, or the Shared Territory. We retained all rights in Europe, South America, Central America, the Caribbean, and Africa, or the Acucela Territory, and Otsuka acquired the exclusive development and commercialization rights to the compound in Asia, the Middle East, and selected markets in the rest of the world, or the Otsuka Territory. Otsuka paid us a $5.0 million nonrefundable upfront license fee upon its entry into the Emixustat Agreement. Through September 30, 2016, in addition to the upfront license fee, we received a milestone payment of $5.0 million and have been reimbursed for fees we paid to external service providers and development services provided by our personnel through May 2016. We expect to receive additional reimbursements through the remainder of the year. We would have been eligible to receive additional development-based, regulatory-based and sales-based milestone payments and tiered royalties on net sales of approved products had the Emixustat Agreement not been terminated. Under the terms of the Emixustat Agreement, Otsuka agreed to fund all development activities in the Shared Territory through Phase 2, up to $40.0 million. In 2012, the cost of development activities exceeded $40.0 million and, pursuant to the terms of the Emixustat Agreement, Otsuka agreed to continue development activities and equally share development costs with us. Our share of the development costs was funded by Otsuka in the form of an interest-bearing secured promissory note. As of September 30, 2016, amounts contingently owed to Otsuka under the promissory note, including accumulated interest, totaled approximately $70.4 million . Our share of the development costs is repayable only in the event that proceeds are generated by any future product sales under the Emixustat Agreement or by the sale or license of collaboration compounds and collaboration products developed under the Emixustat Agreement outside North America and the Otsuka Territory. As of the Termination Date, rights granted by the Company to Otsuka pursuant to the Emixustat Agreement reverted to the Company. In addition, the Company and Otsuka have certain post-termination obligations as set forth in the Emixustat Agreement, including Otsuka’s responsibility for the cost of certain wind-down development activities for a six month period following the date of the termination notice. Effective on the Termination Date, Otsuka granted to the Company a perpetual, fully paid-up, non-exclusive license, with the right to grant sublicenses, under certain Otsuka intellectual property and data that are necessary or useful in the development, manufacture and commercialization of Emixustat. The Emixustat Agreement requires the Company to pay a low single-digit percentage royalty to Otsuka based on net sales of approved products resulting from the Company’s continued development and commercialization of Emixustat after the Termination Date. Such royalties will be capped at an amount equal to the total amount of the development costs and research costs already funded by Otsuka prior to the Termination Date, with interest. Pursuant to the terms of the OPA-6566 Agreement, which terms have been previously disclosed in our filings with the SEC, including our Annual Report on Form 10-K filed on March 11, 2016, the OPA-6566 Agreement granted us an opt-in right to co-develop and co-promote OPA-6566, Otsuka’s proprietary compound for the treatment of glaucoma, in the United States. We did not previously exercise our opt-in right. Pursuant to the OPA-6566 Agreement, all licenses granted by Otsuka to us expired on the Termination Date, and we will have no obligation to share development or commercialization costs that are incurred after the Termination Date. The foregoing is only a brief description of the material terms of the Emixustat Agreement and the OPA-6566 Agreement, does not purport to be complete and is qualified in its entirety by reference to the Emixustat Agreement and the OPA-6566 Agreement that were filed as Exhibits 10.9 and 10.10, respectively, to our Registration Statement on Form S-1, as amended (File No. 333-192900) filed with the SEC on December 17, 2013. Option and License Agreement with YouHealth Eyetech, Inc. In March 2016, we entered into an exclusive option and license agreement with YouHealth Eyetech, Inc., or YouHealth. YouHealth’s parent company, Guangzhou Kang Rui Biological Pharmaceutical Technology Co., Ltd., is a party to the agreement as a guarantor of YouHealth’s performance of its obligations. Pursuant to the terms of the agreement, YouHealth granted us an option to obtain a royalty-bearing license, with the right to sub-license, certain YouHealth technology to develop and commercialize products containing lanosterol for the treatment of ophthalmological diseases in all territories excluding the People’s Republic of China, Taiwan and Hong Kong. Such excluded territories are referred to as the YouHealth Territory. We may exercise the option at any time before June 30, 2019, the option period, by providing written notice to YouHealth and a payment of $10.0 million. During the option period, we granted YouHealth an exclusive, royalty-free, fully-paid license, without the right to sub-license, certain of our technology to develop products containing lanosterol in the YouHealth Territory. If we choose to exercise this option, the license granted by us to YouHealth will then permit sub-licensing and commercialization of products containing lanosterol by YouHealth in the YouHealth Territory. Pursuant to the terms of the agreement, we paid a one-time upfront fee of $5.0 million to YouHealth during the first quarter of 2016. During the option period, YouHealth is eligible to receive up to an additional $5.0 million upon the achievement of certain near-term development and regulatory milestones establishing proof of concept. Upon our exercise of the option, YouHealth would then be eligible to receive up to an additional $300.0 million upon our achievement of certain regulatory milestones, such as initiation of Phase 3 clinical trials and approvals of new drug applications across multiple indications. YouHealth would be eligible to receive up to an additional $90.0 million upon our achievement of certain post-approval sales-based milestones. In addition to these potential one-time payments, YouHealth is eligible to receive a mid single-digit percentage of annual net sales, which may increase to a higher mid single-digit percentage if certain annual net sales figures are exceeded. Royalties would be payable on a product-by-product and country-by-country basis until the later of ten years from the date of first commercial sale in a particular country or the expiration of the last-to-expire valid claim of certain YouHealth patents covering the products. In the event no valid patent claim covers the Product, the royalty percentage would be subject to a 50% reduction in payment. In addition, the royalty may terminate at any time generic competition occurs. Pursuant to the terms of the agreement, each party will be solely responsible for the development, manufacture and commercialization of Products in its respective territory, compliance with applicable regulatory requirements and related expenses. We agreed to use diligent efforts to achieve certain milestones applicable to an existing license between YouHealth and the Regents of the University of California. The license between YouHealth and the Regents of the University of California comprises part of the technology made available to us through this agreement. Unless earlier terminated by the parties, our agreement with YouHealth expires on June 30, 2019, if we have not exercised our option or, if we do exercise our option, then upon the last to expire royalty term for any commercialized product. Either party may terminate the agreement upon the other party’s material breach, after provision of written notice and an opportunity to cure such breach. We have the right to terminate the agreement for any reason at any time upon 60 days prior written notice to YouHealth. If we decline to exercise the option, YouHealth would have the right of first negotiation to obtain an exclusive, worldwide license, with right to sub-license, under certain of our patents, to develop and commercialize products for the treatment of ophthalmic diseases. License Agreement with University of Manchester In April 2016, we announced our execution of an exclusive license agreement with the University of Manchester, whereby we will develop and commercialize University of Manchester’s human rhodopsin based optogenetic gene therapy for the treatment of retinal degenerative disease, including retinitis pigmentosa. We paid a non-refundable fee of $0.2 million in connection with the execution of the agreement, which was expensed during the second quarter of 2016.

Net Loss Per Share

Net Loss Per Share	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share Basic net income (loss) per share is calculated by dividing net income (loss) 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. For the three and nine months ended September 30, 2016 , equity awards with an aggregate of 601,706 and 1,188,682 shares were excluded from the calculation of diluted net loss per share because the impact was anti-dilutive. For the three and nine months ended September 30, 2015 , equity awards with an aggregate of 108,285 and 71,051 were excluded from the calculation of diluted net loss per share because the impact was anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
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, 2015, we have not incurred any additional material contractual obligations or commitments outside of the normal course of business during the nine months ended September 30, 2016 except the following: Severance Mr. Roger Girard, the Company's Chief Strategy Officer, ceased to be an employee on July 10, 2016. On July 11, 2016, we entered into a Separation Agreement and Release with Mr. Girard, which entitles him to receive continuing payments at a rate equal to his annual base salary for a period of nine months from his termination date, up to nine months of health benefit coverage under our COBRA program, an incentive bonus equal to 50% of nine months of his base salary in effect on his termination date and nine months of vesting on his restricted stock units, or RSUs, from his termination date. As of September 30, 2016, the Company had severance payments totaling $0.3 million accrued for our former Chief Strategy Officer which is due to be paid through April 2017. In addition, the Company incurred in the second quarter of 2016 an additional $0.5 million in stock compensation expense to general and administrative expense related to the accelerated vesting of his RSUs on July 10, 2016. All remaining unvested RSUs were forfeited. The foregoing summary of the terms of Mr. Girard's Separation Agreement and Release does not purport to be complete. A copy is filed as an exhibit to this Quarterly Report on Form 10-Q for the quarter ended September 30, 2016. During the three and nine months ended September 30, 2016, the Company paid $0.1 million and $0.4 million , respectively, in severance to the former Chief Operating Officer and other former employees. Additionally, on July 9, 2016, we entered into a Separation Agreement and Release with our former Executive Vice President, General Counsel. As of September 30, 2016, we had severance payments totaling $0.3 million accrued in connection with this Separation Agreement and Release, which is due to be paid through April 2017. The Company paid $0.1 million in severance to Mr. Girard and our former Executive Vice President, General Counsel as of September 30, 2016. 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.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events The 2016 Annual Meeting of Shareholders, or the Annual Meeting, of the Company was held on October 18, 2016 in Seattle, Washington. At the Annual Meeting, shareholders (i) approved the adoption of the merger agreement among the Company, Acucela Japan KK and US Merger Co, pursuant to which the Company will be merged with and into US Merger Co, with US Merger Co surviving the merger as a wholly-owned subsidiary of Acucela Japan KK, (ii) elected the five nominees named in the proxy statement to the Board of Directors and (iii) ratified the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for 2016. The adjournment proposal was not acted upon at the Annual Meeting. The proposals related to each matter are described in detail in the Company’s definitive proxy statement/prospectus on Schedule 14A filed with the SEC on September 15, 2016.

Significant Accounting Polici17

Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Basis of Presentation	Unaudited Interim Financial Information We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the SEC for interim financial reporting. The condensed consolidated balance sheet as of December 31, 2015 has been derived from the audited financial statements. The condensed consolidated financial statements as of September 30, 2016 and September 30, 2015 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 2016 fiscal year. Certain information and footnote disclosures normally included in condensed consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, have been omitted in accordance with the rules and regulations of the SEC. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2015 Annual Report on Form 10-K. Presentation of the balance sheet The prior year presentation of the balance sheet includes a re-classification to conform with the current year presentation of common stock.
Principles of Consolidation	The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Acucela Japan KK, which was organized under the laws of Japan on December 11, 2015. Through the period ended September 30, 2016 , Acucela Japan KK has not commenced operations. We eliminate all intercompany balances and transactions in consolidation.
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 condensed consolidated 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, 2016 and 2015 , 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 cash and money market funds.
Investments	We have classified our entire investment portfolio, which consists of corporate debt securities, commercial paper, securities issued by U.S. government agencies 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 income (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 12 months from the balance sheet date as long-term and with a maturity less than 12 months from the balance sheet date as short-term.
Concentration of Credit Risk	Our accounts receivable, as of September 30, 2016 and December 31, 2015, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co., Ltd, or 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. Collateral is not required under our arrangement with Otsuka. Revenue recognized for the three and nine months ended September 30, 2016 and 2015 consist of amounts derived from our collaboration agreements with Otsuka.
Fair Value	We measure and report at fair value our cash equivalents and investment securities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The carrying amounts reflected in the balance sheets for accounts receivable and accounts payable approximate fair value due to their short-term nature.
Stock-Based Compensation	Stock-based compensation cost is estimated at the grant date based on the award’s fair value and is recognized on a straight line basis as expense, less estimated forfeitures, over the requisite service period, which is generally the vesting period. The fair value of stock options under our equity-based incentive plans, or the Equity Plans, are calculated using the Black-Scholes option pricing model. This model requires us to make assumptions to determine expected risk-free interest rates, stock price volatility, dividend yield, and weighted-average option term. We recognize stock-based compensation expense over the period from the date of grant to the date when the award is no longer contingent on either the employee providing additional services to the Company or the market price of the Company’s common stock reaching a certain level, for a specified minimum period of time (the vesting period). Any unexercised options expire in ten years. We estimate the fair value of each grant as a single award and amortize that value on a straight-line basis into compensation expense over the option’s vesting period. The fair value of restricted stock units and restricted stock awards is equal to the market price of Acucela's stock on the date of grant. We amortize that value on a straight line basis into compensation expense, over the restricted share’s vesting period.
Research and Development Costs	Research and development costs include salaries paid to clinical development staff and scientists, fees paid to external service providers and to contract research organizations to conduct research and development activities. Costs may also include laboratory supplies, license fees, consulting, travel, fees paid to third parties involved in research and development activities, and an allocated portion of certain general and administrative costs. These research and development costs are expensed as incurred. Non-refundable advance payments for goods or services with characteristics that will be used or rendered for future research and development activities, pursuant to an executory contractual arrangement, are deferred and capitalized, assuming the straight-line method. Capitalized research and development activities are evaluated each reporting period, to assess recoverability of the asset. We expense payments to acquire contractual rights to licensed technology as incurred, when the future economic benefit may be foreseen, but cannot be measured with any degree of certainty. Refundable advance payments are recorded as a refundable deposit. In the event the fee becomes nonrefundable, it is capitalized or expensed, based on the certainty of any future economic benefit.
Income Taxes	We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have already been recognized in the financial statements or tax returns. Excess tax benefits associated with stock option exercises and other equity awards are credited to shareholders' equity. Deferred tax liabilities and assets are based on the difference between financial statement carrying amounts and the tax basis of assets and liabilities, operating loss, and tax credit carryforwards and are measured using enacted tax rates expected to be in effect in the years the differences or carryforwards are anticipated to be recovered or settled. A valuation allowance is established when we believe that it is more likely than not that benefits of the deferred tax assets will not be realized.
Recent Accounting Pronouncements	In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Adoption of ASU 2014-09 can be done using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. In August 2015, FASB issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date: Topic 606 (ASU 2015-14) that deferred the effective date of ASU 2014-09 by one year. In April 2016, FASB issued Accounting Standards Update No. 2016-10 Revenue from Contracts with Customers - Identifying Performance Obligations and Licenses: Topic 606 (ASU 2016-10) that clarified accounting for licenses of intellectual property as well as identification of the distinct performance obligations of a contract. In May 2016, FASB issued Accounting Standards Update No. 2016-12 Revenue from Contracts with Customers - Narrow Scope Improvements and Practical Expedients: Topic 606 (ASU 2016-12) which did not change core principles but clarified the guidance on assessing collectability, presenting sales taxes, measuring non cash consideration, and certain transition matters. Application of the new revenue standard, as amended, is required for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We are currently evaluating the potential impact of the pending adoption of ASU 2014-09 on our consolidated financial statements. In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This ASU requires the management to determine whether substantial doubt exists regarding the entity’s going concern presumption, which generally refers to an entity’s ability to meet its obligations as they become due. If substantial doubt exists but is not alleviated by management’s plan, the footnotes must specifically state that “there is substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued.” In addition, if substantial doubt exists, regardless of whether such doubt was alleviated, entities must disclose (a) principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans, if any); (b) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations; and (c) management’s plans that are intended to mitigate the conditions or events that raise substantial doubt, or that did alleviate substantial doubt, about the entity’s ability to continue as a going concern. If substantial doubt has not been alleviated, these disclosures should become more extensive in subsequent reporting periods as additional information becomes available. In the period that substantial doubt no longer exists (before or after considering management’s plans), management should disclose how the principal conditions and events that originally gave rise to substantial doubt have been resolved. The ASU applies prospectively to all entities for annual periods ending after December 15, 2016, and to annual and interim periods thereafter. Early adoption is permitted. We do not expect the adoption the provisions of ASU 2014-15 to have a significant impact on our results of operations, financial position or cash flow. In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of our deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on our Consolidated Balance Sheet. We do not plan to early adopt ASU 2015-17. In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02). The new guidance is intended to increase transparency and comparability for organizations by recognizing lease assets and liabilities on the balance sheet and requiring additional financial disclosure on leasing arrangements. This amendment is primarily designed to address lessee accounting for operating leases and require lessees to account for all leases as assets and liabilities on the balance sheet. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018 including interim reporting periods within those fiscal years. We are currently evaluating the potential impact of the pending adoption of ASU 2016-02 on our consolidated financial statements. In March 2016, FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation: Topic 718 (ASU 2016-09): Improvements to Employee Share Based Accounting. The new guidance is intended to simplify the accounting for share based payment award transactions. The amendments in the update include the following aspects for share based accounting: accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, minimum statutory tax withholding requirements, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax withholding purposes. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016 including interim reporting periods within those fiscal years. We are currently evaluating the potential impact of the pending adoption of ASU 2016-09 on our consolidated financial statements. Other than noted above, we do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Schedule of Cash and Cash Equivalents and Investments	The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): September 30, 2016 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 1,518 $ — $ — $ — $ 1,518 Level 1 Securities: Money market funds 5,083 — — — 5,083 Level 2 Securities: Commercial Paper 24,347 2 (19 ) — 24,330 U.S. government agencies 24,295 7 (5 ) — 24,297 Corporate debt securities 90,054 24 (39 ) (27 ) 90,012 Certificates of deposit 2,640 7 — — 2,647 $ 147,937 $ 40 $ (63 ) $ (27 ) $ 147,887 December 31, 2015 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 3,856 $ — $ — $ — $ 3,856 Level 1 Securities: Money market funds 1,232 — — — 1,232 Level 2 Securities: U.S. government agencies 10,020 — (37 ) — 9,983 Corporate debt securities 144,352 — (435 ) (96 ) 143,821 Certificates of deposit 7,640 1 (7 ) (1 ) 7,633 $ 167,100 $ 1 $ (479 ) $ (97 ) $ 166,525

Shareholders_ Equity and Shar19

Shareholders’ Equity and Share-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2016
Shareholders’ Equity and Share-Based Compensation [Abstract]
Changes in Accumulated Other Comprehensive Loss	Changes in Accumulated Other Comprehensive Income (Loss) (in thousands): Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 Beginning balance $ 67 $ (223 ) $ (575 ) $ (361 ) Current period other comprehensive income (loss), net of tax (117 ) (127 ) 525 11 Ending balance $ (50 ) $ (350 ) $ (50 ) $ (350 )

Business and Basis of Present20

Business and Basis of Presentation (Narrative) (Details)	9 Months Ended
	Sep. 30, 2016segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash	$ 1,518	$ 3,856
Amortized Cost	147,937	167,100
Gross Unrealized Holding Gains	40	1
Gross Unrealized Holding Losses Less than 12 mos	(63)	(479)
Gross Unrealized Holding Losses 12 mos or Longer	(27)	(97)
Fair Value	147,887	166,525
Level 1 Securities | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	5,083	1,232
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	5,083	1,232
Level 2 Securities | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	24,347
Gross Unrealized Holding Gains	2
Gross Unrealized Holding Losses Less than 12 mos	(19)
Gross Unrealized Holding Losses 12 mos or Longer	0
Fair Value	24,330
Level 2 Securities | US Government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	24,295	10,020
Gross Unrealized Holding Gains	7	0
Gross Unrealized Holding Losses Less than 12 mos	(5)	(37)
Gross Unrealized Holding Losses 12 mos or Longer	0	0
Fair Value	24,297	9,983
Level 2 Securities | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	90,054	144,352
Gross Unrealized Holding Gains	24	0
Gross Unrealized Holding Losses Less than 12 mos	(39)	(435)
Gross Unrealized Holding Losses 12 mos or Longer	(27)	(96)
Fair Value	90,012	143,821
Level 2 Securities | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	2,640	7,640
Gross Unrealized Holding Gains	7	1
Gross Unrealized Holding Losses Less than 12 mos	0	(7)
Gross Unrealized Holding Losses 12 mos or Longer	0	(1)
Fair Value	$ 2,647	$ 7,633

Fair Value Measurements (Narrat

Fair Value Measurements (Narrative) (Details) $ in Millions	Sep. 30, 2016USD ($)
Certificates of deposit
Schedule of Available-for-sale Securities [Line Items]
Securities maturing from year one to year two	$ 1.4
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Securities maturing from year one to year two	11.9
US Government agencies
Schedule of Available-for-sale Securities [Line Items]
Securities maturing from year one to year two	$ 15.7

Shareholders_ Equity and Shar23

Shareholders’ Equity and Share-Based Compensation (Changes in AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ 67	$ (223)	$ (575)	$ (361)
Current period other comprehensive income (loss), net of tax	(117)	(127)	525	11
Ending balance	$ (50)	$ (350)	$ (50)	$ (350)

Shareholders_ Equity and Shar24

Shareholders’ Equity and Share-Based Compensation (Narrative) (Details) - shares	Sep. 01, 2016	Jul. 12, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Sep. 30, 2016
Class of Stock [Line Items]
Options granted (in shares)		225,000			937,800
Chief Executive Officer
Class of Stock [Line Items]
Options granted (in shares)					780,000
Share-based compensation, vesting period					3 years
Chief Executive Officer | Vest Over Three Years
Class of Stock [Line Items]
Options granted (in shares)					390,000
Chief Executive Officer | Market-based Awards
Class of Stock [Line Items]
Options granted (in shares)					390,000
Chief Executive Officer | On the First Employment Anniversary
Class of Stock [Line Items]
Vesting percentage					33.00%
Chief Executive Officer | On a Monthly Pro Rata Basis Thereafter
Class of Stock [Line Items]
Vesting percentage					67.00%
Each Board of Directors
Class of Stock [Line Items]
Options granted (in shares)		25,000			30,000
Share-based compensation, vesting period	4 years				4 years
New Hires
Class of Stock [Line Items]
Options granted (in shares)		5,000		62,000	37,800
Share-based compensation, vesting period				4 years	4 years
New Hires | On the First Employment Anniversary
Class of Stock [Line Items]
Vesting percentage				25.00%	25.00%
New Hires | On a Monthly Pro Rata Basis Thereafter
Class of Stock [Line Items]
Vesting percentage				75.00%	75.00%
Executive Vice President of Research and Development
Class of Stock [Line Items]
Options granted (in shares)		120,000
Number of shares vested (in shares)	7,500
Executive Vice President of Research and Development | On the First Day of Each Month, Until Fully Vested
Class of Stock [Line Items]
Number of shares vested (in shares)	2,500
Employees | Restricted Stock Units (RSUs)
Class of Stock [Line Items]
Vested units (in shares)			179,956			499,495

Income Taxes (Narrative) (Detai

Income Taxes (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Effective tax rate	0.00%	0.00%	0.00%	0.00%
Statutory rate	34.00%	34.00%	34.00%	34.00%

Collaboration and License Agr26

Collaboration and License Agreements (Details) - USD ($) $ in Thousands	Apr. 30, 2016	Sep. 30, 2016	Mar. 31, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2008
Revenue Recognition, Milestone Method [Line Items]
Revenue from collaborations		$ 711		$ 7,128	$ 7,341	$ 21,524
Option and license agreement, milestone payment received							$ 5,000
Funded amount, Phase 2		40,000
Contingently repayable funding, accrued interest		70,400			70,400
Loss contingency accrual, payments	$ 200
Research and Development
Revenue Recognition, Milestone Method [Line Items]
Option and license agreement, payment made					5,000
Option and license agreement, payment received									$ 5,000
Option and license agreement, fees			$ 10,000
Royalties, percent of reduction in payment			50.00%
Option and license agreement, termination period			60 days
Research and Development | Maximum
Revenue Recognition, Milestone Method [Line Items]
Option and license agreement, possible future payment			$ 5,000
Exercise of options, eligibility for additional payment			300,000
Sale-based milestone, eligibility for additional payment			$ 90,000
Development Activities
Revenue Recognition, Milestone Method [Line Items]
Costs incurred, development costs								$ 40,000
Collaborative Arrangement, Product
Revenue Recognition, Milestone Method [Line Items]
Revenue from collaborations		$ 700		$ 7,100	$ 7,300	$ 21,500

Net Loss Per Share (Details)

Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Antidilutive securities excluded from the calculation of diluted net income (loss) per share	601,706	108,285	1,188,682	71,051

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Millions	Jul. 11, 2016	Apr. 30, 2016	Sep. 30, 2016	Sep. 30, 2016	Jun. 30, 2016
Loss Contingencies [Line Items]
Loss contingency accrual, payments		$ 0.2
Employee Severance
Loss Contingencies [Line Items]
Loss contingency accrual, payments			$ 0.1	$ 0.4
Employee Severance | Former Chief Strategy Officer
Loss Contingencies [Line Items]
Percent of employee’s annual target bonus for current year	50.00%
Loss contingency accrual			0.3	0.3
Employee Severance | Former Chief Strategy Officer and Former Executive Vice President, General Counsel
Loss Contingencies [Line Items]
Loss contingency accrual, payments				0.1
Share-based Compensation | Former Chief Strategy Officer | Restricted Stock Units (RSUs)
Loss Contingencies [Line Items]
Loss contingency accrual					$ 0.5
Employee Severance and Share-based Compensation | Former Executive Vice President, General Counsel [Member]
Loss Contingencies [Line Items]
Loss contingency accrual			$ 0.3	$ 0.3