Kubota Pharmaceutical (KBBTF) 10-Q 10 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 30, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	KUBOTA PHARMACEUTICAL HOLDINGS CO LTD
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	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		37,939,987

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 12,237	$ 8,949
Investments	102,173	113,365
Accounts receivable from collaborations	616	2,055
Prepaid expenses and other current assets	3,713	2,950
Total current assets	118,739	127,319
Property and equipment, net	728	770
Long-term investments	18,610	18,975
Other assets	513	319
Total assets	138,590	147,383
Current liabilities:
Accounts payable	673	439
Accrued liabilities	1,384	1,726
Accrued compensation	1,138	2,295
Deferred rent and lease incentives	153	153
Total current liabilities	3,348	4,613
Commitments and contingencies
Long-term deferred rent, lease incentives, and others	1,042	953
Total long-term liabilities	1,042	953
Shareholders’ equity:
Common stock, no par value, 151,358 shares authorized as of March 31, 2017 and December 31, 2016; 37,921 and 37,878 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively	208,463	207,449
Accumulated other comprehensive loss	(110)	(132)
Accumulated deficit	(74,153)	(65,500)
Total shareholders’ equity	134,200	141,817
Total liabilities and shareholders’ equity	$ 138,590	$ 147,383

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares	Mar. 31, 2017	Dec. 31, 2016
Equity [Abstract]
Common stock, shares authorized	151,358,000	151,358,000
Common stock, shares issued	37,921,000	37,878,000
Common stock, shares outstanding	37,921,000	37,878,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenue from collaborations	$ 0	$ 3,756
Expenses:
Research and development	4,878	8,919
General and administrative	4,142	7,780
Total expenses	9,020	16,699
Loss from operations	(9,020)	(12,943)
Other income (expense), net:
Interest income	355	351
Other income, net	14	18
Total other income, net	369	369
Loss before income tax	(8,651)	(12,574)
Income tax expense	(2)	(17)
Net loss	$ (8,653)	$ (12,591)
Net loss per share
Basic (in dollars per share)	$ (0.23)	$ (0.34)
Diluted (in dollars per share)	$ (0.23)	$ (0.34)
Weighted average shares used to compute loss per share
Basic (shares)	37,838	36,891
Diluted (shares)	37,838	36,891

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (8,653)	$ (12,591)
Other comprehensive income (loss):
Net unrealized gain on securities, net of tax	22	439
Comprehensive loss	$ (8,631)	$ (12,152)

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities
Net loss	$ (8,653)	$ (12,591)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	80	76
Stock-based compensation	990	2,705
Amortization, net, of premium/discount on marketable securities	93	434
Changes in operating assets and liabilities:
Accounts receivable from collaborations	1,439	4,630
Prepaid expenses and other current assets	(649)	(184)
Accounts payable	234	871
Accrued liabilities	(342)	130
Accrued compensation	(1,157)	(867)
Deferred rent and lease incentives	89	(35)
Deferred revenue from collaborations	0	(1,817)
Other assets	(194)	0
Net cash used in operating activities	(8,070)	(6,648)
Cash flows from investing activities
Purchases of marketable securities available for sale	(25,044)	(21,658)
Maturities of marketable securities available for sale	36,416	27,196
Additions to property and equipment	(38)	(2)
Net cash provided by investing activities	11,334	5,536
Cash flows from financing activities
Value of equity awards withheld for tax liability	0	(4,571)
Proceeds from issuance of common stock	24	8,315
Net cash provided by financing activities	24	3,744
Increase in cash and cash equivalents	3,288	2,632
Cash and cash equivalents—beginning of period	8,949	5,088
Cash and cash equivalents—end of period	$ 12,237	$ 7,720

Business and Basis of Presentat

Business and Basis of Presentation	3 Months Ended
	Mar. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business and Basis of Presentation	Business and Basis of Presentation Business Kubota Pharmaceutical Holdings Co., Ltd., the Company or Kubota Holdings, is a clinical stage ophthalmology company that is committed to translating innovation into a diverse portfolio of drugs and devices to preserve and restore vision for millions worldwide. We have 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. We are pursuing development of our product candidates for debilitating diseases such as diabetic retinopathy/diabetic macular edema, cataract, retinitis pigmentosa, Stargardt disease, and age-related macular degeneration. As part of our mobile health application initiatives, we are also developing technologies intended to detect nascent disease progression to improve treatment outcome in patients with wet age-related macular degeneration , diabetic macular edema and other neovascular retinal diseases. References in this report to the "Company", "we", "our" and "us" refer to Kubota Pharmaceutical Holdings Co., Ltd. and its subsidiaries, including Acucela Inc. Redomicile Transaction On December 1, 2016 Japan Standard Time, we completed a corporate reorganization resulting in the change in corporate domicile, pursuant to which Kubota Holdings, a company organized under the laws of Japan, became the publicly traded parent company of Acucela Inc., a Washington corporation, or Acucela US. The change in domicile, or the Redomicile Transaction, was effected pursuant to an Agreement and Plan of Merger, dated as of August 9, 2016, by and among Acucela US, Acucela North America Inc., a Washington corporation and wholly-owned subsidiary of Kubota Holdings, or US Merger Co, and Kubota Holdings. At the effective time of the merger, (1) Acucela US was merged with US Merger Co, with US Merger Co surviving the merger as a wholly-owned subsidiary of Kubota Holdings and was renamed Acucela Inc., and (2) each issued and outstanding share of common stock of Acucela US, or Acucela US Common Stock, was cancelled and converted into the right to receive one share of Kubota Holdings common stock, or Kubota Holdings Common Stock. An aggregate of approximately 37.8 million shares of Kubota Holdings Common Stock was delivered pursuant to the Redomicile Transaction prior to the listing of Kubota Holdings Common Stock on the Mothers market of the Tokyo Stock Exchange, or TSE, under the code “4596.” Kubota Holdings is the successor registrant to Acucela US pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended. 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, 2016 has been derived from the audited financial statements. The condensed consolidated financial statements as of March 31, 2017 and for the three-month periods ended March 31, 2017 and March 31, 2016 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 the full 2017 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 2016 Annual Report on Form 10-K. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Acucela Inc. and Kubota Ophthalmics Co., Ltd. Intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Segments We operate in one segment, pharmaceutical product development. All of our significant assets are located in the United States. During the three months ended March 31, 2017 and 2016 , all revenue was generated in the United States.

Significant Accounting Policies

Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
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 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 March 31, 2017 and December 31, 2016, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co., Ltd, or Otsuka. In June 2016, Otsuka terminated its collaboration agreements with us. 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. 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 outstanding equity awards is 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 five to 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 Company also utilizes a forfeiture rate of 10% which is embedded in our compensation expense. Once terminations occurs, the Company records the actual forfeiture credits against expense incurred to date. The fair value of restricted stock units and restricted stock awards is equal to the market price of Kubota Holdings' 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 operating costs, including facility and information technology costs. These research and development costs are expensed as incurred. Non-refundable advance payments related to research and development collaboration agreements are currently expensed as incurred as there is no assurance that the pre-clinical compounds will be used or rendered for future research and development. If collaboration projects have not yet begun to incur research and development expenses, we will record the non-refundable advance as a prepayment until such time as we may begin to expense as incurred. We will evaluate each reporting period whether non-refundable fees show characteristics that will be used or rendered for future research and development pursuant to an executory contractual arrangement. At such point, we may then decide to defer and capitalize these payments. 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. Foreign Currency Translation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Acucela Inc. and Kubota Ophthalmics Co., Ltd. The functional currency of the Company and Kubota Ophthalmics Co., Ltd. is the Japanese yen and the functional currency of Acucela Inc. is the U.S. dollar. The reporting currency for this quarterly report on the form 10-Q is the U.S. dollar.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Mar. 31, 2017
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Recent Accounting Pronouncements	Recent Accounting Pronouncements We have adopted the provisions of Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), as of the beginning of the current fiscal year. ASU 2016-09 requires recognition through opening retained earnings of any pre-adoption date NOL carryforwards from employee share-based payments, as well as recognition of all related income tax effects arising on or after January 1, 2017 (our adoption date) in income tax expense. Due to a full valuation allowance at the end of December 31, 2016, we made no adjustment to opening retained earnings of pre-adoption date NOL carryforwards with remaining carryforward periods of more than 10 years. In addition, we realized no windfall tax benefits in the interim period of adoption due to our full valuation allowance. Adoption of ASU 2016-09 allows companies to either elect to estimate the number of awards that are expected to vest and base initial accruals of compensation cost on the estimate or to recognize the effects of forfeitures in compensation cost when they occur. The Company has elected to continue to estimate the number of awards which are expected to vest and base initial accruals of compensation cost on this estimate. 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. Following termination of the Company's collaboration agreements with Otsuka and completion of the wind-down period, we do not anticipate recognizing any future revenues under the Otsuka collaboration agreements. Currently, the Company is pursuing various partnering efforts and may generate revenue through future collaborations with strategic partners. If we enter revenue-generating agreements, we will evaluate the impact of adopting ASU 2014-09. 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. 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	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 and December 31, 2016 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 March 31, 2017 or December 31, 2016 . The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): March 31, 2017 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 2,880 $ — $ — $ — $ 2,880 Level 1 Securities: Money market funds 9,357 — — — 9,357 Level 2 Securities: Commercial Paper 24,517 — (8 ) — 24,509 U.S. government agencies 28,018 — (38 ) — 27,980 Corporate debt securities 66,932 11 (61 ) (31 ) 66,851 Certificates of deposit 1,440 3 — — 1,443 $ 133,144 $ 14 $ (107 ) $ (31 ) $ 133,020 December 31, 2016 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 2,633 $ — $ — $ — $ 2,633 Level 1 Securities: Money market funds 6,316 — — — 6,316 Level 2 Securities: Commercial Paper 25,988 1 (9 ) — 25,980 U.S. government agencies 27,585 — (19 ) (14 ) 27,552 Corporate debt securities 77,459 6 (48 ) (52 ) 77,365 Certificates of deposit 1,440 3 — — 1,443 $ 141,421 $ 10 $ (76 ) $ (66 ) $ 141,289 As of March 31, 2017 , $18.6 million of corporate debt securities mature in greater than one year, but less than two years. All other investment securities held as of March 31, 2017 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 March 31, 2017 .

Shareholders_ Equity and Share-

Shareholders’ Equity and Share-Based Compensation	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 2016 Beginning balance $ (132 ) $ (575 ) Current period other comprehensive income, net of tax 22 439 Ending balance $ (110 ) $ (136 ) The changes in accumulated other comprehensive loss relate to unrealized holding gains and losses in available-for-sale securities. Equity Awards No equity awards were granted during the three months ended March 31, 2017 .

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes Due to our continuing losses, we had an effective tax rate of 0% for the three months ended March 31, 2017 and 2016 , 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	3 Months Ended
	Mar. 31, 2017
Revenue Recognition [Abstract]
Collaboration and License Agreements	Collaboration and License Agreements Collaboration with Otsuka During the three months ended March 31, 2017 and 2016 , we recognized zero and $3.8 million , respectively, of revenues in performance of our collaborative co-development agreement with Otsuka. For further detail on our collaboration with Otsuka, please see “Note 9: Collaboration and License Agreements” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2016. Termination of the Emixustat 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. In accordance with the terms of the agreement, the termination of the Emixustat Agreement was effective on June 27, 2016, or the Termination Date. Otsuka’s written notice stated that its decision to terminate was based on the 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 termination of the Emixustat Agreement was in accordance with the terms of such agreements without modification or amendment thereto. 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. We did not recognize any revenues during the three month period ended March 31, 2017 . 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 funded by Otsuka prior to the Termination Date, with interest. The foregoing is only a brief description of the material terms of the Emixustat Agreement, does not purport to be complete and is qualified in its entirety by reference to the Emixustat Agreement that was filed as Exhibit 10.9 to our Registration Statement on Form S-1, as amended (File No. 333-192900) filed with the SEC on December 17, 2013. Collaboration Agreement with EyeMedics In December 2016, we entered into the Collaboration Agreement, with EyeMedics. Pursuant to the terms of the Collaboration Agreement, we and EyeMedics will jointly conduct through human proof of concept the pre-clinical and clinical development of ACU-6151, a biomimetic small molecule covered by the license from the University of Southern California for the treatment, prevention and diagnosis of ophthalmic diseases, with an initial focus on diabetic macular edema. The agreement includes an exclusive option to acquire the global rights to ACU-6151, including an initial candidate molecule for ophthalmic use. We may exercise the option at any time prior to 120 days following the conclusion of a proof of concept trial and a meeting between EyeMedics and the FDA to discuss final results of Phase 2 trials. The proprietary technology, licensed by EyeMedics from the University of Southern California, modulates endogenous factors released during the inflammatory process at the early pathogenic stages of age related macular degeneration, proliferative diabetic retinopathy, diabetic macular edema and other retinal neovascular conditions. Acucela Inc. and EyeMedics established a Joint Development Committee, or JDC, to meet semi-annually to determine the budget for the following year. The Company is required to advance any funds, less any remaining unused funds from the prior calendar half-year, to EyeMedics within 30 days of the JDC meeting. As of March 31, 2017, research and development work has started under the Collaboration Agreement. Pursuant to the terms of the agreement, we paid non-refundable fees of $0.9 million in 2016 and an additional $1.2 million in January 2017 to fund future collaboration efforts. We recognized these amounts as prepayments which we will expense as research and development costs are incurred. 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.

Net Loss Per Share

Net Loss Per Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share Basic net loss per share is calculated by dividing net loss by the weighted average number of shares outstanding for the period. Diluted net loss per share is calculated by dividing net 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 months ended March 31, 2017 , equity awards with an aggregate of 110,402 shares were excluded from the calculation of diluted net loss per share because the impact was anti-dilutive. For the three months ended March 31, 2016 , equity awards with an aggregate of 1,306,947 were excluded from the calculation of diluted net loss per share because the impact was anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
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, 2016, we have not incurred any additional material contractual obligations or commitments outside of the normal course of business during the three months ended March 31, 2017 except the following: Severance During the three months ended March 31, 2017 , the Company paid $0.5 million in severance to the former Chief Strategy Officer, Executive Vice President, General Counsel and other former employees. Japan Office Leases On August 17, 2016, we entered into an agreement with Servcorp to lease office space for Kubota Holdings' corporate headquarters in Tokyo, Japan, the Current Tokyo Premises. The term of the lease commenced on September 1, 2016 and will expire June 30, 2017. We do not intend to renew this lease. On March 30, 2017, the Company and Tokyu Land Corporation entered into a new agreement relating to the lease of approximately 1,102 square feet of rentable office space located in 3-7-1 Kasumigaseki, Chiyoda-ku, Tokyo, Room 404, the New Tokyo Premises. The New Tokyo Premises will serve as the Company’s future headquarters. The term for the New Tokyo Premises commences on June 1, 2017 and expires on May 31, 2020. Annual base rent under the New Tokyo Premises is approximately ¥11 million , or approximately $0.1 million based on the rate of 1 USD = 112.19 , which is the TTM rate quoted by The Bank of Tokyo-Mitsubishi UFJ, Ltd. on March 31, 2017. In connection with the move of the Company’s head office from Shibuya-ku, Tokyo to Chiyoda-ku, Tokyo, the Company’s shareholders will be asked to approve an amendment to the Company’s articles of incorporation at the annual shareholder meeting to be held on May 25, 2017 in Tokyo, Japan. US Laboratory and Office Leases We lease laboratory and corporate office space under operating leases. We sub-lease approximately 38,723 square feet of corporate office space in Seattle, Washington, the Current Seattle Premises, from The Boeing Company pursuant to the terms of the Sublease Agreement dated June 26, 2014, or the Acucela Sublease. Acucela Inc. uses the Current Seattle Premises for general and administrative purposes. On January 12, 2017, Acucela Inc. entered into a Sub-Sublease Agreement, or the Zillow Sublease, pursuant to which Zillow, Inc., or Zillow, will sublease from Acucela Inc. the entire Current Seattle Premises. The term of the Zillow Sublease is scheduled to commence on June 1, 2017 and will continue until the expiration of the Acucela Sublease on February 28, 2022, unless Boeing earlier terminates the Acucela Sublease on November 30, 2021. For the first three months of the term, Acucela Inc. will remain responsible for payment of rent to the Boeing Company. Following such three month period, the base rent shall be payable monthly by Zillow to Acucela Inc. In addition to base rent, Zillow will also be responsible for operating and other expenses owed by Acucela Inc. to the Boeing Company pursuant to the terms of the Acucela Sublease. The Zillow Sublease is subject and subordinate to the Acucela Sublease and Boeing's lease with the landlord of the Current Seattle Premises. During the term of the Zillow Sublease, Acucela Inc.’s obligations under the Acucela Sublease will remain in force. Acucela Inc. is evaluating alternative office space in Seattle, Washington and intends to relocate its operations currently occupying the Current Seattle Premises once satisfactory space is secured. Acucela Inc. leases approximately 17,488 square feet of laboratory and office space in Bothell, Washington. On January 4, 2017, Acucela Inc. and Nexus Canyon Park LLC entered into an amendment to the lease. Pursuant to the terms of the amendment, the term of the lease was extended to February 29, 2020, subject to Acucela Inc.’s right to extend the term for one additional two year period by written notice to Nexus. 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.

Significant Accounting Polici16

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
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, 2016 has been derived from the audited financial statements. The condensed consolidated financial statements as of March 31, 2017 and for the three-month periods ended March 31, 2017 and March 31, 2016 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 the full 2017 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 2016 Annual Report on Form 10-K. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Acucela Inc. and Kubota Ophthalmics Co., Ltd. Intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Segments	We operate in one segment, pharmaceutical product development. All of our significant assets are located in the United States. During the three months ended March 31, 2017 and 2016 , 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 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 March 31, 2017 and December 31, 2016, consist of amounts due from our collaborations with Otsuka Pharmaceutical Co., Ltd, or Otsuka. In June 2016, Otsuka terminated its collaboration agreements with us. 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.
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 outstanding equity awards is 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 five to 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 Company also utilizes a forfeiture rate of 10% which is embedded in our compensation expense. Once terminations occurs, the Company records the actual forfeiture credits against expense incurred to date. The fair value of restricted stock units and restricted stock awards is equal to the market price of Kubota Holdings' 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 operating costs, including facility and information technology costs. These research and development costs are expensed as incurred. Non-refundable advance payments related to research and development collaboration agreements are currently expensed as incurred as there is no assurance that the pre-clinical compounds will be used or rendered for future research and development. If collaboration projects have not yet begun to incur research and development expenses, we will record the non-refundable advance as a prepayment until such time as we may begin to expense as incurred. We will evaluate each reporting period whether non-refundable fees show characteristics that will be used or rendered for future research and development pursuant to an executory contractual arrangement. At such point, we may then decide to defer and capitalize these payments. 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.
Foreign Currency Translation	The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Acucela Inc. and Kubota Ophthalmics Co., Ltd. The functional currency of the Company and Kubota Ophthalmics Co., Ltd. is the Japanese yen and the functional currency of Acucela Inc. is the U.S. dollar. The reporting currency for this quarterly report on the form 10-Q is the U.S. dollar.
Recent Accounting Pronouncements	We have adopted the provisions of Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), as of the beginning of the current fiscal year. ASU 2016-09 requires recognition through opening retained earnings of any pre-adoption date NOL carryforwards from employee share-based payments, as well as recognition of all related income tax effects arising on or after January 1, 2017 (our adoption date) in income tax expense. Due to a full valuation allowance at the end of December 31, 2016, we made no adjustment to opening retained earnings of pre-adoption date NOL carryforwards with remaining carryforward periods of more than 10 years. In addition, we realized no windfall tax benefits in the interim period of adoption due to our full valuation allowance. Adoption of ASU 2016-09 allows companies to either elect to estimate the number of awards that are expected to vest and base initial accruals of compensation cost on the estimate or to recognize the effects of forfeitures in compensation cost when they occur. The Company has elected to continue to estimate the number of awards which are expected to vest and base initial accruals of compensation cost on this estimate. 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. Following termination of the Company's collaboration agreements with Otsuka and completion of the wind-down period, we do not anticipate recognizing any future revenues under the Otsuka collaboration agreements. Currently, the Company is pursuing various partnering efforts and may generate revenue through future collaborations with strategic partners. If we enter revenue-generating agreements, we will evaluate the impact of adopting ASU 2014-09. 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. 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)	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 and December 31, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): March 31, 2017 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 2,880 $ — $ — $ — $ 2,880 Level 1 Securities: Money market funds 9,357 — — — 9,357 Level 2 Securities: Commercial Paper 24,517 — (8 ) — 24,509 U.S. government agencies 28,018 — (38 ) — 27,980 Corporate debt securities 66,932 11 (61 ) (31 ) 66,851 Certificates of deposit 1,440 3 — — 1,443 $ 133,144 $ 14 $ (107 ) $ (31 ) $ 133,020 December 31, 2016 Amortized Cost Gross Unrealized Fair Value Holding Gains Holding Losses < 12 mos Holding Losses > 12 mos Cash $ 2,633 $ — $ — $ — $ 2,633 Level 1 Securities: Money market funds 6,316 — — — 6,316 Level 2 Securities: Commercial Paper 25,988 1 (9 ) — 25,980 U.S. government agencies 27,585 — (19 ) (14 ) 27,552 Corporate debt securities 77,459 6 (48 ) (52 ) 77,365 Certificates of deposit 1,440 3 — — 1,443 $ 141,421 $ 10 $ (76 ) $ (66 ) $ 141,289

Shareholders_ Equity and Shar18

Shareholders’ Equity and Share-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Shareholders’ Equity and Share-Based Compensation [Abstract]
Changes in Accumulated Other Comprehensive Loss	Changes in Accumulated Other Comprehensive Loss (in thousands): Three months ended March 31, 2017 2016 Beginning balance $ (132 ) $ (575 ) Current period other comprehensive income, net of tax 22 439 Ending balance $ (110 ) $ (136 )

Business and Basis of Present19

Business and Basis of Presentation (Details)	3 Months Ended
	Mar. 31, 2017segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segments	1

Fair Value Measurements (Financ

Fair Value Measurements (Financial Assets) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash	$ 2,880	$ 2,633
Amortized Cost	133,144	141,421
Gross Unrealized Holding Gains	14	10
Gross Unrealized Holding Losses Less than 12 mos	(107)	(76)
Gross Unrealized Holding Losses 12 mos or Longer	(31)	(66)
Fair Value	133,020	141,289
Level 1 Securities | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	9,357	6,316
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	9,357	6,316
Level 2 Securities | Commercial paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	24,517	25,988
Gross Unrealized Holding Gains	0	1
Gross Unrealized Holding Losses Less than 12 mos	(8)	(9)
Gross Unrealized Holding Losses 12 mos or Longer	0	0
Fair Value	24,509	25,980
Level 2 Securities | US Government agencies
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	28,018	27,585
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses Less than 12 mos	(38)	(19)
Gross Unrealized Holding Losses 12 mos or Longer	0	(14)
Fair Value	27,980	27,552
Level 2 Securities | Corporate debt securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	66,932	77,459
Gross Unrealized Holding Gains	11	6
Gross Unrealized Holding Losses Less than 12 mos	(61)	(48)
Gross Unrealized Holding Losses 12 mos or Longer	(31)	(52)
Fair Value	66,851	77,365
Level 2 Securities | Certificates of deposit
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Amortized Cost	1,440	1,440
Gross Unrealized Holding Gains	3	3
Gross Unrealized Holding Losses Less than 12 mos	0	0
Gross Unrealized Holding Losses 12 mos or Longer	0	0
Fair Value	$ 1,443	$ 1,443

Fair Value Measurements (Narrat

Fair Value Measurements (Narrative) (Details) $ in Millions	Mar. 31, 2017USD ($)
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Securities maturing from year one to year two	$ 18.6

Shareholders_ Equity and Shar22

Shareholders’ Equity and Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ (132)	$ (575)
Current period other comprehensive income, net of tax	22	439
Ending balance	$ (110)	$ (136)

Income Taxes (Narrative) (Detai

Income Taxes (Narrative) (Details)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Effective tax rate	0.00%	0.00%
Statutory rate	34.00%	34.00%

Collaboration and License Agr24

Collaboration and License Agreements (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended		12 Months Ended
	Jan. 31, 2017	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Revenue Recognition, Milestone Method [Line Items]
Revenue from collaborations			$ 0	$ 3,756
Research and Development
Revenue Recognition, Milestone Method [Line Items]
Option and license agreement, payment					$ 5,000
Option and license agreement, fees				$ 10,000
Option and license agreement, 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
Option and license agreement, exercise of options, eligibility for additional payment				300,000
Option and license agreement, sale-based milestone, eligibility for additional payment				90,000
EyeMedics
Revenue Recognition, Milestone Method [Line Items]
Collaboration agreement, option period to purchase product rights		120 days
Period to advance funds		30 days
Collaboration agreement, non-refundable fees					$ 900
Option and license agreement, payment	$ 1,200
Collaborative Arrangement, Product
Revenue Recognition, Milestone Method [Line Items]
Revenue from collaborations			$ 0	$ 3,800

Net Loss Per Share (Details)

Net Loss Per Share (Details) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Antidilutive securities excluded from the calculation of diluted net income (loss) per share	110,402	1,306,947

Commitments and Contingencies (

Commitments and Contingencies (Details) ¥ in Millions, $ in Millions	Mar. 30, 2017USD ($)ft²¥ / $	Mar. 30, 2017JPY (¥)ft²¥ / $	Mar. 31, 2017USD ($)ft²	Jun. 26, 2014ft²
Office Building
Loss Contingencies [Line Items]
Net rentable area of leased property	1,102	1,102		38,723
Annual rental payments	$ 0.1	¥ 11
Foreign currency exchange rate | ¥ / $	112.19	112.19
Laboratory and Office Space
Loss Contingencies [Line Items]
Net rentable area of leased property			17,488
Employee Severance
Loss Contingencies [Line Items]
Severance costs | $			$ 0.5