Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
The accompanying consolidated financial statements include the accounts of Relypsa and its wholly-owned subsidiary, Relypsa UK LTD, and have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). Intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates |
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to clinical trial accruals, manufacturing accruals, fair value of assets and liabilities, common stock, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. |
Liquidity | Liquidity |
The Company has never been profitable and, as of December 31, 2014, the Company has an accumulated deficit of $305.7 million. The Company has incurred net losses of approximately $79.9 million, $73.8 million and $43.7 million in the years ended December 31, 2014, 2013 and 2012, respectively. The Company expects to continue to incur net operating losses for at least the next two years, as the Company continues the development of, seeks regulatory approval for, and if approved, begins to commercialize, Patiromer FOS. The Company will need additional funding to support its future operating activities and adequate funding may not be available to the Company on acceptable terms, or at all. The Company’s failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the business, results of operations, and financial condition. The Company will need to generate significant revenues to achieve profitability and may never do so. |
Cash Equivalents | Cash Equivalents |
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at the date of purchase to be cash equivalents. |
Investments | Investments |
Investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days from the date of acquisition. Short-term investments have maturities than 365 days as of the balance sheet date. Long-term investments have maturities greater than 365 days as of the balance sheet date. Investments are carried at fair value based upon quoted market prices or pricing models for similar securities. Unrealized gains and losses on available-for-sale securities are excluded from earnings and are reported as a component of accumulated comprehensive income (loss). Realized gains or losses on the sale of all such securities are reported in interest and other income (expense), net and computed using the specific identification method. |
Concentrations of Credit Risk | Concentrations of Credit Risk |
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents and short-term investments. The Company invests its excess cash in money market accounts, U.S. Treasury notes, municipal bonds, agency bonds, corporate notes, certificates of deposit and commercial paper. Other than for obligations of the U.S. government, the Company’s policy is that no more than 5% of its investments may be concentrated in a single issuer. Bank deposits are held by a single financial institution having a strong credit rating and these deposits may at times be in excess of insured limits. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and short-term investments and issuers of investments to the extent recorded on the balance sheets. The Company’s investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. |
Restricted Cash | Restricted Cash |
Restricted cash related to the Company’s leases consist of irrevocable letters of credit that are collateralized by restricted deposits held at the Company’s bank over a term that is consistent with the corresponding lease. |
Property and Equipment | Property and Equipment |
Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the related assets, ranging from three to seven years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the respective assets. |
Intangible Assets | Intangible Assets |
Intangible assets consist of acquired patent rights that arose from the Company’s acquisition of assets from Ilypsa (See Note 9 for further details). Acquired patent rights were assigned an estimated useful life of seven years and are being amortized using the straight-line method. The carrying value of these patent rights has been fully amortized as of December 31, 2014. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets |
The Company identifies and records impairment losses on long-lived assets used in operations when events and changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Recoverability is measured by comparing the anticipated undiscounted future net cash flows to the related asset’s carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. The Company has not experienced any impairment during 2014, 2013, and 2012. |
Research and Development Expenses | Research and Development Expenses |
Research and development costs are charged to expense as incurred and consist of costs incurred to further the Company’s research and development activities including salaries and related employee benefits, costs associated with clinical trials, costs related to pre-commercialization manufacturing activities such as manufacturing process validation activities and the manufacturing of commercial supply prior to approval, nonclinical research and development activities, regulatory activities, research-related overhead expenses and fees paid to external service providers and contract research and manufacturing organizations that conduct certain research and development activities on behalf of the Company. |
Clinical Trial Accruals | Clinical Trial Accruals |
Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research organizations and clinical sites. The Company determines the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services. |
Contract Manufacturing Accruals | Contract Manufacturing Accruals |
Contract Manufacturing costs are a component of research and development expenses. The Company accrues and expenses contract manufacturing activities performed by third parties based upon the actual or the estimated amount of work completed in accordance with agreements established with contract manufacturing organizations. The Company determines the actual costs or it estimates the costs through discussions with internal personnel and external service providers as to the manufacturing activities that were performed or completed and the agreed-upon fee to be paid for such services. |
Income Taxes | Income Taxes |
The Company uses the liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Financial statement effects of uncertain tax positions are recognized when it is more–likely-than-not, based on the technical merits of the position, that they will be sustained upon examination. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. |
Stock-Based Compensation | Stock-Based Compensation |
The Company accounts for stock-based compensation based on the fair value of the share-based awards that are ultimately expected to vest. The fair value of employee stock options granted is estimated on the date of grant using the Black-Scholes option pricing model, and is recognized in expense over the service period using the straight-line method, net of estimated forfeitures. Forfeiture estimates are adjusted to the extent that actual forfeitures differ from the prior estimates. The fair value of restricted stock unit awards used in the Company’s expense recognition method is based on the number of shares granted and the closing price of the Company’s common stock on the date of the grant. Such value is recognized as an expense over the service period using the straight-line method, net of estimated forfeitures. The Company adopted an employee stock purchase plan (ESPP) on November 2013 and in August 2014, the ESPP was initiated, pursuant to which eligible employees can purchase shares of the Company’s common stock at a price per share equal to the lesser of 85% of the fair market value on the first day of the offering period or 85% of the fair market value on the purchase date. The fair value of each award is estimated on the first day of the offering period using the Black-Scholes option pricing model and is recognized in expense over the service period using the straight-line method, net of estimated forfeitures. |
The Company records the expense attributable to nonemployee services paid with share-based awards based on the estimated fair value of the awards determined using the Black-Scholes option pricing model. The measurement of stock-based compensation for nonemployees is subject to periodic adjustments as the options vest, and the expense is recognized over the period during which services are received. |
Convertible Preferred Stock | Convertible Preferred Stock |
Prior to the Company’s IPO, the Company recorded all shares of convertible preferred stock at their respective fair values, net of issuance costs, on the dates of issuance. Upon completing the IPO, all shares of the Company’s convertible preferred stock then outstanding converted into 18,924,883 shares of our common stock. |
Convertible Preferred Stock Warrant Liability | Convertible Preferred Stock Warrant Liability |
Prior to the Company’s IPO, freestanding warrants for shares that were either puttable or redeemable were classified as liabilities on the balance sheets and were carried at their estimated fair value. The preferred stock underlying the warrants was redeemable in certain circumstances. At the end of each reporting period, changes in the estimated fair value during the period were recorded in interest and other income (expense), net. The consummation of the Company’s IPO resulted in the conversion of all classes of the Company’s preferred stock into common stock. Upon such conversion of the underlying classes of preferred stock, the warrants were reclassified as a component of equity and were no longer subject to re-measurement. |
Deferred Rent | Deferred Rent |
Rent expense is recognized on a straight-line basis over the noncancelable term of the Company’s operating lease and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. In accordance with the terms of the lease for the Company’s office and laboratory space as of December 31, 2014, the Company also recorded lessor-funded lease incentives, such as reimbursable leasehold improvements, as a deferred rent liability, which is amortized as a reduction of rent expense over the noncancelable term of its operating lease. During June 2014, the lease was modified, see Note 8 for further details. |
Net Loss per Common Share Attributable to Common Stockholders | Net Loss per Common Share Attributable to Common Stockholders |
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share of common stock is the same as basic net loss per share of common stock, since the effects of potentially dilutive securities are antidilutive. The net loss per share of common stock attributable to common stockholders is computed using the two-class method required for participating securities. All series of the Company’s convertible preferred stock are considered to be participating securities as they are entitled to participate in undistributed earnings with shares of common stock. Due to the Company’s net loss, there is no impact on earnings per share calculation in applying the two-class method since the participating securities have no legal requirement to share in any losses. |
The following outstanding shares of common stock equivalents were excluded from the computations of diluted net loss per common share attributable to common stockholders for the periods presented as the effect of including such securities would be antidilutive (in thousands): |
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| | Year Ended December 31, | |
| | 2014 | | | 2013 | | | 2012 | |
Convertible preferred stock—as converted to common stock | | | — | | | | — | | | | 17,281 | |
Warrants to purchase convertible preferred stock—as converted to common stock | | | — | | | | — | | | | 2,236 | |
Warrants to purchase common stock | | | 56 | | | | 64 | | | | — | |
Options to purchase common stock | | | 3,813 | | | | 3,545 | | | | 2,163 | |
Restricted stock units | | | 123 | | | | — | | | | — | |
Common stock subject to repurchase | | | 1 | | | | 5 | | | | 7 | |
| | | 3,993 | | | | 3,614 | | | | 21,687 | |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In June 2014, FASB issued Accounting Standards Update No. 2014-10, Development Stage Entities: Elimination of Certain Financial Reporting Requirements. The update removes the definition of a development stage entity from FASB ASC 915 and eliminates the requirement for development stage entities to present inception-to-date information on the statements of operations, cash flows and stockholders’ equity (deficit). The Company early adopted this standard for the period covered by the report herein. |
In August 2014, FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements Going Concern – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments: (1) provide a definition of the term substantial doubt; (2) require an evaluation every reporting period including interim periods; (3) provide principles for considering the mitigating effect of management’s plans; (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans; (5) require an express statement and other disclosures when substantial doubt is not alleviated; and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 will be effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016 with early adoption permitted. ASU 2014-15 will be effective for the Company beginning with its annual report for fiscal 2016 and interim periods thereafter. The Company has not yet determined the effect of the adoption of this standard on the Company’s consolidated financial statements. |
Organization | Organization |
Relypsa, Inc. (Relypsa or the Company) is a biopharmaceutical company dedicated to the development and commercialization of new non-absorbed polymeric drugs for important applications in renal, cardiovascular and metabolic disease. Relypsa’s lead product candidate is Patiromer for Oral Suspension, or Patiromer FOS. A new drug application has been filed with the U.S. Food and Drug Administration for Patiromer FOS for the treatment of hyperkalemia and is currently under review. The Company commenced operations on October 29, 2007. The Company’s principal operations are based in Redwood City, California and it operates in one segment. On October 28, 2014, Relypsa UK LTD was incorporated as a wholly-owned subsidiary of the Company. |
Offerings | Offerings |
On November 15, 2013, the Company completed its initial public offering, or IPO, which resulted in net proceeds of $78.0 million from the issuance of 7,877,500 shares of common stock. In connection with the IPO, on an as converted basis, 18,924,883 shares of the Company’s convertible preferred stock and 2,563,076 convertible preferred stock warrants were converted into 21,487,959 shares of common stock. In addition, upon completing the IPO, the liabilities related to the convertible preferred stock warrants were re-classified to additional paid-in-capital and are no longer subject to re-measurement. |
In connection with the completion of its IPO, on November 15, 2013, the Company filed an amended and restated certificate of incorporation and bylaws, which, among other things, changed the number of authorized shares of common stock to 300,000,000 shares and preferred stock to 5,000,000 shares. |
On April 16, 2014, the Company completed an underwritten public offering of 4,130,611 shares of common stock at an offering price of $24.50 per share. The Company received aggregate net proceeds of $94.6 million, after deducting the underwriting discounts and offering related transaction costs. |
On December 4, 2014, the Company filed a shelf registration statement on Form S-3, which permitted: (a) the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $250.0 million of its common stock, preferred stock, debt securities, warrants and/or units; and (b) as part of the $250.0 million, the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $70.0 million of its common stock that may be issued and sold under a sales agreement with Cantor Fitzgerald & Co in one or more at-the-market offerings. As of December 31, 2014, the Company had sold 514,710 shares pursuant to its at-the-market offering program at an average price of $32.17 for an aggregate offering price of $16.6 million and the Company received aggregate net proceeds of $16.1 million. During January and February 2015, the Company sold an additional 1,549,910 shares at an average price of $34.48 for an aggregate offering price of $53.4 million. The Company received aggregate net proceeds of $51.8 million. |
On March 3, 2015, the Company completed an underwritten public offering of 4,485,000 shares of common stock at an offering price of $38.50 per share for gross proceeds of $172.3 million. The Company estimates net proceeds from the offering to be $161.9 million, after deducting the underwriting discounts and estimated expenses. |