Esperion Therapeutics (ESPR) 10-Q 1 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Oct. 31, 2018
Document and Entity Information
Entity Registrant Name	Esperion Therapeutics, Inc.
Entity Central Index Key	1,434,868
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		26,811,002
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q3

Condensed Balance Sheets

Condensed Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 26,755	$ 34,468
Short-term investments	132,463	165,731
Prepaid clinical development costs	7,411	2,072
Other prepaid and current assets	1,581	1,653
Total current assets	168,210	203,924
Property and equipment, net	583	435
Intangible assets	56	56
Long-term investments	5,181	73,420
Total assets	174,030	277,835
Current liabilities:
Accounts payable	18,630	20,375
Current portion of long-term debt		1,045
Accrued clinical development costs	20,030	10,506
Other accrued liabilities	3,625	1,218
Total current liabilities	42,285	33,144
Total liabilities	42,285	33,144
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized and no shares issued or outstanding as of September 30, 2018 and December 31, 2017
Common stock, $0.001 par value; 120,000,000 shares authorized as of September 30, 2018 and December 31, 2017; 26,804,300 shares issued and outstanding at September 30, 2018 and 26,304,669 shares issued and outstanding at December 31, 2017	27	26
Additional paid-in capital	670,340	641,801
Accumulated other comprehensive loss	(560)	(845)
Accumulated deficit	(538,062)	(396,291)
Total stockholders' equity	131,745	244,691
Total liabilities and stockholders' equity	$ 174,030	$ 277,835

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Condensed Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	26,804,300	26,304,669
Common stock, shares outstanding	26,804,300	26,304,669

Condensed Statements of Operati

Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Operating expenses:
Research and development	$ 41,551	$ 40,056	$ 122,015	$ 114,164
General and administrative	9,011	5,681	21,921	16,122
Total operating expenses	50,562	45,737	143,936	130,286
Loss from operations	(50,562)	(45,737)	(143,936)	(130,286)
Other income, net	651	518	2,165	1,189
Net loss	$ (49,911)	$ (45,219)	$ (141,771)	$ (129,097)
Net loss per common share (basic and diluted) (in dollars per share)	$ (1.86)	$ (1.86)	$ (5.30)	$ (5.57)
Weighted-average shares outstanding (basic and diluted)	26,804,026	24,311,844	26,732,733	23,161,847
Other comprehensive loss:
Unrealized gain (loss) on investments	$ 216	$ (112)	$ 285	$ (179)
Total comprehensive loss	$ (49,695)	$ (45,331)	$ (141,486)	$ (129,276)

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Operating activities
Net loss	$ (141,771)	$ (129,097)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	191	196
Amortization of premiums and discounts on investments	(134)	314
Stock-based compensation expense	17,139	14,071
Changes in assets and liabilities:
Prepaids and other assets	(5,267)	(1,458)
Accounts payable	(1,808)	14,906
Other accrued liabilities	11,704	4,640
Net cash used in operating activities	(119,946)	(96,428)
Investing activities
Purchases of investments	(25,481)	(212,973)
Proceeds from sales/maturities of investments	127,408	128,740
Purchase of property and equipment	(46)	(19)
Net cash provided by (used in) investing activities	101,881	(84,252)
Financing activities
Proceeds from issuance of common stock, net of issuance costs		164,079
Proceeds from exercise of common stock options	11,401	732
Payments on long-term debt	(1,049)	(1,272)
Net cash provided by financing activities	10,352	163,539
Net decrease in cash and cash equivalents	(7,713)	(17,141)
Cash and cash equivalents at beginning of period	34,468	38,165
Cash and cash equivalents at end of period	26,755	21,024
Supplemental disclosure of cash flow information:
Purchase of property and equipment not yet paid	$ 293
Offering costs not yet paid		$ 111

The Company and Basis of Presen

The Company and Basis of Presentation	9 Months Ended
	Sep. 30, 2018
The Company and Basis of Presentation
The Company and Basis of Presentation	1. The Company and Basis of Presentation The Company is the Lipid Management Company, a late-stage pharmaceutical company focused on developing and commercializing complementary, convenient, cost-effective, once-daily, oral therapies for the treatment of patients with elevated low density lipoprotein cholesterol ("LDL-C"). Through scientific and clinical excellence, and a deep understanding of cholesterol biology, the experienced lipid management team at Esperion is committed to developing new LDL-C lowering therapies that will make a substantial impact on reducing global cardiovascular disease ("CVD"); the leading cause of death around the world. Bempedoic acid and the Company's lead product candidate, the bempedoic acid / ezetimibe combination pill, are targeted therapies that have been shown to significantly lower elevated LDL-C levels in patients with hypercholesterolemia, including patients inadequately treated with current lipid-modifying therapies. The clinical development program for the bempedoic acid / ezetimibe combination pill consisted of a single pivotal Phase 3 clinical study (1002FDC-053) in patients with hypercholesterolemia and with atherosclerotic cardiovascular disease (“ASCVD”) and/or heterozygous familial hypercholesterolemia ("HeFH"), including high CVD risk primary prevention patients, whose LDL-C is not adequately controlled despite receiving maximally tolerated lipid-modifying background therapy. 1002FDC-053 initiated in November 2017, fully enrolled 382 patients in March 2018, and the Company reported top-line results in August 2018. The global pivotal Phase 3 clinical development program for bempedoic acid, consisting of four clinical studies, is complete with 3,621 high CVD risk patients with hypercholesterolemia and ASCVD and/or HeFH, or who are high CVD risk primary prevention, on optimized background lipid-modifying therapy and with elevated levels of LDL-C. These patients are on two distinct types of background lipid-modifying therapy: 1) patients on their maximally tolerated statin therapy, and 2) patients who are only able to tolerate less than the lowest approved daily starting dose of a statin, and can be considered stain intolerant. In March 2018, the Company reported top-line results from the first of the Phase 3 studies, Study 4 (1002-048). In May 2018, the Company reported top-line results from the 52-week long-term safety study, Study 1 (1002-040), and from Study 3 (1002-046). In October 2018, the Company reported top-line results from Study 2 (1002-047). The Company intends to use positive results from the Phase 3 bempedoic acid / ezetimibe combination pill and bempedoic acid programs with a total of 4,003 patients to support global regulatory submissions for tandem LDL-C lowering indications in the U.S. no later than the first quarter of 2019 and in Europe no later than the second quarter of 2019. The Company is also conducting a global cardiovascular outcomes trial ("CVOT")—known as C holesterol L owering via B E mpedoic Acid, an A CL-inhibiting R egimen (CLEAR) Outcomes, for bempedoic acid in 12,604 patients with hypercholesterolemia and high CVD risk and who can be considered statin intolerant. The Company initiated the CLEAR Outcomes CVOT in December 2016 and expects the study to be fully enrolled in 2019, and intends to use positive results from this CVOT to support submissions for a CV risk reduction indication in the U.S. and Europe by 2022. The Company's primary activities since incorporation have been conducting research and development activities, including nonclinical, preclinical and clinical testing, performing business and financial planning, recruiting personnel, and raising capital. Accordingly, the Company has not commenced principal operations and is subject to risks and uncertainties which include the need to research, develop, and clinically test potential therapeutic products; obtain regulatory approvals for its products and commercialize them, if approved; expand its management and scientific staff; and finance its operations with an ultimate goal of achieving profitable operations. The Company has sustained operating losses since inception and expects such losses to continue over the foreseeable future. Management plans to continue to fund operations through public or private equity or debt financings or through other sources, which may include collaborations with third parties. If adequate funds are not available, the Company may not be able to continue the development of its current or future product candidates, or to commercialize its current or future product candidates, if approved. Basis of Presentation The accompanying condensed financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, the Company has made all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations for the interim periods presented. Certain prior year amounts have been reclassified to conform with current year presentation. Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2018
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01 which includes provisions to accounting for equity investments, financial liabilities under the fair value option, and presentation and disclosure requirements for financial instruments. The updated guidance requires equity investments with determinable fair values to be measured at fair value with changes in fair value recognized in income. Equity investments without determinable fair values are to be measured at cost, less any impairment determined to be other than temporary. The Company adopted ASU 2016-01 effective January 1, 2018. Prospectively, unrealized gains or losses from equity investments with readily determinable fair values will be reflected in earnings through “Other income, net” on the statement of operations and any equity investments owned by the Company without readily determinable fair values will be measured at cost, less any impairment determined to be other than temporary. The adoption of the ASU did not have a material impact to the Company’s balance sheets, statements of operations or statements of cash flows. In May 2017, the FASB issued ASU 2017-09 which includes provisions to clarify when to account for a change to terms or conditions of a share-based payment award as a modification. Under the updated guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The Company adopted ASU 2017-09 effective January 1, 2018. The adoption of the ASU did not have a material impact to the Company’s balance sheets, statements of operations or statements of cash flows. In August 2018, the FASB issued ASU 2018-15 which includes provisions to clarify customer's accounting for implementation costs incurred in a cloud computing arrangement. Under the updated guidance, a customer in a cloud computing arrangement that is a service contract should follow the internal-use software guidance to determine how to account for costs incurred in implementation. The updated guidance also requires certain classification on the balance sheets, statements of operations and statements of cash flows as well as additional quantitative and qualitative disclosures. The standard is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those years. Early adoption is permitted and entities can choose to adopt the new guidance prospectively or retrospectively. The Company does not believe the adoption of this standard to have a material impact to the Company's balance sheets, statements of operations or statements of cash flows. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Debt

Debt	9 Months Ended
	Sep. 30, 2018
Debt
Debt	3. Debt In June 2014, the Company entered into a loan and security agreement (the “Credit Facility”) with Oxford Finance LLC which provided for initial borrowings of $5.0 million under the term loan (the “Term A Loan”). On June 30, 2014, the Company received proceeds of $5.0 million from the issuance of secured promissory notes under the Term A Loan. The secured promissory notes issued under the Credit Facility bear interest at an annual rate of 6.40% and were due on July 1, 2018. A final payment equal to 8.0% of the Term A Loan was due upon the earlier of the maturity date or prepayment of the term loan. The Company recognized the final payment as interest expense using the effective interest method over the life of the Credit Facility. The Term A Loan was fully repaid in July 2018.

Warrants

Warrants	9 Months Ended
	Sep. 30, 2018
Warrants
Warrants	4. Warrants In connection with the Credit Facility entered into in June 2014, the Company issued a warrant to purchase 8,230 shares of common stock at an exercise price of $15.19. The warrant will terminate on the earlier of June 30, 2019, and the closing of a merger or consolidation transaction in which the Company is not the surviving entity. The warrant was recorded at fair value of $0.1 million to additional-paid-in-capital in accordance with ASC 815-10 based upon the allocation of the debt proceeds. Upon the closing of the Company’s Initial Public Offering, all warrants exercisable for 1,940,000 shares of Series A preferred stock, at an exercise price of $1.00 per share (unadjusted for stock splits), were automatically converted into warrants exercisable for 277,690 shares of common stock, at an exercise price of $6.99 per share. During the nine months ended September 30, 2018, the remaining 177,123 warrants were net exercised for 159,944 shares of the Company’s common stock. During the year ended December 31, 2017, 71,237 warrants were net exercised for 62,525 shares of the Company's common stock. As of September 30, 2018, the Company had warrants outstanding that were exercisable for a total of 8,230 shares of common stock at a weighted-average exercise price of $15.19 per share.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2018
Commitments and Contingencies
Commitments and Contingencies	5. Commitments and Contingencies On January 12, 2016, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, against the Company and Tim Mayleben, captioned Kevin L. Dougherty v. Esperion Therapeutics, Inc., et al. (No. 16-cv-10089). The lawsuit alleges that the Company and Mr. Mayleben violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by allegedly failing to disclose in an August 17, 2015, public statement that the FDA would require a cardiovascular outcomes trial before approving the Company’s lead product candidate. The lawsuit seeks, among other things, compensatory damages in connection with an allegedly inflated stock price between August 18, 2015 and September 28, 2015, as well as attorneys' fees and costs. On May 20, 2016, an amended complaint was filed in the lawsuit and on July 5, 2016, the Company filed a motion to dismiss the amended complaint. On December 27, 2016, the court granted the Company’s motion to dismiss with prejudice and entered judgment in the Company’s favor. On January 24, 2017, the plaintiffs in this lawsuit filed a motion to alter or amend the judgment. In May 2017, the court denied the plaintiff’s motion to alter or amend the judgment. On June 19, 2017, the plaintiffs filed a notice of appeal to the Sixth Circuit Court of Appeals and on September 14, 2017, they filed their opening brief in support of the appeal. The appeal was fully briefed on December 7, 2017, and it was argued before the Sixth Circuit on March 15, 2018. On September 27, 2018, the Sixth Circuit issued an opinion in which it reversed the district court's dismissal and remanded for further proceedings. On October 11, 2018, the Company filed a petition for rehearing en banc and, on October 23, 2018, the Sixth Circuit Court of Appeals directed plaintiffs to respond to that petition. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome. On May 7, 2018, a purported stockholder of the Company filed a putative class action lawsuit in the United States District Court for the Eastern District of Michigan, captioned Kevin Bailey v. Esperion Therapeutics, Inc., et al. (No. 18-cv-11438). An amended complaint was filed on October 22, 2018, against the Company and certain directors and officers. The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 based on allegedly making false and misleading statements about the facts and circumstances surrounding the Phase 3 trial results for bempedoic acid that the Company announced on May 2, 2018. The lawsuit seeks, among other things, compensatory damages in connection with an allegedly inflated stock price between February 22, 2017, and May 22, 2018, as well as attorneys’ fees and costs. The Company is unable to predict the outcome of this matter and is unable to make a meaningful estimate of the amount or range of loss, if any, that could result from an unfavorable outcome. On July 6, 2018, the Company entered into the first amendment of the lease for the Company’s principal executive office in Ann Arbor, Michigan. The amended lease is to increase the current 7,941 rentable square feet of office space by 11,471 rentable square feet, together with the right to use common areas and facilities in common with the landlord and other tenants. The term of the lease commences with respect to all of the space in the leased premises on the later to occur of (i) the date upon which landlord delivers the premises to the Company under the terms of the lease with the delivery conditions set forth in the lease satisfied and (ii) November 1, 2018 (the “Lease Commencement Date”). The term of the lease shall end 60 months after the Lease Commencement Date. Under the terms of the lease, following the first month (during which the base rent is $0) and the second month (during which the base rent is $15,990), the base rent, subject to certain adjustments, for the leased premises will start at approximately $19,412 per month, plus certain operating expenses and taxes, and shall increase on an annual basis and/or as otherwise provided in the lease agreement. In addition, on May 14, 2018, the Company provided notice of early lease termination for its second Ann Arbor lease of 5,500 square feet to end its tenancy effective November 15, 2018. There have been no other material changes to the Company’s contractual obligations and commitments and contingencies outside the ordinary course of business from those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Investments

Investments	9 Months Ended
	Sep. 30, 2018
Investments
Investments	6. Investments The following table summarizes the Company’s cash equivalents and investments: September 30, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 22,071 $ — $ — $ 22,071 Short-term investments: Certificates of deposit 6,749 — (13) 6,736 U.S. treasury notes 57,401 — (248) 57,153 U.S. government agency securities 68,864 — (290) 68,574 Long-term investments: Certificates of deposit 245 — (2) 243 U.S. treasury notes 4,945 — (7) 4,938 Total $ 160,275 $ — $ (560) $ 159,715 December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 27,302 $ — $ — $ 27,302 U.S. treasury notes 2,999 — — 2,999 Short-term investments: Certificates of deposit 12,429 1 (13) 12,417 U.S treasury notes 97,537 — (225) 97,312 U.S. government agency securities 56,143 — (141) 56,002 Long-term investments: Certificates of deposit 3,863 — (10) 3,853 U.S. treasury notes 27,983 — (209) 27,774 U.S. government agency securities 42,041 — (248) 41,793 Total $ 270,297 $ 1 $ (846) $ 269,452 At September 30, 2018, remaining contractual maturities of investments classified as current on the balance sheets were less than 12 months and remaining contractual maturities of investments classified as long-term were less than two years. During the three and nine months ended September 30, 2018, other income, net in the statements of operations includes interest income on investments of $0.6 million and $2.1 million, and income for the accretion of premiums and discounts on investments of less than $0.1 million and $0.1 million, respectively. During the three and nine months ended September 30, 2017, other income, net in the statements of operations includes interest income on available-for-sale investments of $0.7 million and $1.7 million, and expense for the amortization of premiums and discounts on investments of less than $0.1 million and $0.3 million, respectively. There were no unrealized gains or losses on investments reclassified from accumulated other comprehensive loss to other income in the statements of operations during the three and nine months ended September 30, 2018 and 2017.

Fair Value Measurements

Fair Value Measurements	9 Months Ended
	Sep. 30, 2018
Fair Value Measurements
Fair Value Measurements	7. Fair Value Measurements The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity-specific measurement. 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.” Fair value measurements are defined on a three level hierarchy: Level 1 inputs: Quoted prices for identical assets or liabilities in active markets; Level 2 inputs: Observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities or other inputs that are observable or can be corroborated by market data; and Level 3 inputs: Unobservable inputs that are supported by little or no market activity and require the reporting entity to develop assumptions that market participants would use when pricing the asset or liability. The following table presents the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis: Description Total Level 1 Level 2 Level 3 (in thousands) September 30, 2018 Assets: Money market funds $ 22,071 $ 22,071 $ — $ — Investments: Certificates of deposit 6,979 6,979 — — U.S. treasury notes 62,091 62,091 — — U.S. government agency securities 68,574 — 68,574 — Total assets at fair value $ 159,715 $ 91,141 $ 68,574 $ — December 31, 2017 Assets: Money market funds $ 27,302 $ 27,302 $ — $ — Available-for-sale securities: Certificates of deposit 16,270 16,270 — — U.S. treasury notes 128,085 128,085 — — U.S. government agency securities 97,795 — 97,795 — Total assets at fair value $ 269,452 $ 171,657 $ 97,795 $ — There were no transfers between Levels 1, 2 or 3 during the three and nine months ended September 30, 2018 and 2017.

Stock Compensation

Stock Compensation	9 Months Ended
	Sep. 30, 2018
Stock Compensation
Stock Compensation	8. Stock Compensation 2017 Inducement Equity Plan In May 2017, the Company’s board of directors approved the 2017 Inducement Equity Plan (the “2017 Plan”). The number of shares of common stock available for awards under the 2017 Plan was set to 750,000, with any shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock, or otherwise terminated (other than by exercise) under the 2017 Plan added back to the shares of common stock available for issuance under the 2017 Plan. 2013 Stock Option and Incentive Plan In May 2015, the Company's stockholders approved the amended and restated 2013 Stock Option and Incentive Plan (as amended, the “2013 Plan”). The number of shares of common stock available for awards under the 2013 Plan was set to 2,975,000 shares, plus (i) shares of common stock that are forfeited, cancelled, held back upon the exercise or settlement of an award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of common stock or otherwise terminated (other than by exercise) under the 2013 Plan and the Company's 2008 Incentive Stock Option and Restricted Stock Plan are added back to the shares of common stock available for issuance under the 2013 Plan, and (ii) on January 1, 2016, and each January 1, thereafter, the number of shares of common stock reserved and available for issuance under the 2013 Plan will be cumulatively increased by 2.5% of the number of shares of common stock outstanding on the immediately preceding December 31, or such lesser number of shares of common stock determined by the compensation committee. The 2017 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), unrestricted stock awards and dividend equivalent rights. The 2013 Plan provides for the granting of stock options, stock appreciation rights, restricted stock awards, RSUs, unrestricted stock awards, cash-based awards, performance share awards and dividend equivalent rights. The Company incurs stock-based compensation expense related to stock options and RSUs. The fair value of RSUs is determined by the closing market price of the Company’s common stock on the date of grant. The fair value of stock options is calculated using a Black-Scholes option pricing model. The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation. Accordingly, compensation costs related to equity instruments granted are recognized over the requisite service periods of the awards on a straight-line basis at the grant-date fair value. In accordance with the adoption of ASU 2016-09, the Company accounts for forfeitures as they occur. The following table summarizes the activity relating to the Company’s options to purchase common stock for the nine months ended September 30, 2018: Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Outstanding at December 31, 2017 4,159,151 $ 28.13 7.39 $ 165,385 Granted 1,096,827 $ 60.30 Forfeited or expired (362,415) $ 40.57 Exercised (336,875) $ 33.84 Outstanding at September 30, 2018 4,556,688 $ 34.46 7.23 $ 78,758 The following table summarizes information about the Company’s stock option plan as of September 30, 2018: Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Vested and expected to vest at September 30, 2018 4,556,688 $ 34.46 7.23 $ 78,758 Exercisable at September 30, 2018 2,738,990 $ 28.19 6.18 $ 59,605 During the three and nine months ended September 30, 2018, the Company recognized $5.3 million and $16.6 million, respectively, of stock-based compensation expense related to stock options. During the three and nine months ended September 30, 2017, the Company recognized $4.9 million and $13.8 million, respectively, of stock-based compensation expense related to stock options. As of September 30, 2018, there was $46.3 million of unrecognized stock-based compensation expense related to unvested options, which will be recognized over a weighted-average period of 2.9 years. The following table summarizes the activity relating to the Company’s RSUs for the nine months ended September 30, 2018: Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2017 10,003 $ 57.54 Granted 34,000 $ 67.94 Forfeited or expired (4,691) $ 57.54 Vested (2,812) $ 57.54 Outstanding and unvested at September 30, 2018 36,500 $ 67.23 During the three and nine months ended September 30, 2018, the Company recognized $0.2 million and $0.5 million, respectively, of stock-based compensation expense related to RSUs. During the three and nine months ended September 30, 2017, the Company recognized $0.1 million and $0.3 million, respectively, of stock-based compensation expense recognized related to RSUs. As of September 30, 2018, there was $2.1 million of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted-average period of 3.3 years.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2018
Income Taxes
Income Taxes	9. Income Taxes There was no provision for income taxes for the three and nine months ended September 30, 2018 and 2017, because the Company has incurred operating losses since inception. At September 30, 2018, the Company concluded that it is not more likely than not that the Company will realize the benefit of its deferred tax assets due to its history of losses. Accordingly, a full valuation allowance has been applied against the net deferred tax assets.

Net Loss Per Common Share

Net Loss Per Common Share	9 Months Ended
	Sep. 30, 2018
Net Loss Per Common Share
Net Loss Per Common Share	10. Net Loss Per Common Share Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, warrants for common stock, stock options and unvested RSUs are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect: September 30, December 31, 2018 2017 Warrants for common stock 8,230 185,353 Common shares under option 4,556,688 4,159,151 Unvested RSUs 36,500 10,003 Total potential dilutive shares 4,601,418 4,354,507

The Company and Basis of Pres_2

The Company and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2018
The Company and Basis of Presentation
Basis of Presentation	Basis of Presentation The accompanying condensed financial statements are unaudited and were prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“GAAP”). In the opinion of management, the Company has made all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s financial position and results of operations for the interim periods presented. Certain prior year amounts have been reclassified to conform with current year presentation. Certain information and disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2017, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The results of operations for the interim periods are not necessarily indicative of the results to be expected for a full year, any other interim periods or any future year or period.

Investments (Tables)

Investments (Tables)	9 Months Ended
	Sep. 30, 2018
Investments
Summary of the Company's cash equivalents and investments	September 30, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 22,071 $ — $ — $ 22,071 Short-term investments: Certificates of deposit 6,749 — (13) 6,736 U.S. treasury notes 57,401 — (248) 57,153 U.S. government agency securities 68,864 — (290) 68,574 Long-term investments: Certificates of deposit 245 — (2) 243 U.S. treasury notes 4,945 — (7) 4,938 Total $ 160,275 $ — $ (560) $ 159,715 December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 27,302 $ — $ — $ 27,302 U.S. treasury notes 2,999 — — 2,999 Short-term investments: Certificates of deposit 12,429 1 (13) 12,417 U.S treasury notes 97,537 — (225) 97,312 U.S. government agency securities 56,143 — (141) 56,002 Long-term investments: Certificates of deposit 3,863 — (10) 3,853 U.S. treasury notes 27,983 — (209) 27,774 U.S. government agency securities 42,041 — (248) 41,793 Total $ 270,297 $ 1 $ (846) $ 269,452

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	9 Months Ended
	Sep. 30, 2018
Fair Value Measurements
Schedule of the Company's financial assets and liabilities that have been measured at fair value on a recurring basis	Description Total Level 1 Level 2 Level 3 (in thousands) September 30, 2018 Assets: Money market funds $ 22,071 $ 22,071 $ — $ — Investments: Certificates of deposit 6,979 6,979 — — U.S. treasury notes 62,091 62,091 — — U.S. government agency securities 68,574 — 68,574 — Total assets at fair value $ 159,715 $ 91,141 $ 68,574 $ — December 31, 2017 Assets: Money market funds $ 27,302 $ 27,302 $ — $ — Available-for-sale securities: Certificates of deposit 16,270 16,270 — — U.S. treasury notes 128,085 128,085 — — U.S. government agency securities 97,795 — 97,795 — Total assets at fair value $ 269,452 $ 171,657 $ 97,795 $ —

Stock Compensation (Tables)

Stock Compensation (Tables)	9 Months Ended
	Sep. 30, 2018
Stock Compensation
Summary of activity relating to the Company's options to purchase common stock	Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Outstanding at December 31, 2017 4,159,151 $ 28.13 7.39 $ 165,385 Granted 1,096,827 $ 60.30 Forfeited or expired (362,415) $ 40.57 Exercised (336,875) $ 33.84 Outstanding at September 30, 2018 4,556,688 $ 34.46 7.23 $ 78,758
Summary of information about the stock option plan	Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Vested and expected to vest at September 30, 2018 4,556,688 $ 34.46 7.23 $ 78,758 Exercisable at September 30, 2018 2,738,990 $ 28.19 6.18 $ 59,605
Summary of activity relating to the Company's RSUs	Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2017 10,003 $ 57.54 Granted 34,000 $ 67.94 Forfeited or expired (4,691) $ 57.54 Vested (2,812) $ 57.54 Outstanding and unvested at September 30, 2018 36,500 $ 67.23

Net Loss Per Common Share (Tabl

Net Loss Per Common Share (Tables)	9 Months Ended
	Sep. 30, 2018
Net Loss Per Common Share
Schedule of anti-dilutive securities excluded from the calculation of diluted net loss per share	September 30, December 31, 2018 2017 Warrants for common stock 8,230 185,353 Common shares under option 4,556,688 4,159,151 Unvested RSUs 36,500 10,003 Total potential dilutive shares 4,601,418 4,354,507

Debt (Details)

Debt (Details) - USD ($) $ in Millions	Jun. 30, 2014	Sep. 30, 2018
Credit Facility
Debt
Percentage of final payment equal to amount drawn under the Credit Facility		8.00%
Term A Loan
Debt
Maximum borrowing capacity	$ 5
Interest rate (as a percent)	6.40%
Term A Loan | Secured promissory notes
Debt
Proceeds from issuance of debt	$ 5

Warrants (Details)

Warrants (Details) - USD ($) $ / shares in Units, $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017	Jun. 30, 2014	Jul. 31, 2013
Warrants for common stock
Warrants
Exercise price (in dollars per share)	$ 15.19
Warrants exercised	177,123	71,237
Number of shares of common stock to be purchased against outstanding warrants	8,230
Series A preferred stock warrant
Warrants
Warrants exercised/exercisable into stock (in shares)				1,940,000
Exercise price (in dollars per share)				$ 1
Common stock
Warrants
Exercise price (in dollars per share)			$ 15.19
Common stock | Warrants for common stock
Warrants
Warrants exercised/exercisable into stock (in shares)	159,944	62,525	8,230	277,690
Fair value of warrants			$ 0.1
Share price of common stock (in dollars per share)				$ 6.99

Commitments and contingencies (

Commitments and contingencies (Details) - Office space in Ann Arbor, Michigan	Jul. 06, 2018USD ($)ft²	May 14, 2018ft²
Commitments and contingencies
Current rentable square feet of office space | ft²	7,941
Increase in rentable square feet of office space | ft²	11,471
Operating Lease Term	60 months
Base rent in first month | $	$ 0
Base rate in second month | $	15,990
Base rent thereafter | $	$ 19,412
Early lease termination for its second Ann Arbor lease | ft²		5,500

Investments (Details)

Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Cash equivalents and investments
Gross Unrealized Gains					$ 1
Gross Unrealized Losses	$ (560)		$ (560)		(846)
Total, Amortized Cost	160,275		160,275		270,297
Total, Estimated Fair Value	159,715		159,715		269,452
Amortization of premiums and discounts on investments			134	$ (314)
Other income (expense), net	651	$ 518	2,165	1,189
Other income, net
Cash equivalents and investments
Interest income on investments	600	700	2,100	1,700
Amortization of premiums and discounts on investments			100	(300)
Other income, net | Maximum
Cash equivalents and investments
Amortization of premiums and discounts on investments	100	(100)
Reclassification out of accumulated other comprehensive income (loss)
Cash equivalents and investments
Other income (expense), net	0	$ 0	0	$ 0
U.S. treasury notes
Cash equivalents and investments
Investments, Amortized Cost					2,999
Investments, Estimated Fair Value					2,999
Short-term investments | U.S. treasury notes
Cash equivalents and investments
Investments, Amortized Cost	57,401		57,401		97,537
Gross Unrealized Losses	(248)		(248)		(225)
Investments, Estimated Fair Value	57,153		57,153		97,312
Short-term investments | U.S. government agency securities
Cash equivalents and investments
Investments, Amortized Cost	68,864		68,864		56,143
Gross Unrealized Losses	(290)		(290)		(141)
Investments, Estimated Fair Value	68,574		68,574		56,002
Long-term investments | U.S. treasury notes
Cash equivalents and investments
Investments, Amortized Cost	4,945		4,945		27,983
Gross Unrealized Losses	(7)		(7)		(209)
Investments, Estimated Fair Value	4,938		4,938		27,774
Long-term investments | U.S. government agency securities
Cash equivalents and investments
Investments, Amortized Cost					42,041
Gross Unrealized Losses					(248)
Investments, Estimated Fair Value					41,793
Money market funds
Cash equivalents and investments
Cash equivalents, Estimated Fair Value	22,071		22,071		27,302
Investments, Amortized Cost	22,071		22,071		27,302
Certificates of deposit | Short-term investments
Cash equivalents and investments
Investments, Amortized Cost	6,749		6,749		12,429
Gross Unrealized Gains					1
Gross Unrealized Losses	(13)		(13)		(13)
Investments, Estimated Fair Value	6,736		6,736		12,417
Certificates of deposit | Long-term investments
Cash equivalents and investments
Investments, Amortized Cost	245		245		3,863
Gross Unrealized Losses	(2)		(2)		(10)
Investments, Estimated Fair Value	$ 243		$ 243		$ 3,853

Fair Value Measurements - Recur

Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Assets:
Available-for-sale-securities	$ 5,181		$ 5,181		$ 73,420
Total, Estimated Fair Value	159,715		159,715		269,452
Transfer of assets between levels	0	$ 0	0	$ 0
Transfer of liabilities between levels	0	$ 0	0	$ 0
Recurring fair value measurement
Assets:
Money market funds	22,071		22,071		27,302
Total, Estimated Fair Value	159,715		159,715		269,452
Recurring fair value measurement | U.S. treasury notes
Assets:
Available-for-sale-securities	62,091		62,091		128,085
Recurring fair value measurement | U.S. government agency securities
Assets:
Available-for-sale-securities	68,574		68,574		97,795
Recurring fair value measurement | Certificates of deposit
Assets:
Available-for-sale-securities	6,979		6,979		16,270
Recurring fair value measurement | Level 1
Assets:
Money market funds	22,071		22,071		27,302
Total, Estimated Fair Value	91,141		91,141		171,657
Recurring fair value measurement | Level 1 | U.S. treasury notes
Assets:
Available-for-sale-securities	62,091		62,091		128,085
Recurring fair value measurement | Level 1 | Certificates of deposit
Assets:
Available-for-sale-securities	6,979		6,979		16,270
Recurring fair value measurement | Level 2
Assets:
Total, Estimated Fair Value	68,574		68,574		97,795
Recurring fair value measurement | Level 2 | U.S. government agency securities
Assets:
Available-for-sale-securities	$ 68,574		$ 68,574		$ 97,795

Stock Compensation (Details)

Stock Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	May 31, 2015	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017	May 31, 2017
Stock compensation
Stock-based compensation expense		$ 5,300	$ 4,900	$ 16,600	$ 13,800
Weighted-average period over which remaining unrecognized compensation cost will be recognized				2 years 10 months 24 days
Number of Options
Outstanding at the beginning of period (in shares)				4,159,151
Granted (in shares)				1,096,827
Forfeited or expired (in shares)				(362,415)
Exercised (in shares)				(336,875)
Outstanding at the end of the period (in shares)		4,556,688		4,556,688		4,159,151
Weighted-Average Exercise Price Per Share
Outstanding at the beginning of period (in dollars per share)				$ 28.13
Granted (in dollars per share)				60.30
Forfeited or expired (in dollars per share)				40.57
Exercised (in dollars per share)				33.84
Outstanding at the end of the period (in dollars per share)		$ 34.46		$ 34.46		$ 28.13
Weighted-Average Remaining Contractual Term (Years)
Outstanding at the end of the period				7 years 2 months 23 days		7 years 4 months 21 days
Aggregate Intrinsic Value
Outstanding at the end of the period (in dollars)		$ 78,758		$ 78,758		$ 165,385
Information about the stock option plan
Number of Options, vested and expected to vest (in shares)		4,556,688		4,556,688
Number of Options, exercisable (in shares)		2,738,990		2,738,990
Weighted-Average Exercise Price Per Share, vested and expected to vest (in dollars per share)		$ 34.46		$ 34.46
Weighted-Average Exercise Price Per Share, exercisable (in dollars per share)		$ 28.19		$ 28.19
Weighted-Average Remaining Contractual Term, vested and expected to vest				7 years 2 months 23 days
Weighted-Average Remaining Contractual Term, exercisable				6 years 2 months 5 days
Aggregate Intrinsic Value, vested and expected to vest (in dollars)		$ 78,758		$ 78,758
Aggregate Intrinsic Value, exercisable (in dollars)		59,605		59,605
Additional disclosures
Unrecognized stock-based compensation expense (in dollars)		46,300		46,300
RSUs
Stock compensation
Stock-based compensation expense		200	$ 100	500	$ 300
Unrecognized stock-based compensation expense		$ 2,100		$ 2,100
Weighted-average period over which remaining unrecognized compensation cost will be recognized				3 years 3 months 18 days
Number of Options
Outstanding and unvested at the beginning of period (in shares)				10,003
Granted (in shares)				34,000
Forfeited or expired (in shares)				(4,691)
Vested (in shares)				(2,812)
Outstanding and unvested at the ending of period (in shares)		36,500		36,500		10,003
Weighted-Average Exercise Price Per Share
Outstanding and unvested at the beginning of period (in dollars per share)				$ 57.54
Granted (in dollars per share)				67.94
Forfeited or expired (in dollars per share)				57.54
Vested (in dollars per share)				57.54
Outstanding and unvested at the at the end of the period (in dollars per share)		$ 67.23		$ 67.23		$ 57.54
2017 Inducement Equity Plan | Maximum
Stock compensation
Shares reserved and approved for issuance							750,000
2013 Stock Option and Incentive Plan
Stock compensation
Percentage of increase in the number of shares reserved and available for issuance	2.50%
2013 Stock Option and Incentive Plan | Maximum
Stock compensation
Shares reserved and approved for issuance	2,975,000

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Provision for income taxes
Provision for income taxes	$ 0	$ 0	$ 0	$ 0

Net Loss Per Common Share (Deta

Net Loss Per Common Share (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Net Loss Per Common Share
Total potential dilutive shares	4,601,418	4,354,507
Warrants for common stock
Net Loss Per Common Share
Total potential dilutive shares	8,230	185,353
Common shares under option
Net Loss Per Common Share
Total potential dilutive shares	4,556,688	4,159,151
Unvested RSUs
Net Loss Per Common Share
Total potential dilutive shares	36,500	10,003