Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 01, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | Esperion Therapeutics, Inc. | |
Entity Central Index Key | 0001434868 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
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 | |
Trading Symbol | ESPR | |
Entity Common Stock, Shares Outstanding | 26,917,456 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 174,836 | $ 36,973 |
Restricted cash | 1,193 | |
Short-term investments | 53,692 | 99,050 |
Prepaid clinical development costs | 4,392 | 5,275 |
Right of use operating lease assets | 185 | |
Other prepaid and current assets | 923 | 1,334 |
Total current assets | 235,221 | 142,632 |
Property and equipment, net | 439 | 520 |
Intangible assets | 56 | 56 |
Long-term investments | 243 | |
Right of use operating lease assets | 766 | |
Total assets | 236,482 | 143,451 |
Current liabilities: | ||
Accounts payable | 33,270 | 44,893 |
Accrued clinical development costs | 18,871 | 16,039 |
Other accrued liabilities | 3,774 | 3,401 |
Deferred revenue from collaborations | 3,926 | |
Operating lease liabilities | 184 | |
Total current liabilities | 60,025 | 64,333 |
Deferred revenue from collaborations | 655 | |
Operating lease liabilities | 792 | |
Total liabilities | 61,472 | 64,333 |
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 March 31, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value; 120,000,000 shares authorized as of March 31, 2019 and December 31, 2018; 26,908,202 shares issued and outstanding at March 31, 2019 and 26,824,859 shares issued and outstanding at December 31, 2018 | 27 | 27 |
Additional paid-in capital | 685,816 | 677,511 |
Accumulated other comprehensive loss | (111) | (319) |
Accumulated deficit | (510,722) | (598,101) |
Total stockholders' equity | 175,010 | 79,118 |
Total liabilities and stockholders' equity | $ 236,482 | $ 143,451 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
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 | 26,908,202 | 26,824,859 |
Common stock, shares outstanding | 26,908,202 | 26,824,859 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues: | ||
Total Revenues | $ 145,419 | |
Type of revenue | espr:CollaborationRevenueMember | espr:CollaborationRevenueMember |
Operating expenses: | ||
Research and development | $ 46,308 | $ 40,940 |
General and administrative | 12,182 | 5,954 |
Total operating expenses | 58,490 | 46,894 |
Income (loss) from operations | 86,929 | (46,894) |
Other income, net | 450 | 764 |
Net income (loss) | $ 87,379 | $ (46,130) |
Net income (loss) per common share - basic | $ 3.26 | $ (1.73) |
Net income (loss) per common share - diluted | $ 3.07 | $ (1.73) |
Weighted-average shares outstanding - basic | 26,842,785 | 26,605,189 |
Weighted-average shares outstanding - diluted | 28,449,767 | 26,605,189 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on investments | $ 208 | $ (118) |
Comprehensive income (loss) | $ 87,587 | $ (46,248) |
Statements of Stockholders' Equ
Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2017 | $ 26 | $ 641,801 | $ (396,291) | $ (845) | $ 244,691 |
Balance (in shares) at Dec. 31, 2017 | 26,304,669 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | $ 1 | 9,775 | 9,776 | ||
Exercise of stock options (in shares) | 285,413 | ||||
Exercise of warrants (in shares) | 159,944 | ||||
Vesting of restricted stock options (in shares) | 1,562 | ||||
Stock-based compensation | 5,921 | 5,921 | |||
Other comprehensive gain (loss) | (118) | (118) | |||
Net income (loss) | (46,130) | (46,130) | |||
Balance at Mar. 31, 2018 | $ 27 | 657,497 | (442,421) | (963) | 214,140 |
Balance (in shares) at Mar. 31, 2018 | 26,751,588 | ||||
Balance at Dec. 31, 2018 | $ 27 | 677,511 | (598,101) | (319) | $ 79,118 |
Balance (in shares) at Dec. 31, 2018 | 26,824,859 | 26,824,859 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options | 1,669 | $ 1,669 | |||
Exercise of stock options (in shares) | 80,218 | 80,218 | |||
Vesting of restricted stock options (in shares) | 3,125 | ||||
Stock-based compensation | 6,636 | $ 6,636 | |||
Other comprehensive gain (loss) | 208 | 208 | |||
Net income (loss) | 87,379 | 87,379 | |||
Balance at Mar. 31, 2019 | $ 27 | $ 685,816 | $ (510,722) | $ (111) | $ 175,010 |
Balance (in shares) at Mar. 31, 2019 | 26,908,202 | 26,908,202 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net income (loss) | $ 87,379 | $ (46,130) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation expense | 71 | 61 |
Accretion of premiums and discounts on investments | (75) | |
Stock-based compensation expense | 6,636 | 5,921 |
Changes in assets and liabilities: | ||
Prepaids and other assets | 1,294 | (421) |
Deferred revenue | 4,581 | |
Accounts payable | (11,549) | (8,413) |
Other accrued liabilities | 3,354 | 5,761 |
Net cash provided by (used in) operating activities | 91,691 | (43,221) |
Investing activities | ||
Purchases of investments | (14,620) | |
Proceeds from sales/maturities of investments | 45,885 | 44,903 |
Purchase of property and equipment | (189) | |
Net cash provided by investing activities | 45,696 | 30,283 |
Financing activities | ||
Proceeds from exercise of common stock options | 1,669 | 9,738 |
Payments on long-term debt | (445) | |
Net cash provided by financing activities | 1,669 | 9,293 |
Net increase (decrease) in cash and cash equivalents | 139,056 | (3,645) |
Cash and cash equivalents at beginning of period | 36,973 | 34,468 |
Cash, cash equivalents and restricted cash at end of period | 176,029 | $ 30,823 |
Supplemental disclosure of cash flow information: | ||
Non cash right of use asset | $ 25 |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
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, cost-effective, convenient, 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 bempedoic acid / ezetimibe combination tablet 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. On February 20, 2019, the Company submitted the new drug application (“NDA”) for bempedoic acid and on February 26, 2019, the Company submitted the NDA for the bempedoic acid / ezetimibe combination tablet to the Food and Drug Administration (“FDA”) for LDL-C lowering indications. On May 5, 2019, the Company announced that the FDA accepted the NDAs for bempedoic acid and the bempedoic acid / ezetimibe combination tablet for filing and regulatory review. The Prescription Drug User Fee Act (“PDUFA”) goal date for completion of the bempedoic acid NDA review is set for February 21, 2020, and the PDUFA goal date for completion of the bempedoic acid /ezetimibe combination tablet NDA review is set for February 26, 2020. These dates are consistent with the Company’s expectations and reflect the standard review period. The FDA has communicated that there is no current plan to hold an advisory committee meeting to discuss the applications. On February 11, 2019, the Company submitted the Marketing Authorization Applications (“MAAs”) for bempedoic acid and the bempedoic acid / ezetimibe combination tablet to the European Medicines Agency (“EMA”). On February 28, 2019, the EMA completed formal validation of the MAAs for bempedoic acid and the bempedoic acid / ezetimibe combination tablet for LDL-C lowering indications. The Company is 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 averse. The Company initiated the CLEAR Outcomes CVOT in December 2016 and expects the study to be fully enrolled in the third quarter of 2019. The Company 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 annual operating losses since inception and expects such losses to continue over the foreseeable future. While management believes current cash resources and future cash received from the Company's collaboration agreement with Daiichi Sankyo Europe GmbH ("DSE"), entered into on January 2, 2019, will fund operations for the foreseeable future, management may continue to fund operations and advance the development of the Company's product candidates through a combination of collaborations with third parties, strategic alliances, licensing arrangements, debt financings, royalty-based financings, and private and public equity offerings or through other sources. 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 presentation of the Company’s financial position and results of operations for the interim periods presented. 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, 2018, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. 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 | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. Actual results could differ from those estimates. Cash and Cash Equivalents The Company invests its excess cash in bank deposits, money market accounts, and short-term investments. The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents are reported at fair value. Restricted Cash Restricted cash consists of legally restricted amounts held by financial institutions pursuant to contractual arrangements. Investments Investments are considered to be available-for-sale and are carried at fair value. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity. The cost of investments classified as available-for-sale are adjusted for the amortization of premiums and accretion of discounts to maturity and recorded in other income, net. Realized gains and losses, if any, are determined using the specific identification method and recorded in other income, net. Investments with original maturities beyond 90 days at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the balance sheet date are classified as long-term. Concentration of Credit Risk Cash, cash equivalents, and marketable securities consist of financial instruments that potentially subject the Company to concentrations of credit risk. The Company has established guidelines for investment of its excess cash and believes the guidelines maintain safety and liquidity through diversification of counterparties and maturities. Segment Information The Company views its operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with elevated LDL-C. Fair Value of Financial Instruments The Company’s cash, cash equivalents, restricted cash and investments are carried at fair value. Financial instruments, including other prepaid and current assets, accounts payable and accrued liabilities are carried at cost, which approximates fair value. Debt is carried at amortized cost, which approximates fair value. Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets, generally three to ten years. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the related assets. Impairment of Long-Lived Assets The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value. No impairment losses have been recorded through March 31, 2019. Leases The Company reviews all arrangements to determine if the contract contains a lease or an embedded lease using the criteria in ASC 842. If a lease is identified, the Company reviews the consideration in the contract and separates the lease components from the nonlease components. In addition, the Company reviews the classification of the lease between operating and finance leases. According to ASC 842, lessees should discount lease payments at the lease commencement date using the rate implicit in the lease. If the rate implicit in the lease is not readily determinable, a lessee must use its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and liability. To the extent the rate is not implicit in the lease, the Company uses the incremental borrowing rate it would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. Revenue Recognition a. The Company has entered into an agreement related to its activities to develop, manufacture, and commercialize its product candidates. The Company earns collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where the Company deems the collaborator to be the customer. The Company has adopted ASC 606, Revenue from Contracts with Customers, and under the terms of the standard, revenue is measured as the amount of consideration expected to be entitled to in exchange for transferring promised goods or providing services to a customer. Revenue is recognized when (or as) the Company satisfies performance obligations under the terms of a contract. Depending on the terms of the arrangement, the Company may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied. The collaboration agreement may require the Company to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In the agreement involving multiple goods or services promised to be transferred to a customer, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation. The terms of the agreement typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory. At the inception of the contract, the transaction price reflects the amount of consideration the Company expects to be entitled to in exchange for transferring promised goods or services to its customer. In the arrangement where the Company satisfies performance obligation(s) during the regulatory phase over time, the Company recognizes collaboration revenue typically using an input method on the basis of regulatory costs incurred relative to the total expected cost which determines the extent of progress toward completion. The Company reviews the estimate of the transaction price and the total expected cost each period, and makes revisions to such estimates as necessary. Under the Company's collaboration agreement, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction. The Company receives royalties from the commercialization of such products, and records its share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. The collaborator will provide the Company with estimates of its royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary. Please refer to the discussion in Note 3 “Collaborations with Third Parties” for further discussion of accounting related to the collaboration agreement. Research and Development Research and development expenses consist of costs incurred to further the Company's research and development activities and include salaries and related benefits, costs associated with clinical activities, nonclinical activities, regulatory activities, manufacturing activities to support clinical activities, research-related overhead expenses and fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company. Research and development costs are expensed as incurred. Accrued Clinical Development Costs Outside research costs are a component of research and development expense. These expenses include fees paid to clinical research organizations and other service providers that conduct certain clinical and product development activities on behalf of the Company. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management's estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly. Income Taxes The Company utilizes the liability method of accounting for income taxes as required by ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company has incurred annual operating losses since inception. Accordingly, it is not more likely than not that the Company will realize a tax benefit from its deferred tax assets and as such, it has recorded a full valuation allowance. Warrants The Company accounts for its warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants classified as additional-paid-in-capital are recorded on the Company's balance sheet at their fair value on the date of issuance. The warrants are measured using the Black-Scholes option-pricing model. Stock-Based Compensation 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 calculated using a Black-Scholes option-pricing model. The Company accounts for forfeitures as they occur. Expense is recognized during the period the related services are rendered. Recent Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2018-08, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Accounting Standards Codification (“ASC”) 606 when the collaborative arrangement participant is a customer in the context of a unit of account. 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, included in any interim period, provided an entity has already adopted ASC 606 or does so concurrently with the adoption of this guidance. The Company early adopted this guidance as of January 1, 2019, and implemented the new guidance in its consideration of the accounting for the DSE collaboration signed on January 2, 2019. Refer to Note 3 “Collaborations with Third Parties” and the Collaboration Revenue accounting policy above for further information. In February 2016, the FASB issued ASU 2016-02, which was amended by subsequent updates (collectively the “lease standard” or “ASC 842”), and is intended to improve financial reporting about leasing transactions. The updated guidance requires a lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. The Company adopted the standard on January 1, 2019 using the modified retrospective method. Results for the reporting period beginning after December 31, 2018 have been presented in accordance with the standard, while results for prior periods have not been adjusted. The Company recognized $1.0 million and $1.0 million of operating lease assets and operating lease liabilities, respectively, on the Company’s balance sheets as of January 1, 2019, primarily related to the lease agreement for the Company’s principal executive office. Refer to Note 9 “Leases” for more information on the Company’s leases. 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, 2018. |
Collaborations with Third Parti
Collaborations with Third Parties | 3 Months Ended |
Mar. 31, 2019 | |
Collaborations with Third Parties | |
Collaborations with Third Parties | 3. Collaborations with Third Parties Agreement Terms On January 2, 2019, the Company entered into a license and collaboration agreement with DSE. Pursuant to the agreement, the Company granted DSE exclusive commercialization rights to bempedoic acid and the bempedoic acid / ezetimibe combination tablet in the European Economic Area and Switzerland (“DSE Territory”). DSE will be responsible for commercialization in the DSE Territory. The Company remains responsible for clinical development, regulatory and manufacturing activities for the licensed products globally, including in the DSE Territory. Pursuant to the agreement, the consideration consists of a $150 million upfront cash payment as well as $150 million cash payment to the Company upon first commercial sales in the DSE Territory. The Company is also eligible to receive a substantial additional regulatory milestone payment upon the grant of the marketing authorization in the European Union for the CV risk reduction label, depending on the range of relative risk reduction in the CLEAR Outcomes study. In addition, the Company is eligible to receive additional sales milestone payments related to total net sales achievements for DSE in the DSE Territory. Finally, the Company will receive tiered fifteen percent (15%) to twenty-five percent (25%) royalties on net DSE Territory sales. The agreement calls for both parties to participate in a Joint Collaboration Committee (the “JCC”). The JCC is comprised of executive management from each company and the Company will lead in all aspects related to development and DSE will lead in all aspects related to commercialization in the DSE Territory. Collaboration Revenue The Company considered the guidance under ASC 606 and concluded that the agreement was in the scope of ASC 606. The Company concluded that the upfront payment of $150 million should be included in the transaction price and related to the following performance obligations under the agreement: 1) the license to the Company’s intellectual property and 2) the obligation to provide ongoing regulatory and development activities. The Company used the adjusted market assessment approach in determining the standalone selling price of the Company’s intellectual property and the expected cost plus margin approach in determining the standalone selling price of the Company’s obligation to provide ongoing regulatory and development activities. Accordingly, for the three months ended March 31, 2019, the Company recognized $145.4 million of collaboration revenue related to the $150 million upfront payment. The $145.4 million relates to the performance obligations for the license to the Company’s intellectual property and a portion of ongoing regulatory and development activities conducted during the period ended March 31, 2019, in the amounts of $144.4 million and $1.0, respectively. The remaining $4.6 million of the upfront payment was deferred as of March 31, 2019 due to an on-going performance obligation related to the ongoing regulatory efforts related to the MAA in the DSE Territory. This deferred revenue will be recognized ratably over the period leading up to the approval of the MAA acceptance by the EMA. All future potential milestone amounts were not included in the transaction price, as they were all determined to be fully constrained following the concepts of ASC 606 due to the fact that such amounts hinge on regulatory approval. Additionally, the Company expects that any consideration related to royalties and sales-based milestones will be recognized when the subsequent sales occur. The Company has not yet recognized any revenue for milestone payments as the related regulatory and commercial milestones have not yet been achieved. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2019 | |
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. As of March 31, 2019, 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 | 3 Months Ended |
Mar. 31, 2019 | |
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. On December 3, 2018, the Sixth Circuit denied the Company's petition for en banc rehearing, and on December 11, 2018, the case was returned to the federal district court by mandate from the Sixth Circuit. On December 26, 2018, the Company filed an answer to the amended complaint, and on March 28, 2019, the Company filed its amended answer to the amended complaint. 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 December 15, 2016, a purported stockholder of the Company filed a derivative lawsuit in the Court of Chancery of the State of Delaware against Tim Mayleben, Roger Newton, Mary McGowan, Nicole Vitullo, Dov Goldstein, Daniel Janney, Antonio Gotto Jr., Mark McGovern, Gilbert Omenn, Scott Braunstein, and Patrick Enright. The Company is named as a nominal defendant. The lawsuit alleges that the defendants breached their fiduciary duties to the Company when they made or approved improper statements on August 17, 2015, regarding the Company’s lead product candidate’s path to FDA approval, and failed to ensure that reliable systems of internal controls were in place at the Company. On February 8, 2019, the Company and defendants filed a motion to dismiss the derivative lawsuit. On April 23, 2019, the plaintiff filed an opposition to the motion to dismiss the derivative lawsuit. The lawsuit seeks, among other things, any damages sustained by the Company as a result of the defendants’ alleged breaches of fiduciary duties, including damages related to the above-referenced securities class action, an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution from the defendants, and 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 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 and omissions about the safety and tolerability of bempedoic acid, and specifically facts and circumstances surrounding the Phase 3 trial results for bempedoic acid that the Company announced on May 2, 2018. On November 13, 2018, the Company filed a motion to dismiss the amended complaint, and that motion was fully briefed on December 18, 2018. The lawsuit sought, 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. On February 19, 2019, the court granted the Company’s motion to dismiss with prejudice and entered judgment in the Company’s favor. 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, 2018. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2019 | |
Investments | |
Investments | 6. Investments The following table summarizes the Company’s cash equivalents and investments: March 31, 2019 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 166,196 $ — $ — $ 166,196 Short-term investments: Certificates of deposit 735 — (2) 733 U.S. treasury notes 30,946 3 (53) 30,896 U.S. government agency securities 22,122 — (59) 22,063 Total $ 219,999 $ 3 $ (114) $ 219,888 December 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 34,526 $ — $ — $ 34,526 Short-term investments: Certificates of deposit 3,873 — (7) 3,866 U.S treasury notes 44,897 — (142) 44,755 U.S. government agency securities 50,598 — (169) 50,429 Long-term investments: Certificates of deposit 244 — (1) 243 Total $ 134,138 $ — $ (319) $ 133,819 At March 31, 2019, remaining contractual maturities of investments classified as current on the balance sheets were less than 12 months and at December 31, 2018, remaining contractual maturities of investments classified as long-term were less than two years. During the three months ended March 31, 2019 and 2018, other income, net in the statements of operations includes interest income on available-for-sale of investments of $0.4 million and $0.8 million. Other income, net in the statements of operations includes income for the accretion of premiums and discounts on investments of $0.1 million during the three months March 31, 2019 and expense for the amortization of premiums and discounts on investments of less than $0.1 million during the three months ended March 31, 2018. 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 months ended March 31, 2019 and 2018. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
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) March 31, 2019 Assets: Money market funds $ 166,196 $ 166,196 $ — $ — Investments: Certificates of deposit 733 733 — — U.S. treasury notes 30,896 30,896 — — U.S. government agency securities 22,063 — 22,063 — Total assets at fair value $ 219,888 $ 197,825 $ 22,063 $ — December 31, 2018 Assets: Money market funds $ 34,526 $ 34,526 $ — $ — Available-for-sale securities: Certificates of deposit 4,109 4,109 — — U.S. treasury notes 44,755 44,755 — — U.S. government agency securities 50,429 — 50,429 — Total assets at fair value $ 133,819 $ 83,390 $ 50,429 $ — There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2019 and 2018. |
Stock Compensation
Stock Compensation | 3 Months Ended |
Mar. 31, 2019 | |
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 three months ended March 31, 2019: Weighted-Average Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Options Per Share Term (Years) Value (in thousands) Outstanding at December 31, 2018 5,303,723 $ 37.01 7.42 $ 83,473 Granted 139,500 $ 46.54 — — Forfeited or expired (81,530) $ 50.16 — — Exercised (80,218) $ 20.81 — — Outstanding at March 31, 2019 5,281,475 $ 37.30 7.21 $ 63,263 The following table summarizes information about the Company’s stock option plan as of March 31, 2019: 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 March 31, 2019 5,281,475 $ 37.30 7.21 $ 63,263 Exercisable at March 31, 2019 2,993,824 $ 30.32 5.90 $ 51,567 During the three months ended March 31, 2019 and 2018, the Company recognized $6.4 million and $5.8 million, respectively, of stock-based compensation expense related to stock options. As of March 31, 2019, there was $61.6 million of unrecognized stock-based compensation expense related to unvested options, which will be recognized over a weighted-average period of 3.1 years. The following table summarizes the activity relating to the Company’s RSUs for the three months ended March 31, 2019: Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2018 37,475 $ 66.96 Granted 2,000 $ 46.54 Vested (3,125) $ 73.86 Outstanding and unvested at March 31, 2019 36,350 $ 65.24 During the three months ended March 31, 2019 and 2018, the Company recognized $0.2 million and $0.1 million, respectively, of stock-based compensation expense related to RSUs. As of March 31, 2019, there was $1.9 million of unrecognized stock-based compensation expense related to unvested RSUs, which will be recognized over a weighted-average period of 3.0 years. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Leases | 9. Leases The Company has operating leases primarily related to the Company’s principal executive office and other IT related equipment. The lease for the principal executive office has a lease term of 5 years and the IT equipment primarily has a term of 3 years. During the three months ended March 31, 2019, the Company recognized $0.1 million of operating lease costs, recognized on the Condensed Statements of Operations, and paid cash for the amounts included in the measurement of lease liabilities of $0.1 million, which were included in operating cash flows on the Condensed Statements of Cash Flows. At March 31, 2019, the weighted-average remaining lease term of operating leases was 4.5 years and the weighted average discount rate was 8.6%. There were no right of use assets obtained in exchange for lease obligations in the three months ended March 31, 2019. The Company had no additional operating and finance leases that have not yet commenced as of March 31, 2019. The following table summarizes the Company’s future maturities of operating lease liabilities as of March 31, 2019: (in thousands) 2019 $ 195 2020 266 2021 249 2022 256 2023 216 Total lease payments 1,182 Less imputed interest 206 Total $ 976 The following table summarizes supplemental balance sheet information related to leases as of March 31, 2019: Operating Leases (in thousands) Right of use operating lease assets (short-term) $ 185 Right of use operating lease assets (long-term) 766 Total right of use operating lease assets $ 951 Operating lease liabilities (short-term) $ 184 Operating lease liabilities (long-term) 792 Total lease obligations under operating leases $ 976 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | 10. Income Taxes There was no provision for income taxes for the three months ended March 31, 2019 and 2018, because the Company has incurred annual operating losses since inception. At March 31, 2019, the Company continues to conclude 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 Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 2019 | |
Net Income (Loss) Per Common Share | |
Net Income (Loss) Per Common Share | 11. Net Income (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, including shares that potentially could be dilutive if they were exercised during the period, determined using the treasury-stock method. March 31, March 31, 2019 2018 Net income (loss) (in thousands) $ 87,379 $ (46,130) Weighted average shares - basic 26,842,785 26,605,189 Effect of dilutive shares: Warrants for common stock 5,443 — Common shares under option 1,601,288 — Unvested RSUs 251 — Dilutive shares 1,606,982 — Weighted average shares - diluted 28,449,767 26,605,189 Net income (loss) per common share - basic $ 3.26 $ (1.73) Net income (loss) per common share - diluted $ 3.07 $ (1.73) The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect: March 31, March 31, 2019 2018 Warrants for common stock — 8,230 Common shares under option 2,288,037 4,211,025 Unvested RSUs 34,350 13,750 Total potential dilutive shares 2,322,387 4,233,005 |
Statements of Cash Flows
Statements of Cash Flows | 3 Months Ended |
Mar. 31, 2019 | |
Statements of Cash Flows | |
Statements of Cash Flows | 12. Statements of Cash Flows The following table provides a reconciliation of cash and cash equivalents and restricted cash presented on the Condensed Balance Sheets to the same amounts presented on the Condensed Statements of Cash Flows on March 31, 2019 and 2018. March 31, March 31, 2019 2018 Cash and cash equivalents $ 174,836 $ 30,823 Restricted cash 1,193 — Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows $ 176,029 $ 30,823 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and related disclosures. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company invests its excess cash in bank deposits, money market accounts, and short-term investments. The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents are reported at fair value. |
Restricted Cash | Restricted Cash Restricted cash consists of legally restricted amounts held by financial institutions pursuant to contractual arrangements. |
Investments | Investments Investments are considered to be available-for-sale and are carried at fair value. Unrealized gains and losses, if any, are reported as a separate component of stockholders’ equity. The cost of investments classified as available-for-sale are adjusted for the amortization of premiums and accretion of discounts to maturity and recorded in other income, net. Realized gains and losses, if any, are determined using the specific identification method and recorded in other income, net. Investments with original maturities beyond 90 days at the date of purchase and which mature at, or less than twelve months from, the balance sheet date are classified as current. Investments with a maturity beyond twelve months from the balance sheet date are classified as long-term. |
Concentration of Credit Risk | Concentration of Credit Risk Cash, cash equivalents, and marketable securities consist of financial instruments that potentially subject the Company to concentrations of credit risk. The Company has established guidelines for investment of its excess cash and believes the guidelines maintain safety and liquidity through diversification of counterparties and maturities. |
Segment Information | Segment Information The Company views its operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with elevated LDL-C. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s cash, cash equivalents, restricted cash and investments are carried at fair value. Financial instruments, including other prepaid and current assets, accounts payable and accrued liabilities are carried at cost, which approximates fair value. Debt is carried at amortized cost, which approximates fair value. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the respective assets, generally three to ten years. Leasehold improvements are amortized over the lesser of the lease term or the estimated useful lives of the related assets. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value. No impairment losses have been recorded through March 31, 2019. |
Leases | Leases The Company reviews all arrangements to determine if the contract contains a lease or an embedded lease using the criteria in ASC 842. If a lease is identified, the Company reviews the consideration in the contract and separates the lease components from the nonlease components. In addition, the Company reviews the classification of the lease between operating and finance leases. According to ASC 842, lessees should discount lease payments at the lease commencement date using the rate implicit in the lease. If the rate implicit in the lease is not readily determinable, a lessee must use its incremental borrowing rate for purposes of classifying the lease and measuring the right-of-use asset and liability. To the extent the rate is not implicit in the lease, the Company uses the incremental borrowing rate it would have to pay to borrow on a collateralized basis over a similar term in an amount equal to the lease payments in a similar economic environment. |
Revenue Recognition | Revenue Recognition a. The Company has entered into an agreement related to its activities to develop, manufacture, and commercialize its product candidates. The Company earns collaboration revenue in connection with a collaboration agreement to develop and/or commercialize product candidates where the Company deems the collaborator to be the customer. The Company has adopted ASC 606, Revenue from Contracts with Customers, and under the terms of the standard, revenue is measured as the amount of consideration expected to be entitled to in exchange for transferring promised goods or providing services to a customer. Revenue is recognized when (or as) the Company satisfies performance obligations under the terms of a contract. Depending on the terms of the arrangement, the Company may defer the recognition of all or a portion of the consideration received as the performance obligations are satisfied. The collaboration agreement may require the Company to deliver various rights, services, and/or goods across the entire life cycle of a product or product candidate. In the agreement involving multiple goods or services promised to be transferred to a customer, the Company must assess, at the inception of the contract, whether each promise represents a separate performance obligation (i.e., is "distinct"), or whether such promises should be combined as a single performance obligation. The terms of the agreement typically include consideration to be provided to the Company in the form of non-refundable up-front payments, development milestones, sales milestones, and royalties on sales of products within a respective territory. At the inception of the contract, the transaction price reflects the amount of consideration the Company expects to be entitled to in exchange for transferring promised goods or services to its customer. In the arrangement where the Company satisfies performance obligation(s) during the regulatory phase over time, the Company recognizes collaboration revenue typically using an input method on the basis of regulatory costs incurred relative to the total expected cost which determines the extent of progress toward completion. The Company reviews the estimate of the transaction price and the total expected cost each period, and makes revisions to such estimates as necessary. Under the Company's collaboration agreement, product sales and cost of sales may be recorded by the Company's collaborators as they are deemed to be the principal in the transaction. The Company receives royalties from the commercialization of such products, and records its share of the variable consideration, representing a percentage of net product sales, as collaboration revenue in the period in which such underlying sales occur and costs are incurred by the collaborator. The collaborator will provide the Company with estimates of its royalties for such quarter; these estimates are reconciled to actual results in the subsequent quarter, and the royalty is adjusted accordingly, as necessary. Please refer to the discussion in Note 3 “Collaborations with Third Parties” for further discussion of accounting related to the collaboration agreement. |
Research and Development | Research and Development Research and development expenses consist of costs incurred to further the Company's research and development activities and include salaries and related benefits, costs associated with clinical activities, nonclinical activities, regulatory activities, manufacturing activities to support clinical activities, research-related overhead expenses and fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company. Research and development costs are expensed as incurred. |
Accrued Clinical Development Costs | Accrued Clinical Development Costs Outside research costs are a component of research and development expense. These expenses include fees paid to clinical research organizations and other service providers that conduct certain clinical and product development activities on behalf of the Company. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management's estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly. |
Income Taxes | Income Taxes The Company utilizes the liability method of accounting for income taxes as required by ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company has incurred annual operating losses since inception. Accordingly, it is not more likely than not that the Company will realize a tax benefit from its deferred tax assets and as such, it has recorded a full valuation allowance. |
Warrants | Warrants The Company accounts for its warrants issued in connection with its various financing transactions based upon the characteristics and provisions of the instrument. Warrants classified as additional-paid-in-capital are recorded on the Company's balance sheet at their fair value on the date of issuance. The warrants are measured using the Black-Scholes option-pricing model. |
Stock-Based Compensation | Stock-Based Compensation 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 calculated using a Black-Scholes option-pricing model. The Company accounts for forfeitures as they occur. Expense is recognized during the period the related services are rendered. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2018-08, which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under Accounting Standards Codification (“ASC”) 606 when the collaborative arrangement participant is a customer in the context of a unit of account. 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, included in any interim period, provided an entity has already adopted ASC 606 or does so concurrently with the adoption of this guidance. The Company early adopted this guidance as of January 1, 2019, and implemented the new guidance in its consideration of the accounting for the DSE collaboration signed on January 2, 2019. Refer to Note 3 “Collaborations with Third Parties” and the Collaboration Revenue accounting policy above for further information. In February 2016, the FASB issued ASU 2016-02, which was amended by subsequent updates (collectively the “lease standard” or “ASC 842”), and is intended to improve financial reporting about leasing transactions. The updated guidance requires a lessee to recognize assets and liabilities for leases with lease terms of more than twelve months. The Company adopted the standard on January 1, 2019 using the modified retrospective method. Results for the reporting period beginning after December 31, 2018 have been presented in accordance with the standard, while results for prior periods have not been adjusted. The Company recognized $1.0 million and $1.0 million of operating lease assets and operating lease liabilities, respectively, on the Company’s balance sheets as of January 1, 2019, primarily related to the lease agreement for the Company’s principal executive office. Refer to Note 9 “Leases” for more information on the Company’s leases. 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, 2018. |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Investments | |
Summary of the Company's cash equivalents and investments | March 31, 2019 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 166,196 $ — $ — $ 166,196 Short-term investments: Certificates of deposit 735 — (2) 733 U.S. treasury notes 30,946 3 (53) 30,896 U.S. government agency securities 22,122 — (59) 22,063 Total $ 219,999 $ 3 $ (114) $ 219,888 December 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) Cash equivalents: Money market funds $ 34,526 $ — $ — $ 34,526 Short-term investments: Certificates of deposit 3,873 — (7) 3,866 U.S treasury notes 44,897 — (142) 44,755 U.S. government agency securities 50,598 — (169) 50,429 Long-term investments: Certificates of deposit 244 — (1) 243 Total $ 134,138 $ — $ (319) $ 133,819 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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) March 31, 2019 Assets: Money market funds $ 166,196 $ 166,196 $ — $ — Investments: Certificates of deposit 733 733 — — U.S. treasury notes 30,896 30,896 — — U.S. government agency securities 22,063 — 22,063 — Total assets at fair value $ 219,888 $ 197,825 $ 22,063 $ — December 31, 2018 Assets: Money market funds $ 34,526 $ 34,526 $ — $ — Available-for-sale securities: Certificates of deposit 4,109 4,109 — — U.S. treasury notes 44,755 44,755 — — U.S. government agency securities 50,429 — 50,429 — Total assets at fair value $ 133,819 $ 83,390 $ 50,429 $ — |
Stock Compensation (Tables)
Stock Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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, 2018 5,303,723 $ 37.01 7.42 $ 83,473 Granted 139,500 $ 46.54 — — Forfeited or expired (81,530) $ 50.16 — — Exercised (80,218) $ 20.81 — — Outstanding at March 31, 2019 5,281,475 $ 37.30 7.21 $ 63,263 |
Summary of information about the Company's 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 March 31, 2019 5,281,475 $ 37.30 7.21 $ 63,263 Exercisable at March 31, 2019 2,993,824 $ 30.32 5.90 $ 51,567 |
Summary of activity relating to the Company's RSUs | Weighted-Average Number of Fair Value Per RSUs Share Outstanding and unvested at December 31, 2018 37,475 $ 66.96 Granted 2,000 $ 46.54 Vested (3,125) $ 73.86 Outstanding and unvested at March 31, 2019 36,350 $ 65.24 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases | |
Schedule of future maturities of operating lease liabilities | The following table summarizes the Company’s future maturities of operating lease liabilities as of March 31, 2019: (in thousands) 2019 $ 195 2020 266 2021 249 2022 256 2023 216 Total lease payments 1,182 Less imputed interest 206 Total $ 976 |
Schedule of supplemental balance sheet information related to leases | The following table summarizes supplemental balance sheet information related to leases as of March 31, 2019: Operating Leases (in thousands) Right of use operating lease assets (short-term) $ 185 Right of use operating lease assets (long-term) 766 Total right of use operating lease assets $ 951 Operating lease liabilities (short-term) $ 184 Operating lease liabilities (long-term) 792 Total lease obligations under operating leases $ 976 |
Net Income (Loss) Per Common _2
Net Income (Loss) Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Net Income (Loss) Per Common Share | |
Schedule of Earnings Per Share, Basic and Diluted | March 31, March 31, 2019 2018 Net income (loss) (in thousands) $ 87,379 $ (46,130) Weighted average shares - basic 26,842,785 26,605,189 Effect of dilutive shares: Warrants for common stock 5,443 — Common shares under option 1,601,288 — Unvested RSUs 251 — Dilutive shares 1,606,982 — Weighted average shares - diluted 28,449,767 26,605,189 Net income (loss) per common share - basic $ 3.26 $ (1.73) Net income (loss) per common share - diluted $ 3.07 $ (1.73) |
Schedule of the shares outstanding were excluded from the calculation of diluted net income (loss) per share due to their anti-dilutive effect | March 31, March 31, 2019 2018 Warrants for common stock — 8,230 Common shares under option 2,288,037 4,211,025 Unvested RSUs 34,350 13,750 Total potential dilutive shares 2,322,387 4,233,005 |
Statements of Cash Flows (Table
Statements of Cash Flows (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Statements of Cash Flows | |
Schedule of reconciliation of cash and cash equivalents and restricted cash presented on the Condensed Balance Sheets to the same amounts presented on the Condensed Statements of Cash Flows | March 31, March 31, 2019 2018 Cash and cash equivalents $ 174,836 $ 30,823 Restricted cash 1,193 — Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows $ 176,029 $ 30,823 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($)segment | Jan. 01, 2019USD ($) | |
Segment Information | ||
Number of operating segments | segment | 1 | |
Impairment of Long-Lived Assets | ||
Impairment losses | $ 0 | |
Recent Accounting Pronouncements | ||
Operating lease assets | 951,000 | |
Operating lease liabilities | $ 976,000 | |
ASU 2016-02 | ||
Recent Accounting Pronouncements | ||
Operating lease assets | $ 1,000,000 | |
Operating lease liabilities | $ 1,000,000 | |
Property and equipment | Minimum | ||
Property and Equipment, Net | ||
Estimated useful lives | 3 years | |
Property and equipment | Maximum | ||
Property and Equipment, Net | ||
Estimated useful lives | 10 years |
Collaborations with Third Par_2
Collaborations with Third Parties (Details) - USD ($) $ in Thousands | Jan. 02, 2019 | Mar. 31, 2019 |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Total Revenues | $ 145,419 | |
Deferred revenue, Upfront payments | 4,600 | |
License for the intellectual property | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Total Revenues | 144,400 | |
Ongoing regulatory and development activities | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Total Revenues | $ 1,000 | |
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Upfront cash payment | $ 150,000 | |
Cash payment to the Company upon first commercial sales in the DSE Territory | $ 150,000 | |
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | Minimum | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Percentage of royalties to be received on the net sales | 15.00% | |
Collaborative Arrangement | Daiichi Sankyo Europe GmbH ("DSE") | Maximum | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Percentage of royalties to be received on the net sales | 25.00% |
Warrants (Details)
Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 31, 2019 | Jun. 30, 2014 |
Warrants for common stock | ||
Warrants | ||
Exercise price (in dollars per share) | $ 15.19 | |
Number of shares of common stock to be purchased against outstanding warrants | 8,230 | |
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) | 8,230 | |
Fair value of warrants | $ 0.1 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Cash equivalents and investments | |||
Gross Unrealized Gains | $ 3 | ||
Gross Unrealized Losses | (114) | $ (319) | |
Total, Amortized Cost | 219,999 | 134,138 | |
Total, Estimated Fair Value | 219,888 | 133,819 | |
Accretion (amortization) of premiums and discounts on investments | 75 | ||
Other income, net | 450 | $ 764 | |
Interest Income | |||
Cash equivalents and investments | |||
Interest income on investments | 400 | 800 | |
Other income, net | |||
Cash equivalents and investments | |||
Accretion (amortization) of premiums and discounts on investments | 100 | ||
Other income, net | Maximum | |||
Cash equivalents and investments | |||
Accretion (amortization) of premiums and discounts on investments | (100) | ||
Reclassification out of accumulated other comprehensive income (loss) | |||
Cash equivalents and investments | |||
Other income, net | 0 | $ 0 | |
Short-term investments | U.S. treasury notes | |||
Cash equivalents and investments | |||
Investments, Amortized Cost | 30,946 | 44,897 | |
Gross Unrealized Gains | 3 | ||
Gross Unrealized Losses | (53) | (142) | |
Investments, Estimated Fair Value | 30,896 | 44,755 | |
Short-term investments | U.S. government agency securities | |||
Cash equivalents and investments | |||
Investments, Amortized Cost | 22,122 | 50,598 | |
Gross Unrealized Losses | (59) | (169) | |
Investments, Estimated Fair Value | 22,063 | 50,429 | |
Money market funds | |||
Cash equivalents and investments | |||
Cash equivalents, Estimated Fair Value | 166,196 | 34,526 | |
Investments, Amortized Cost | 166,196 | 34,526 | |
Certificates of deposit | Short-term investments | |||
Cash equivalents and investments | |||
Investments, Amortized Cost | 735 | 3,873 | |
Gross Unrealized Losses | (2) | (7) | |
Investments, Estimated Fair Value | $ 733 | 3,866 | |
Certificates of deposit | Long-term investments | |||
Cash equivalents and investments | |||
Investments, Amortized Cost | 244 | ||
Gross Unrealized Losses | (1) | ||
Investments, Estimated Fair Value | $ 243 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Assets: | |||
Available-for-sale-securities | $ 243 | ||
Total, Estimated Fair Value | $ 219,888 | 133,819 | |
Transfer of assets between levels | 0 | $ 0 | |
Transfer of liabilities between levels | 0 | $ 0 | |
Recurring fair value measurement | |||
Assets: | |||
Money market funds | 166,196 | 34,526 | |
Total, Estimated Fair Value | 219,888 | 133,819 | |
Recurring fair value measurement | U.S. treasury notes | |||
Assets: | |||
Available-for-sale-securities | 30,896 | 44,755 | |
Recurring fair value measurement | U.S. government agency securities | |||
Assets: | |||
Available-for-sale-securities | 22,063 | 50,429 | |
Recurring fair value measurement | Certificates of deposit | |||
Assets: | |||
Available-for-sale-securities | 733 | 4,109 | |
Recurring fair value measurement | Level 1 | |||
Assets: | |||
Money market funds | 166,196 | 34,526 | |
Total, Estimated Fair Value | 197,825 | 83,390 | |
Recurring fair value measurement | Level 1 | U.S. treasury notes | |||
Assets: | |||
Available-for-sale-securities | 30,896 | 44,755 | |
Recurring fair value measurement | Level 1 | Certificates of deposit | |||
Assets: | |||
Available-for-sale-securities | 733 | 4,109 | |
Recurring fair value measurement | Level 2 | |||
Assets: | |||
Total, Estimated Fair Value | 22,063 | 50,429 | |
Recurring fair value measurement | Level 2 | U.S. government agency securities | |||
Assets: | |||
Available-for-sale-securities | $ 22,063 | $ 50,429 |
Stock Compensation (Details)
Stock Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
May 31, 2015 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | May 31, 2017 | |
Stock compensation | |||||
Stock-based compensation expense | $ 6,400 | $ 5,800 | |||
Weighted-average period over which remaining unrecognized compensation cost will be recognized | 3 years 1 month 6 days | ||||
Number of Options | |||||
Outstanding at the beginning of period (in shares) | 5,303,723 | ||||
Granted (in shares) | 139,500 | ||||
Forfeited or expired (in shares) | (81,530) | ||||
Exercised (in shares) | (80,218) | ||||
Outstanding at the end of the period (in shares) | 5,281,475 | 5,303,723 | |||
Weighted-Average Exercise Price Per Share | |||||
Outstanding at the beginning of period (in dollars per share) | $ 37.01 | ||||
Granted (in dollars per share) | 46.54 | ||||
Forfeited or expired (in dollars per share) | 50.16 | ||||
Exercised (in dollars per share) | 20.81 | ||||
Outstanding at the end of the period (in dollars per share) | $ 37.30 | $ 37.01 | |||
Weighted-Average Remaining Contractual Term (Years) | |||||
Outstanding at the end of the period | 7 years 2 months 16 days | 7 years 5 months 1 day | |||
Aggregate Intrinsic Value | |||||
Outstanding at the end of the period (in dollars) | $ 63,263 | $ 83,473 | |||
Information about the stock option plan | |||||
Number of Options, vested and expected to vest (in shares) | 5,281,475 | ||||
Number of Options, exercisable (in shares) | 2,993,824 | ||||
Weighted-Average Exercise Price Per Share, vested and expected to vest (in dollars per share) | $ 37.30 | ||||
Weighted-Average Exercise Price Per Share, exercisable (in dollars per share) | $ 30.32 | ||||
Weighted-Average Remaining Contractual Term, vested and expected to vest | 7 years 2 months 16 days | ||||
Weighted-Average Remaining Contractual Term, exercisable | 5 years 10 months 24 days | ||||
Aggregate Intrinsic Value, vested and expected to vest (in dollars) | $ 63,263 | ||||
Aggregate Intrinsic Value, exercisable (in dollars) | 51,567 | ||||
Additional disclosures | |||||
Unrecognized stock-based compensation expense (in dollars) | 61,600 | ||||
RSUs | |||||
Stock compensation | |||||
Stock-based compensation expense | 200 | $ 100 | |||
Unrecognized stock-based compensation expense | $ 1,900 | ||||
Weighted-average period over which remaining unrecognized compensation cost will be recognized | 3 years | ||||
Number of Options | |||||
Outstanding and unvested at the beginning of period (in shares) | 37,475 | ||||
Granted (in shares) | 2,000 | ||||
Vested (in shares) | (3,125) | ||||
Outstanding and unvested at the ending of period (in shares) | 36,350 | 37,475 | |||
Weighted-Average Exercise Price Per Share | |||||
Outstanding and unvested at the beginning of period (in dollars per share) | $ 66.96 | ||||
Granted (in dollars per share) | 46.54 | ||||
Vested (in dollars per share) | 73.86 | ||||
Outstanding and unvested at the at the end of the period (in dollars per share) | $ 65.24 | $ 66.96 | |||
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 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases | |
Operating lease costs | $ 100 |
Cash paid for the amounts included in the measurement of lease liabilities | $ 100 |
Weighted-average remaining lease term of operating leases | 4 years 6 months |
Weighted average discount rate | 8.60% |
Right of use assets obtained in exchange for lease obligations | $ 0 |
Future maturities of operating lease liabilities | |
2019 | 195 |
2020 | 266 |
2021 | 249 |
2022 | 256 |
2023 | 216 |
Total lease payments | 1,182 |
Less imputed interest | 206 |
Total | 976 |
Supplemental balance sheet information related to leases | |
Right of use operating lease assets (short-term) | 185 |
Right of use operating lease assets (long-term) | 766 |
Total right of use operating lease assets | 951 |
Operating lease liabilities (short-term) | 184 |
Operating lease liabilities (long-term) | 792 |
Total lease obligations under operating leases | $ 976 |
Principal executive office | |
Leases | |
Lease term | 5 years |
IT equipment | |
Leases | |
Lease term | 3 years |
Income Taxes - Other (Details)
Income Taxes - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Provision for income taxes | ||
Provision for income taxes | $ 0 | $ 0 |
Net Income (Loss) Per Common _3
Net Income (Loss) Per Common Share - Calculation of Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net income (loss) | $ 87,379 | $ (46,130) |
Weighted average shares - basic | 26,842,785 | 26,605,189 |
Dilutive shares | 1,606,982 | |
Weighted average shares - diluted | 28,449,767 | 26,605,189 |
Net income (loss) per common share - basic (in dollars per share) | $ 3.26 | $ (1.73) |
Net income (loss) per common share - diluted (in dollars per share) | $ 3.07 | $ (1.73) |
Warrants for common stock | ||
Dilutive shares | 5,443 | |
Common shares under option | ||
Dilutive shares | 1,601,288 | |
Unvested RSUs | ||
Dilutive shares | 251 |
Net Income (Loss) Per Common _4
Net Income (Loss) Per Common Share - Calculation of diluted net loss per share (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Income (Loss) Per Common Share | ||
Total potential dilutive shares | 2,322,387 | 4,233,005 |
Warrants for common stock | ||
Net Income (Loss) Per Common Share | ||
Total potential dilutive shares | 8,230 | |
Common shares under option | ||
Net Income (Loss) Per Common Share | ||
Total potential dilutive shares | 2,288,037 | 4,211,025 |
Unvested RSUs | ||
Net Income (Loss) Per Common Share | ||
Total potential dilutive shares | 34,350 | 13,750 |
Statements of Cash Flows (Detai
Statements of Cash Flows (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Statements of Cash Flows | ||||
Cash and cash equivalents | $ 174,836 | $ 36,973 | $ 30,823 | |
Restricted cash | 1,193 | |||
Total cash and cash equivalents and restricted cash shown on the Condensed Statements of Cash Flows | $ 176,029 | $ 36,973 | $ 30,823 | $ 34,468 |