Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 01, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | ARDX | |
Entity Registrant Name | Ardelyx, Inc. | |
Entity Central Index Key | 1,437,402 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 62,134,530 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | [1] |
Current assets: | |||
Cash and cash equivalents | $ 75,015 | $ 75,383 | |
Short-term investments | 111,391 | 58,593 | |
Accounts receivable | 167 | 10,796 | |
Unbilled license revenue | 5,000 | ||
Prepaid expenses and other current assets | 7,749 | 4,940 | |
Total current assets | 199,322 | 149,712 | |
Property and equipment, net | 5,996 | 8,032 | |
Other assets | 1,350 | 159 | |
Total assets | 206,668 | 157,903 | |
Current liabilities: | |||
Accounts payable | 2,269 | 3,933 | |
Accrued compensation and benefits | 2,306 | 3,229 | |
Uncharged license fees | 1,000 | ||
Accrued and other liabilities | 9,974 | 10,709 | |
Total current liabilities | 15,549 | 17,871 | |
Loan payable, long term | 49,020 | ||
Other long-term liabilities | 651 | 720 | |
Total liabilities | 65,220 | 18,591 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively. | |||
Common stock, $0.0001 par value; 300,000,000 shares authorized; 62,106,121 and 47,534,979 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively. | 6 | 5 | |
Additional paid-in capital | 479,109 | 417,568 | |
Accumulated deficit | (337,650) | (278,214) | |
Accumulated other comprehensive loss | (17) | (47) | |
Total stockholders' equity | 141,448 | 139,312 | |
Total liabilities and stockholders' equity | $ 206,668 | $ 157,903 | |
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
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 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 62,106,121 | 47,534,979 |
Common stock, shares outstanding | 62,106,121 | 47,534,979 |
Condensed Consolidated Statemen
Condensed Consolidated 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 | |
Revenues: | ||||
Total revenues | $ 172 | $ 2,522 | ||
Cost of revenue | 2 | 466 | ||
Gross profit | 170 | 2,056 | ||
Operating expenses: | ||||
Research and development | 17,941 | $ 15,365 | 47,337 | $ 58,325 |
General and administrative | 5,961 | 5,860 | 18,290 | 17,752 |
Total operating expenses | 23,902 | 21,225 | 65,627 | 76,077 |
Loss from operations | (23,732) | (21,225) | (63,571) | (76,077) |
Other (expense) income, net | (394) | 501 | 141 | 1,624 |
Loss before provision for income taxes | (24,126) | (20,724) | (63,430) | (74,453) |
Provision for income taxes | 6 | |||
Net loss | $ (24,126) | $ (20,724) | $ (63,436) | $ (74,453) |
Net loss per common share, basic and diluted | $ (0.39) | $ (0.44) | $ (1.17) | $ (1.57) |
Shares used in computing net loss per share - basic and diluted | 62,071,397 | 47,464,310 | 54,204,907 | 47,404,039 |
Comprehensive loss: | ||||
Net loss | $ (24,126) | $ (20,724) | $ (63,436) | $ (74,453) |
Unrealized (loss) gain on available-for-sale securities, net of tax | 19 | 30 | 30 | 61 |
Comprehensive loss | (24,107) | $ (20,694) | (63,406) | $ (74,392) |
Licensing | ||||
Revenues: | ||||
Total revenues | 2,320 | |||
Other | ||||
Revenues: | ||||
Total revenues | $ 172 | $ 202 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | ||
Operating activities | |||
Net loss | $ (63,436) | $ (74,453) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation expense | 2,005 | 1,965 | |
Amortization of deferred financing costs | 144 | 360 | |
Amortization of deferred compensation for services | 177 | 142 | |
Amortization of premium on investment securities | (708) | 57 | |
Stock-based compensation | 6,976 | 7,001 | |
Change in derivative liabilities | 56 | ||
Non-cash interest expense relating to loan payable | 164 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 10,629 | ||
Prepaid expenses and other assets | (3,908) | (2,178) | |
Accounts payable | (1,609) | (3,182) | |
Accrued compensation and benefits | (923) | (439) | |
Accrued and other liabilities | (1,405) | 839 | |
Net cash used in operating activities | (51,838) | (69,888) | |
Investing activities | |||
Proceeds from maturities of investments | 95,450 | 109,923 | |
Sales and redemptions of investments | 850 | 16,857 | |
Purchases of investments | (148,360) | (70,384) | |
Purchases of property and equipment | (24) | (2,327) | |
Net cash (used in) provided by investing activities | (52,084) | 54,069 | |
Financing activities | |||
Proceeds from loan payable, net of issuance costs | 49,292 | ||
Proceeds from underwritten public offering, net of issuance costs | 53,770 | ||
Proceeds from issuance of common stock under stock plans | 492 | 675 | |
Net cash provided by financing activities | 103,554 | 675 | |
Net decrease in cash and cash equivalents | (368) | (15,144) | |
Cash and cash equivalents at beginning of period | 75,383 | [1] | 74,598 |
Cash and cash equivalents at end of period | 75,015 | $ 59,454 | |
Supplementary disclosure of non-cash financing information: | |||
Issuance of derivative in connection with issuance of loan payable | $ 546 | ||
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Ardelyx, Inc., or “the Company,” is a specialized biopharmaceutical company focused on developing disruptive medicines for the treatment of cardiorenal disease. Tenapanor, a first-in-class inhibitor of NHE3, is being evaluated in a second Phase 3 trial for the treatment of hyperphosphatemia in patients with end-stage renal disease, or ESRD, who are on dialysis. The Company is also advancing a small molecule potassium secretagogue program, RDX013, for the potential treatment of hyperkalemia. In September 2018, the Company submitted a New Drug Application, or NDA, to the United States Food and Drug Administration, or FDA, for tenapanor for the treatment of people with irritable bowel syndrome with constipation, or IBS-C. The Company operates in only one business segment, which is the development of biopharmaceutical products. Basis of Presentation These unaudited condensed consolidated financial statements and the related footnote information of the Company have been prepared pursuant to the requirements of the Securities and Exchange Commission, or the SEC, for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, the accompanying interim unaudited condensed consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the information for the periods presented. The results for the three and nine months ended September 30, 2018, are not necessarily indicative of results to be expected for the entire year ending December 31, 2018, or future operating periods. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10‑K filed with the SEC (the “2017 Form 10‑K”). The balance sheet at December 31, 2017, has been derived from the audited consolidated financial statements at that date, as filed with the 2017 Form 10‑K. The accompanying condensed consolidated financial statements include the accounts of Ardelyx, Inc. and its wholly-owned subsidiary, Ardelyx Cayman Islands, which was placed into voluntary liquidation in December 2017, and have been prepared in accordance with U.S. GAAP. Intercompany transactions and balances have been eliminated in consolidation. |
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 | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates. Accrued Research and Development Expenses As part of the process of preparing its financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with its personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers submit its monthly invoices in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known to the Company at that time. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to: · contract research organizations, or CROs, in connection with clinical studies; · investigative sites in connection with clinical studies; · vendors related to product manufacturing, development and distribution of clinical supplies; and · vendors in connection with preclinical development activities. The Company records expenses related to clinical studies and manufacturing development activities based on its estimates of the services received and efforts expended pursuant to contracts with multiple CROs and manufacturing vendors that conduct and manage these activities on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the Company will adjust the accrued or prepaid expense balance accordingly. To date, there have been no material differences from the Company’s estimates to the amounts actually incurred. Revenue Recognition On January 1, 2018 the Company adopted the new standard for Revenue from Contracts with Customers, ASC 606, on a modified retrospective method as an adjustment to the opening balance of retained earnings of the annual reporting period. As a result of the adoption of the new standard, on January 1, 2018, the Company recorded the following: (i) an increase in current assets of $5.0 million representing a future receivable related to the first milestone under the Company’s license agreement with Kyowa Hakko Kirin Co., Ltd., or KHK, which the Company believes is not materially at risk, (ii) an increase in current liabilities of $1.0 million representing a future payable related to the corresponding payment to AstraZeneca AB, or AstraZeneca, in accordance with the Company’s termination agreement with AstraZeneca and (iii) a related decrease in its accumulated deficit of approximately $4.0 million as the new standard permits revenue from milestones that possess certain criteria to be recognized earlier as the new standard contains different recognition criteria related to milestones than under the previous standard, Revenue Recognition, Multiple-Element Arrangements - Licensing revenues , ASC 605. The Company enters into licensing agreements which are within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and future royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. Milestone Payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment. Manufacturing Supply Services: Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered as options. The Company assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. If the Company is entitled to additional payments when the customer exercises these options, any payments are recorded in other revenues when the customer obtains control of the goods, which is upon delivery. Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. Derivatives and Hedging Activities The Company accounts for its derivative instruments as either assets or liabilities on the condensed consolidated balance sheet and measures them at fair value. Derivatives are adjusted to fair value through other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss. Reclassification Approximately $0.2 million in the nine months ended September 30, 2017, which was previously recorded within “Proceeds from issuance of common stock under stock plans” in Operating activities in the Statement of Cash Flows, has been reclassified as a Changes in operating assets and liabilities item “Prepaid expenses and other assets” within Operating activities. Recent Accounting Pronouncements New Accounting Pronouncements - Recently Adopted In August 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. These amendments eliminate, modify, or integrate into other SEC requirements certain disclosure rules. Among the amendments is the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in quarterly reports on Form 10-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments are effective for all filings made on or after November 5, 2018. In light of the anticipated timing of effectiveness of the amendments and expected proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC’s Division of Corporate Finance issued a Compliance and Disclosure Interpretation related to Exchange Act Forms, or CDI – Question 105.09, that provides transition guidance related to this disclosure requirement. CDI – Question 105.09 states that the SEC would not object if the filer’s first presentation of the changes in shareholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments. As such, the Company adopted these SEC amendments on November 5, 2018 and will present the analysis of changes in stockholders’ equity in its interim financial statements in its March 31, 2019 Form 10-Q. The Company does not anticipate that the adoption of these SEC amendments will have a material effect on the Company’s financial position, results of operations, cash flows or shareholders’ equity. In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. In 2015 and 2016, the FASB issued additional ASUs related to Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the modified retrospective transition method. Impact of Adoption The Company, on adopting Topic 606 on January 1, 2018, has used the modified retrospective transition method with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application. The following adjustments were recorded in the opening balance on January 1, 2018. December 31, Adjustments January 1, 2017 Due to Topic 606 2018 Total current assets $ — 5,000 $ 5,000 Total current liabilities — 1,000 1,000 Accumulated deficit $ — 4,000 $ 4,000 As a result of adopting Topic 606 on January 1, 2018, the following financial statement line items in the Company’s Condensed Consolidated Balance Sheet at September 30, 2018 and the Condensed Consolidated Statement of Income for the nine months ended September 30, 2018 were affected. September 30, 2018 As Reported Under Topic 605 Effect of Change Total current assets $ 199,322 194,322 $ 5,000 Total current liabilities 15,549 14,549 1,000 Accumulated deficit (337,650) (341,650) 4,000 Nine Months Ended September 30, 2018 As Reported Under Topic 605 Effect of Change Revenue: Licensing revenue $ 2,320 2,320 $ — Other revenue 202 202 — Cost of revenue 466 466 — In May 2017, FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting (ASU 2017-09). The amendments included in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update will be applied prospectively to an award modified on or after the adoption date. On January 1, 2018, we adopted ASU 2017-09 and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which replaces most current lease guidance when it becomes effective. This standard update intends to increase the transparency and improve comparability by requiring entities to recognize assets and liabilities on the balance sheet for all leases, with certain exceptions. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, related to another transition method in lease accounting. If elected, the transition method allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We are evaluating the impact of the adoption of this standard on the consolidated financial statements. The Company plans to adopt the new guidance effective January 1, 2019, using a modified retrospective approach and based on initial assessment of ASU No.2016-02 as of September 30, 2018, the Company believes the largest impact to its balance sheet will be from recognizing a right of use asset and corresponding lease liability related to its property leases in Fremont and Boston. The Company is continuing to evaluate the full impact the adoption of Topic 842 will have on its consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. ASU 2018-07 expands the scope of Topic 718, Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes Subtopic 505-50, Equity-Based Payments to Non-Employees. ASU 2018-07 is effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year and early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . ASU 2018-13 considers cost and benefits, and removes, modifies and adds disclosure requirements in Topic 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty is to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are to be applied retrospectively to all periods presented. ASU 2018-13 is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year and early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. The Company has reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or no material effect is expected on its condensed consolidated financial statements as a result of future adoption. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 9 Months Ended |
Sep. 30, 2018 | |
Cash, Cash Equivalents and Investments | |
Cash, Cash Equivalents and Investments | NOTE 3. CASH, CASH EQUIVALENTS AND INVESTMENTS Securities classified as cash, cash equivalents and short-term investments as of September 30, 2018 and December 31, 2017, are summarized below (in thousands). Estimated fair value is based on quoted market prices for these investments. September 30, 2018 Gross Unrealized Amortized Cost Gains Losses Fair Value Cash and cash equivalents: Cash $ 2,787 — — $ 2,787 Money market funds 66,235 — — 66,235 Corporate bonds 1,999 — — 1,999 Commercial paper 3,994 — — 3,994 Total cash and cash equivalents $ 75,015 $ — $ — $ 75,015 Short-term investments U.S. treasury securities 7,959 — (2) 7,957 Corporate bonds 34,449 — (9) 34,440 Commercial paper 61,116 — (5) 61,111 Asset-backed securities 7,884 — (1) 7,883 Total short-term investments $ 111,408 $ — $ (17) $ 111,391 Total cash equivalents and investments $ 186,423 $ — $ (17) $ 186,406 December 31, 2017 Gross Unrealized Amortized Cost Gains Losses Fair Value Cash and cash equivalents: Cash $ 5,882 $ — $ — $ 5,882 Money market funds 68,651 — — 68,651 Commercial paper 850 — — 850 Total cash equivalents and investments $ 75,383 $ — $ — $ 75,383 Short-term investments U.S. treasury securities $ 3,994 — (1) $ 3,993 Corporate bonds 26,853 — (26) 26,827 Commercial paper 19,584 — (14) 19,570 Asset-backed securities 8,209 — (6) 8,203 Total short-term investments $ 58,640 $ — $ (47) $ 58,593 Total cash equivalents and investments $ 134,023 $ — $ (47) $ 133,976 Cash equivalents consist of money market funds and other debt securities with original maturities of three months or less at the time of purchase, and the carrying amount is a reasonable approximation of fair value. The Company invests its cash in high quality securities of financial and commercial institutions. These securities are carried at fair value, which is based on readily available market information, with unrealized gains and losses included in “accumulated other comprehensive loss” within stockholders’ equity on the Company’s condensed consolidated balance sheets. The Company uses the specific identification method to determine the amount of realized gains or losses on sales of marketable securities. Realized gains or losses have been insignificant and are included in “other income, net” in the consolidated condensed statement of operations. All available-for-sale securities held as of September 30, 2018, had contractual maturities of less than one year. The Company’s available-for-sale securities are subject to a periodic impairment review. The Company considers a debt security to be impaired when its fair value is less than its carrying cost, in which case the Company would further review the investment to determine whether it is other-than-temporarily impaired. When the Company evaluates an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, intent to sell, and whether it is more likely than not the Company will be required to sell the investment before the recovery of its cost basis. If an investment is other-than-temporarily impaired, the Company writes it down through the statement of operations to its fair value and establishes that value as a new cost basis for the investment. The Company did not identify any of its available-for-sale securities as other-than-temporarily impaired in any of the periods presented. As of September 30, 2018, no investment was in a continuous unrealized loss position for more than one year and the Company believes that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 4. FAIR VALUE MEASUREMENTS Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 – Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by the Company at the reporting date. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets. Level 2 – Valuations based on inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Examples of assets and liabilities utilizing Level 2 inputs are corporate bonds, commercial paper, certificates of deposit and over-the-counter derivatives. Level 3 – Valuations based on unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy (in thousands): September 30, 2018 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 66,235 $ 66,235 $ — $ — U.S. treasury securities 7,957 7,957 — — Corporate bonds 36,439 — 36,439 — Commercial paper 65,105 — 65,105 — Asset-backed securities 7,883 — 7,883 — Total $ 183,619 $ 74,192 $ 109,427 $ — Liabilities: Derivative liability for exit fee $ 556 $ — $ — $ 556 Foreign currency derivative contracts 46 $ — $ 46 $ — Total $ 602 $ — $ 46 $ 556 December 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 68,651 $ 68,651 $ — $ — U.S. treasury securities 3,993 3,993 — — Corporate bonds 26,827 — 26,827 — Commercial paper 20,420 — 20,420 — Asset-backed securities 8,203 — 8,203 — Total $ 128,094 $ 72,644 $ 55,450 $ — Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds, U.S. treasury securities and U.S. government-sponsored agency bonds as Level 1. When quoted market prices are not available for the specific security, the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes and issuer spreads. The Company classifies corporate bonds, commercial paper and asset-backed securities as Level 2. In certain cases, where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3. There were no transfers between Level 1 and Level 2 during the periods presented. In May 2018, pursuant to the loan and security agreement with Solar Capital Ltd. and Western Alliance Bank (see “Note 6. Borrowings”), the Company entered into an Exit Fee Agreement under which the Company agreed to pay $1.5 million in cash, or the Exit Fee, upon any change of control transaction in respect of the Company or if the Company obtains both (i) FDA approval of tenapanor in the treatment of hyperphosphatemia in ESRD patients on dialysis and (ii) FDA approval of tenapanor for the treatment of patients with IBS-C. Notwithstanding the prepayment or termination of the Term Loan, the Company’s obligation to pay the Exit Fee will expire May 16, 2028. The Company evaluated that the Exit Fee is a freestanding derivative which should be accounted for at fair value on a recurring basis. The estimated fair value of the Exit Fee is recorded as a derivative liability and included in accrued and other liabilities on the accompanying consolidated balance sheet. As of September 30, 2018, the estimated fair value of the Exit Fee was determined to be $556,000 and the derivative liability for Exit Fee increased by $10,000 from $546,000 as of June 30, 2018, primarily as a result of a change to the inputs of the calculation and the time value of money, which is presented as a component of change in derivative liabilities in the Company’s condensed consolidated statements of operations. The fair value of the derivative liability was determined using a discounted cash flow analysis and is classified as a Level 3 measurement within the fair value hierarchy since the Company’s valuation utilized significant unobservable inputs. Specifically, the key assumptions included in the calculation of the estimated fair value of the derivative instrument include: i) the Company’s estimates of both the probability and timing of a potential $1.5 million payment to Solar Capital Ltd. and Western Alliance Bank as a result of the FDA approvals, and ii) a discount rate which was derived from the Company's estimated cost of debt. Generally, increases or decreases in the probability of occurrence would result in a directionally similar impact in the fair value measurement of the derivative instrument and it is estimated that a 10% increase (decrease) in the probability of occurrence would result in a fair value fluctuation of approximately $0.1 million. Changes in the fair value of recurring measurements included in Level 3 of the fair value hierarchy are presented as changes in derivative liabilities for Exit Fee in the Company's condensed consolidated statements of operations and were as follows for the nine months ended September 30, 2018 (in thousands): Estimated Fair Value of Derivative Liability Balance of Level 3 Liabilities at December 31, 2017 $ — Initial estimated fair value of derivative liability for exit fee 546 Balance of Level 3 Liabilities at June 30, 2018 546 Change in estimated fair value of derivative liability for exit fee 10 Balance of Level 3 Liabilities at September 30, 2018 $ 556 The carrying amounts reflected in the balance sheets for cash equivalents, short-term investments, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values at both September 30, 2018 and December 31, 2017, due to their short-term nature. |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS Foreign Currency Exchange Rate Exposure The Company uses forward foreign currency exchange contracts to secure a foreign currency exchange rate when a contract is executed involving payment in a foreign currency in order to minimize cash flow exposure to fluctuating exchange rates. Such exposure results from portions of the Company’s forecasted cash outflows being denominated in currencies other than the U.S. dollar, primarily the Swiss franc. The derivative instruments the Company uses to hedge this exposure are not designated as cash flow hedges, and as a result, changes in their fair value are recorded in other (expense) income, net, on the Company's condensed consolidated statements of operations and comprehensive loss. The fair values of forward foreign currency exchange contracts are estimated using current exchange rates and interest rates and take into consideration the current creditworthiness of the counterparties. Information regarding the specific instruments used by the Company to hedge its exposure to foreign currency exchange rate fluctuations is provided below. The following table summarizes the Company’s forward foreign currency exchange contracts outstanding as of September 30, 2018 (notional amounts in thousands): Aggregate Notional Amount in Foreign Foreign Exchange Contracts Number of Contracts Currency Maturity Swiss francs 2 6,002 Nov. 2018 - Mar. 2019 Total 2 The maximum length of time over which the Company is hedging its exposure to changes in exchange rates is March 2019. The derivative liability balance of $45,566 is recorded in accrued and other liabilities on the condensed consolidated balance sheet as of September 30, 2018, and the net loss associated with the Company's derivative instruments of $45,566 is recognized in other (expense) income, net on the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2018. As of September 30, 2018, we had open forward foreign currency exchange contracts with notional amounts of $6.2 million. A hypothetical 10% strengthening in the Swiss francs exchange rates compared with the U.S. dollar relative to exchange rates at September 30, 2018 would have resulted in a reduction in the value received over the remaining life of these contracts of approximately $0.6 million and, if realized, would negatively affect earnings during the remaining life of the contracts. |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2018 | |
Borrowings | |
Borrowings | NOTE 6. BORROWINGS Solar Capital and Western Alliance Bank Loan Agreement On May 16, 2018, Borrowings under the Term Loan bear interest at a floating per annum rate equal to 7.45% plus the one-month LIBOR. The Company is permitted to make interest-only payments on the Term Loan through June 1, 2020, unless the Company achieves its primary endpoint in the Phase 3 study of tenapanor for the treatment of hyperphosphatemia in end-stage renal disease patients on dialysis, prior to June 1, 2020, in which case The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants. Additionally, if the Company elects to enter into an exclusive license agreement for the use of its intellectual property in the United States (other than for tenapanor for hyperphosphatemia or for our FXR and TGR5 agonist programs) and has not obtained the written consent of the Lenders to enter into such license agreement, the Company has agreed to maintain unrestricted cash and cash equivalents of at least $50.0 million, until the Company achieves its primary endpoint in the second Phase 3 study of tenapanor for the treatment of hyperphosphatemia in end-stage renal disease patients on dialysis. As of September 30, 2018, the Company was in compliance with all of the covenants set forth in the Loan Agreement. In addition, the Loan Agreement contains customary events of default that entitle the Lender to cause the Company’s indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the Term Loan, including our cash. Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4.0% per annum will apply to all obligations owed under the Loan Agreement. As of September 30, 2018, to the Company’s knowledge, there were no facts or circumstances in existence giving rise to an event of default. As of September 30, 2018, assuming the principal payments start on December 1, 2020, the Company’s future debt payment obligations towards the principal and final fee, excluding interest payments and exit fee, for the respective fiscal years are as follows (in thousands): 2018 $ — 2019 — 2020 2,083 2021 25,000 2022 24,892 Total principal and final fee payments 51,975 Less: Unamortized discount and debt issuance costs (1,144) Less: Unaccreted value of final fee (1,811) Loan payable, long term $ 49,020 |
Shareholders Equity
Shareholders Equity | 9 Months Ended |
Sep. 30, 2018 | |
Shareholders Equity | |
Shareholders Equity | NOTE 7. SHAREHOLDERS EQUITY On May 22, 2018, the Company entered into an underwriting agreement with Jefferies LLC and Leerink Partners LLC, as representatives of several underwriters, or collectively the Underwriters, pursuant to which the Company agreed to issue and sell 12,500,000 shares of its common stock, par value $0.0001 per share, or Common Stock, to the Underwriters, or the Offering. The shares were sold at a public offering price of $4.00 per share, and were purchased by the Underwriters from the Company at a price of $3.76 per Share. Under the terms of the underwriting agreement, the Company granted the Underwriters the option, for 30 days, to purchase up to 1,875,000 additional shares of Common Stock at the public offering price. On May 25, 2018, the Offering closed and the Company completed the sale and issuance of 12,500,000 shares of Common Stock. The Company received net proceeds from the Offering of approximately $46.7 million, after deducting the Underwriters’ discounts and commissions and offering expenses payable by the Company. Subsequently, on June 25, 2018, the Underwriters exercised their option to purchase the full 1,875,000 shares of Common Stock at the public offering price of $4.00 per share that were purchased by the Underwriters from the Company at a price of $3.76 per Share and the Company received additional net proceeds of $7.1 million, after deducting the Underwriters’ commissions. In aggregate, the Company completed the sale and issuance of 14,375,000 shares of Common Stock and received net proceeds from the Offering of approximately $53.8 million, after deducting the Underwriters’ discounts, commissions and offering expenses. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | NOTE 8. STOCK-BASED COMPENSATION The following table presents stock-based compensation expense recognized for stock options, restricted stock units, or RSUs, performance-based restricted stock units, or PRSUs, and the Company’s employee stock purchase program, or ESPP, in the Company’s statements of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 880 $ 916 $ 2,770 $ 3,361 General and administrative 1,068 1,186 4,206 3,640 Total $ 1,948 $ 2,102 $ 6,976 $ 7,001 In January 2017, the Company granted 161,865 PRSUs to certain employees that vest upon the achievement of specified performance conditions, subject to the employees’ continued service relationship with the Company through the date of achievement. At September 30, 2018, 125,895 of these PRSUs were outstanding. None of the PRSUs vested during each of the three and nine months ended September 30, 2018 and 2017. However, the related compensation cost is recognized as an expense over the estimated vesting period when achievement of the milestone is considered probable. The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted. The Company recognized $0.1 million and $0.5 million of related expense during the three and nine months ended September 30, 2018, respectively. In July 2018, the Company granted 903,374 PRSUs to its employees that vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with the Company through the achievement date. At September 30, 2018, 903,374 of these PRSUs were outstanding. Based on the evaluation of the performance conditions at September 30, 2018, the Company has not recorded stock-based compensation expense for the three months ended September 30, 2018 related to these PRSUs. The Company will continue to evaluate the performance conditions for these PRSUs at each reporting period and will record compensation expense related to the PRSUs accordingly. At September 30, 2018, the Company had $14.4 million, $1.2 million, $0.1 million and $0.1 million of total unrecognized compensation expense, net of estimated forfeitures, related to stock option grants, RSU grants, PRSU grants and the ESPP, respectively, that will be recognized over an average vesting period of 2.8 years, 1.7 years, 0.1 years and 0.4 years, respectively. Option Exercises For each of the three and nine months ended September 30, 2018, zero options were exercised to purchase shares of the Company's common stock, with zero net proceeds to the Company. For the three and nine months ended September 30, 2017, 4,833 and 33,159 options, respectively, were exercised to purchase shares of the Company’s common stock, with insignificant net proceeds to the Company. Restricted Stock Units For each of the three and nine months ended September 30, 2018, the Company issued zero shares, of its common stock upon vesting of RSUs or PRSUs to its employees. For the three and nine months ended September 30, 2017, the Company issued zero and 15,188 shares, respectively, of its common stock due to vesting of RSUs. Employee Stock Purchase Plan In February 2018, the Company sold 68,589 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $4.38 per share with proceeds to the Company of approximately $0.3 million. In August 2018, the Company sold 52,370 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $3.66 per share with proceeds to the Company of approximately $0.2 million. Issuance of Common Stock for Services For the three and nine months ended September 30, 2018, the Company issued zero and 75,183 shares, respectively, of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under the Company’s Non-Employee Director Compensation Program. The shares issued were valued at $0.3 million based on the fair value of the common stock on the date of grant. For the three and nine months ended September 30, 2017, the Company issued zero and 46,858 shares, respectively, of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under the Company’s Non-Employee Director Compensation Program. The shares issued were valued at $0.2 million based on the fair value of the common stock on the date of grant. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Share | |
Net Loss Per Share | NOTE 9. NET LOSS PER SHARE Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of stock-based awards and warrants. Diluted net loss per common share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options, and unvested restricted common stock and stock units. As the Company had net losses for the three and nine months ended September 30, 2018 and 2017, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of net loss per common share (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (24,126) $ (20,724) $ (63,436) $ (74,453) Denominator: Weighted average common shares outstanding - basic and diluted 62,071,397 47,464,310 54,204,907 47,404,039 Net loss per share - basic and diluted $ (0.39) $ (0.44) $ (1.17) $ (1.57) For the three and nine months ended September 30, 2018 the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 8.3 million and 8.1 million, respectively. For the three and nine months ended September 30, 2017, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 7.0 million and 6.6 million, respectively. |
Accrued and Other Liabilities
Accrued and Other Liabilities | 9 Months Ended |
Sep. 30, 2018 | |
Accrued and Other Liabilities | |
Accrued and Other Liabilities | NOTE 10. ACCRUED AND OTHER LIABILITIES Accrued liabilities and other liabilities consist of the following (in thousands): September 30, December 31, 2018 2017 Accrued clinical and non-clinical expenses $ 6,792 $ 5,447 Accrued contract manufacturing expenses 977 3,980 Accrued professional and consulting services 627 530 Derivative liability for exit fee 556 — Foreign currency derivative contract 46 — Other 976 752 $ 9,974 $ 10,709 |
Collaboration and Licensing Agr
Collaboration and Licensing Agreements | 9 Months Ended |
Sep. 30, 2018 | |
Collaboration and Licensing Agreements | |
Collaboration and Licensing Agreements | NOTE 11. COLLABORATION AND LICENSING AGREEMENTS Kyowa Hakko Kirin Co., Ltd., or KHK In November 2017, the Company entered into an exclusive license agreement with KHK, or the KHK Agreement, for the development, commercialization and distribution of tenapanor in Japan for cardiorenal indications. The Company assessed these arrangements in accordance with Topic 606 and concluded that the contract counterparty, KHK, is a customer. Under the terms of the KHK Agreement, the Company received $30.0 million in up-front license fees which was recognized as revenue when the agreement was executed. Based on the Company’s assessment, it identified that the license and the manufacturing supply services were its material performance obligations at the inception of the agreement, and as such each of the performance obligations are distinct. Additionally, on January 1, 2018, the Company recorded an increase in current assets of $5.0 million and an increase in current liabilities of $1.0 million related to the first milestone under the KHK Agreement which the Company believes is not materially at risk, reflecting revenues and cost of revenue, respectively, that would have been recognized in the fourth quarter 2017 if the Company had adopted Topic 606 prior to January 1, 2018. In addition to the up-front license fee of $30.0 million, the Company may be entitled to receive up to $55.0 million in total development milestones and 8.5 billion yen in commercialization milestones, as well as reimbursement of cost, plus a reasonable overhead for the supply of product and high-teen royalties on net sales throughout the term of the agreement. For the three and nine months ended September 30, 2018, $0.2 million of other revenue was recorded for manufacturing supply of tenapanor and other materials to KHK for KHK’s product development and clinical trials in Japan, in accordance with the Company’s agreement with KHK, and a negligible cost of revenue was recorded pursuant to the AstraZeneca Termination Agreement. Shanghai Fosun Pharmaceutical Industrial Development Co. Ltd., or Fosun Pharma In December 2017, the Company entered into an exclusive license agreement with Fosun Pharma, or the Fosun Agreement, for the development, commercialization and distribution of tenapanor in China for both hyperphosphatemia and irritable bowel syndrome with constipation, or IBS-C. The Company assessed these arrangements in accordance with Topic 606 and concluded that the contract counterparty, Fosun Pharma, is a customer. Under the terms of the Fosun Agreement, the Company received $12.0 million in up-front license fees which was recognized as revenue when the agreement was executed. Based on the Company’s assessment, it identified that the license and the manufacturing supply services were its material performance obligations at the inception of the agreement, and as such each of the performance obligations are distinct. In addition, the Company may be entitled to additional development and commercialization milestones of up to $113.0 million, as well as reimbursement of cost plus a reasonable overhead for the supply of product and tiered royalties on net sales ranging from the mid-teens to 20%. For the three and nine months ended September 30, 2018, there was no revenue recorded related to the Fosun Agreement. Knight Therapeutics, Inc., or Knight In March 2018, the Company entered into an exclusive license agreement with Knight Therapeutics, Inc., or the Knight Agreement, for the development, commercialization and distribution of tenapanor in Canada for hyperphosphatemia and IBS-C. The Company assessed these arrangements in accordance with Topic 606 and concluded that the contract counterparty, Knight, is a customer. Based on the Company’s assessment, it identified that the license and the manufacturing supply services were its material performance obligations at the inception of the agreement, and as such each of the performance obligations are distinct. Under the terms of the agreement, the Company is eligible to receive up to CAD 25 million in total payments including an up-front payment and development and sales milestones, reimbursement of supply costs on a schedule specifying cost per tablet, with a reasonable mark up for overhead, as well as double-digit tiered royalties on net sales. For the three and nine months ended September 30, 2018, zero and $2.3 million of revenue, respectively, was recorded related to the Knight Agreement, and zero and $0.5 million of cost of revenue, respectively, was recorded pursuant to the AstraZeneca Termination Agreement. AstraZeneca In June 2015, the Company entered into a termination agreement with AstraZeneca, or the AstraZeneca Termination Agreement, pursuant to which the Company remains liable to pay AstraZeneca license fees for (i) future royalties at a royalty rate of 10% of net sales of tenapanor or other NHE3 products by the Company or its licensees, and (ii) 20% of non-royalty revenue received from a new collaboration partner should the Company elect to license, or otherwise provide rights to develop and commercialize tenapanor or another NHE3 inhibitor, up to a maximum of $75.0 million in aggregate for (i) and (ii). To date in aggregate, the Company has recognized $9.9 million of the $75.0 million, recorded as cost of revenue comprising (i) $6.0 million and $2.4 million related to the KHK Agreement and Fosun Agreement, respectively, recorded in 2017 (ii) $0.5 million related to the Knight Agreement recorded in the nine month period ended September 30, 2018 and (iii) $1.0 million related to the KHK Agreement associated with a future milestone which the Company believes is not materially at risk for which the Company recorded an increase in current liabilities in the nine month period ended September 30, 2018 reflecting the amount that will be paid to AstraZeneca when KHK achieves the milestone. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Contingencies | |
Contingencies | NOTE 12. CONTINGENCIES From time to time the Company may be involved in claims arising in connection with its business. Based on information currently available, the Company believes that the amount, or range, of reasonably possible losses in connection with any pending actions against it in excess of established reserves, in the aggregate, not to be material to its consolidated financial condition or cash flows. However, losses may be material to the Company’s operating results for any particular future period, depending on the level of income or loss for such period. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates. |
Accrued Research and Development Expenses | Accrued Research and Development Expenses As part of the process of preparing its financial statements, the Company is required to estimate its accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with its personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers submit its monthly invoices in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses as of each balance sheet date in its financial statements based on facts and circumstances known to the Company at that time. The Company periodically confirms the accuracy of its estimates with the service providers and makes adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to: · contract research organizations, or CROs, in connection with clinical studies; · investigative sites in connection with clinical studies; · vendors related to product manufacturing, development and distribution of clinical supplies; and · vendors in connection with preclinical development activities. The Company records expenses related to clinical studies and manufacturing development activities based on its estimates of the services received and efforts expended pursuant to contracts with multiple CROs and manufacturing vendors that conduct and manage these activities on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the Company will adjust the accrued or prepaid expense balance accordingly. To date, there have been no material differences from the Company’s estimates to the amounts actually incurred. |
Revenue Recognition | Revenue Recognition On January 1, 2018 the Company adopted the new standard for Revenue from Contracts with Customers, ASC 606, on a modified retrospective method as an adjustment to the opening balance of retained earnings of the annual reporting period. As a result of the adoption of the new standard, on January 1, 2018, the Company recorded the following: (i) an increase in current assets of $5.0 million representing a future receivable related to the first milestone under the Company’s license agreement with Kyowa Hakko Kirin Co., Ltd., or KHK, which the Company believes is not materially at risk, (ii) an increase in current liabilities of $1.0 million representing a future payable related to the corresponding payment to AstraZeneca AB, or AstraZeneca, in accordance with the Company’s termination agreement with AstraZeneca and (iii) a related decrease in its accumulated deficit of approximately $4.0 million as the new standard permits revenue from milestones that possess certain criteria to be recognized earlier as the new standard contains different recognition criteria related to milestones than under the previous standard, Revenue Recognition, Multiple-Element Arrangements - Licensing revenues , ASC 605. The Company enters into licensing agreements which are within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and future royalties on net sales of licensed products. Each of these payments results in license, collaboration and other revenues, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success. Milestone Payments: At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment. Manufacturing Supply Services: Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered as options. The Company assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. If the Company is entitled to additional payments when the customer exercises these options, any payments are recorded in other revenues when the customer obtains control of the goods, which is upon delivery. Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements. |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company accounts for its derivative instruments as either assets or liabilities on the condensed consolidated balance sheet and measures them at fair value. Derivatives are adjusted to fair value through other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss. |
Reclassification | Reclassification Approximately $0.2 million in the nine months ended September 30, 2017, which was previously recorded within “Proceeds from issuance of common stock under stock plans” in Operating activities in the Statement of Cash Flows, has been reclassified as a Changes in operating assets and liabilities item “Prepaid expenses and other assets” within Operating activities. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements - Recently Adopted In August 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. These amendments eliminate, modify, or integrate into other SEC requirements certain disclosure rules. Among the amendments is the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in quarterly reports on Form 10-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments are effective for all filings made on or after November 5, 2018. In light of the anticipated timing of effectiveness of the amendments and expected proximity of effectiveness to the filing date for most filers’ quarterly reports, the SEC’s Division of Corporate Finance issued a Compliance and Disclosure Interpretation related to Exchange Act Forms, or CDI – Question 105.09, that provides transition guidance related to this disclosure requirement. CDI – Question 105.09 states that the SEC would not object if the filer’s first presentation of the changes in shareholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments. As such, the Company adopted these SEC amendments on November 5, 2018 and will present the analysis of changes in stockholders’ equity in its interim financial statements in its March 31, 2019 Form 10-Q. The Company does not anticipate that the adoption of these SEC amendments will have a material effect on the Company’s financial position, results of operations, cash flows or shareholders’ equity. In May 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. In 2015 and 2016, the FASB issued additional ASUs related to Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the modified retrospective transition method. Impact of Adoption The Company, on adopting Topic 606 on January 1, 2018, has used the modified retrospective transition method with the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application. The following adjustments were recorded in the opening balance on January 1, 2018. December 31, Adjustments January 1, 2017 Due to Topic 606 2018 Total current assets $ — 5,000 $ 5,000 Total current liabilities — 1,000 1,000 Accumulated deficit $ — 4,000 $ 4,000 As a result of adopting Topic 606 on January 1, 2018, the following financial statement line items in the Company’s Condensed Consolidated Balance Sheet at September 30, 2018 and the Condensed Consolidated Statement of Income for the nine months ended September 30, 2018 were affected. September 30, 2018 As Reported Under Topic 605 Effect of Change Total current assets $ 199,322 194,322 $ 5,000 Total current liabilities 15,549 14,549 1,000 Accumulated deficit (337,650) (341,650) 4,000 Nine Months Ended September 30, 2018 As Reported Under Topic 605 Effect of Change Revenue: Licensing revenue $ 2,320 2,320 $ — Other revenue 202 202 — Cost of revenue 466 466 — In May 2017, FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting (ASU 2017-09). The amendments included in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments in this update will be applied prospectively to an award modified on or after the adoption date. On January 1, 2018, we adopted ASU 2017-09 and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which replaces most current lease guidance when it becomes effective. This standard update intends to increase the transparency and improve comparability by requiring entities to recognize assets and liabilities on the balance sheet for all leases, with certain exceptions. The new standard states that a lessee will recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. The new guidance will be effective for the Company starting in the first quarter of fiscal 2019, with early adoption permitted. In July 2018, the FASB issued ASU 2018-11, related to another transition method in lease accounting. If elected, the transition method allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We are evaluating the impact of the adoption of this standard on the consolidated financial statements. The Company plans to adopt the new guidance effective January 1, 2019, using a modified retrospective approach and based on initial assessment of ASU No.2016-02 as of September 30, 2018, the Company believes the largest impact to its balance sheet will be from recognizing a right of use asset and corresponding lease liability related to its property leases in Fremont and Boston. The Company is continuing to evaluate the full impact the adoption of Topic 842 will have on its consolidated financial statements and related disclosures. In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting . ASU 2018-07 is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. ASU 2018-07 expands the scope of Topic 718, Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes Subtopic 505-50, Equity-Based Payments to Non-Employees. ASU 2018-07 is effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year and early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement . ASU 2018-13 considers cost and benefits, and removes, modifies and adds disclosure requirements in Topic 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty is to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are to be applied retrospectively to all periods presented. ASU 2018-13 is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year and early adoption is permitted. The Company is currently assessing the impact of this standard on its consolidated financial statements. The Company has reviewed all other significant newly-issued accounting pronouncements and concluded that they either are not applicable to the Company’s operations or no material effect is expected on its condensed consolidated financial statements as a result of future adoption. |
Fair Value Measurements | Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 – Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by the Company at the reporting date. Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S. Treasuries and trading securities with quoted prices on active markets. Level 2 – Valuations based on inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Examples of assets and liabilities utilizing Level 2 inputs are corporate bonds, commercial paper, certificates of deposit and over-the-counter derivatives. Level 3 – Valuations based on unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
ASU 2014-09 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Schedule of adjustments of topic 606 | December 31, Adjustments January 1, 2017 Due to Topic 606 2018 Total current assets $ — 5,000 $ 5,000 Total current liabilities — 1,000 1,000 Accumulated deficit $ — 4,000 $ 4,000 September 30, 2018 As Reported Under Topic 605 Effect of Change Total current assets $ 199,322 194,322 $ 5,000 Total current liabilities 15,549 14,549 1,000 Accumulated deficit (337,650) (341,650) 4,000 Nine Months Ended September 30, 2018 As Reported Under Topic 605 Effect of Change Revenue: Licensing revenue $ 2,320 2,320 $ — Other revenue 30 30 — Cost of revenue 464 464 — |
Cash, Cash Equivalents and In_2
Cash, Cash Equivalents and Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Cash, Cash Equivalents and Investments | |
Schedule of Securities Classified as Cash, Cash Equivalents and Short-term Investments | Securities classified as cash, cash equivalents and short-term investments as of September 30, 2018 and December 31, 2017, are summarized below (in thousands). Estimated fair value is based on quoted market prices for these investments. September 30, 2018 Gross Unrealized Amortized Cost Gains Losses Fair Value Cash and cash equivalents: Cash $ 2,787 — — $ 2,787 Money market funds 66,235 — — 66,235 Corporate bonds 1,999 — — 1,999 Commercial paper 3,994 — — 3,994 Total cash and cash equivalents $ 75,015 $ — $ — $ 75,015 Short-term investments U.S. treasury securities 7,959 — (2) 7,957 Corporate bonds 34,449 — (9) 34,440 Commercial paper 61,116 — (5) 61,111 Asset-backed securities 7,884 — (1) 7,883 Total short-term investments $ 111,408 $ — $ (17) $ 111,391 Total cash equivalents and investments $ 186,423 $ — $ (17) $ 186,406 December 31, 2017 Gross Unrealized Amortized Cost Gains Losses Fair Value Cash and cash equivalents: Cash $ 5,882 $ — $ — $ 5,882 Money market funds 68,651 — — 68,651 Commercial paper 850 — — 850 Total cash equivalents and investments $ 75,383 $ — $ — $ 75,383 Short-term investments U.S. treasury securities $ 3,994 — (1) $ 3,993 Corporate bonds 26,853 — (26) 26,827 Commercial paper 19,584 — (14) 19,570 Asset-backed securities 8,209 — (6) 8,203 Total short-term investments $ 58,640 $ — $ (47) $ 58,593 Total cash equivalents and investments $ 134,023 $ — $ (47) $ 133,976 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Summary of Fair Value Measurements of Company's Financial Assets and Liabilities | The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy (in thousands): September 30, 2018 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 66,235 $ 66,235 $ — $ — U.S. treasury securities 7,957 7,957 — — Corporate bonds 36,439 — 36,439 — Commercial paper 65,105 — 65,105 — Asset-backed securities 7,883 — 7,883 — Total $ 183,619 $ 74,192 $ 109,427 $ — Liabilities: Derivative liability for exit fee $ 556 $ — $ — $ 556 Foreign currency derivative contracts 46 $ — $ 46 $ — Total $ 602 $ — $ 46 $ 556 December 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market funds $ 68,651 $ 68,651 $ — $ — U.S. treasury securities 3,993 3,993 — — Corporate bonds 26,827 — 26,827 — Commercial paper 20,420 — 20,420 — Asset-backed securities 8,203 — 8,203 — Total $ 128,094 $ 72,644 $ 55,450 $ — |
Summary of changes in the fair value of recurring measurements | Changes in the fair value of recurring measurements included in Level 3 of the fair value hierarchy are presented as changes in derivative liabilities for Exit Fee in the Company's condensed consolidated statements of operations and were as follows for the nine months ended September 30, 2018 (in thousands): Estimated Fair Value of Derivative Liability Balance of Level 3 Liabilities at December 31, 2017 $ — Initial estimated fair value of derivative liability for exit fee 546 Balance of Level 3 Liabilities at June 30, 2018 546 Change in estimated fair value of derivative liability for exit fee 10 Balance of Level 3 Liabilities at September 30, 2018 $ 556 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Financial Instruments | |
Summary of derivative instruments | The following table summarizes the Company’s forward foreign currency exchange contracts outstanding as of September 30, 2018 (notional amounts in thousands): Aggregate Notional Amount in Foreign Foreign Exchange Contracts Number of Contracts Currency Maturity Swiss francs 2 6,002 Nov. 2018 - Mar. 2019 Total 2 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Borrowings | |
Schedule of future debt payment obligations | As of September 30, 2018, assuming the principal payments start on December 1, 2020, the Company’s future debt payment obligations towards the principal and final fee, excluding interest payments and exit fee, for the respective fiscal years are as follows (in thousands): 2018 $ — 2019 — 2020 2,083 2021 25,000 2022 24,892 Total principal and final fee payments 51,975 Less: Unamortized discount and debt issuance costs (1,144) Less: Unaccreted value of final fee (1,811) Loan payable, long term $ 49,020 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation | |
Summary of Stock-Based Compensation Expense Recognized | The following table presents stock-based compensation expense recognized for stock options, restricted stock units, or RSUs, performance-based restricted stock units, or PRSUs, and the Company’s employee stock purchase program, or ESPP, in the Company’s statements of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Research and development $ 880 $ 916 $ 2,770 $ 3,361 General and administrative 1,068 1,186 4,206 3,640 Total $ 1,948 $ 2,102 $ 6,976 $ 7,001 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Net Loss Per Share | |
Computation of Basic and Diluted Loss Per Share Attributable to Common Stockholders | As the Company had net losses for the three and nine months ended September 30, 2018 and 2017, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of net loss per common share (in thousands, except share and per share amounts): Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator: Net loss $ (24,126) $ (20,724) $ (63,436) $ (74,453) Denominator: Weighted average common shares outstanding - basic and diluted 62,071,397 47,464,310 54,204,907 47,404,039 Net loss per share - basic and diluted $ (0.39) $ (0.44) $ (1.17) $ (1.57) |
Accrued and Other Liabilities (
Accrued and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accrued and Other Liabilities | |
Schedule of Accrued Liabilities and Other Liabilities | Accrued liabilities and other liabilities consist of the following (in thousands): September 30, December 31, 2018 2017 Accrued clinical and non-clinical expenses $ 6,792 $ 5,447 Accrued contract manufacturing expenses 977 3,980 Accrued professional and consulting services 627 530 Derivative liability for exit fee 556 — Foreign currency derivative contract 46 — Other 976 752 $ 9,974 $ 10,709 |
Organization and Basis of Pre_2
Organization and Basis of Presentation - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2018segment | |
Organization and Basis of Presentation | |
Number of operating segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Reclassification (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Summary of Significant Accounting Policies | |
Amount reclassified from financing activities to operating activities | $ 0.2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2018 | Jan. 02, 2018 | Dec. 31, 2017 | [1] | |
Impact of Adoption | |||||
Current assets | $ 199,322 | $ 199,322 | $ 5,000 | $ 149,712 | |
Current liabilities | 15,549 | 15,549 | 1,000 | 17,871 | |
Accumulated deficit | (337,650) | (337,650) | 4,000 | $ (278,214) | |
Total revenues | 172 | 2,522 | |||
Cost of revenue | 2 | 466 | |||
Licensing | |||||
Impact of Adoption | |||||
Total revenues | 2,320 | ||||
Other | |||||
Impact of Adoption | |||||
Total revenues | 172 | 202 | |||
ASU 2014-09 | Adjustments | |||||
Impact of Adoption | |||||
Current assets | 5,000 | 5,000 | 5,000 | ||
Current liabilities | 1,000 | 1,000 | 1,000 | ||
Accumulated deficit | 4,000 | 4,000 | $ 4,000 | ||
ASU 2014-09 | Before topic 606 | |||||
Impact of Adoption | |||||
Current assets | 194,322 | 194,322 | |||
Current liabilities | 14,549 | 14,549 | |||
Accumulated deficit | $ (341,650) | (341,650) | |||
ASU 2014-09 | Before topic 606 | Licensing | |||||
Impact of Adoption | |||||
Total revenues | 2,320 | ||||
Cost of revenue | 466 | ||||
ASU 2014-09 | Before topic 606 | Other | |||||
Impact of Adoption | |||||
Total revenues | $ 202 | ||||
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |
Cash, Cash Equivalents and In_3
Cash, Cash Equivalents and Investments - Schedule of Securities Classified as Cash, Cash Equivalents and Short-term Investments (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Cash and cash equivalents, Amortized Cost | $ 75,015 | $ 75,383 | [1] | $ 59,454 | $ 74,598 |
Cash and cash equivalents, Fair Value | 75,015 | 75,383 | |||
Short-term investments, Amortized Cost | 111,408 | 58,640 | |||
Short-term investments, Gross Unrealized Losses | (17) | (47) | |||
Short-term investments, Fair Value | 111,391 | 58,593 | |||
Cash equivalents and short-term investments, Amortized Cost | 186,423 | 134,023 | |||
Cash equivalents and short-term investments, Gross Unrealized Losses | (17) | (47) | |||
Cash equivalents and short-term investments, Fair Value | 186,406 | 133,976 | |||
Cash [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Cash and cash equivalents, Amortized Cost | 2,787 | 5,882 | |||
Cash and cash equivalents, Fair Value | 2,787 | 5,882 | |||
Money Market Funds [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Cash and cash equivalents, Amortized Cost | 66,235 | 68,651 | |||
Cash and cash equivalents, Fair Value | 66,235 | 68,651 | |||
Corporate Bonds (Investments) [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Cash and cash equivalents, Amortized Cost | 1,999 | ||||
Cash and cash equivalents, Fair Value | 1,999 | ||||
Commercial Paper (Cash Equivalents) [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Cash and cash equivalents, Amortized Cost | 3,994 | 850 | |||
Cash and cash equivalents, Fair Value | 3,994 | 850 | |||
U.S. Treasury Securities [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Short-term investments, Amortized Cost | 7,959 | 3,994 | |||
Short-term investments, Gross Unrealized Losses | (2) | (1) | |||
Short-term investments, Fair Value | 7,957 | 3,993 | |||
Corporate Bonds (Investments) [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Short-term investments, Amortized Cost | 34,449 | 26,853 | |||
Short-term investments, Gross Unrealized Losses | (9) | (26) | |||
Short-term investments, Fair Value | 34,440 | 26,827 | |||
Commercial Paper (Investments) [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Short-term investments, Amortized Cost | 61,116 | 19,584 | |||
Short-term investments, Gross Unrealized Losses | (5) | (14) | |||
Short-term investments, Fair Value | 61,111 | 19,570 | |||
Asset-Backed Securities [Member] | |||||
Cash Cash Equivalents And Short Term Investments [Line Items] | |||||
Short-term investments, Amortized Cost | 7,884 | 8,209 | |||
Short-term investments, Gross Unrealized Losses | (1) | (6) | |||
Short-term investments, Fair Value | $ 7,883 | $ 8,203 | |||
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |
Cash, Cash Equivalents and In_4
Cash, Cash Equivalents and Investments - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Cash Cash Equivalents And Short Term Investments [Line Items] | |
Investment in continuous unrealized loss position for more than one year | $ 0 |
Maximum [Member] | |
Cash Cash Equivalents And Short Term Investments [Line Items] | |
Available for sale securities contractual maturity period | 1 year |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Fair Value Measurements of Company's Financial Assets and Liabilities (Detail) - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets: | ||
Assets at fair value | $ 183,619 | $ 128,094 |
Liabilities: | ||
Derivative liability | 602 | |
Level 1 [Member] | ||
Assets: | ||
Assets at fair value | 74,192 | 72,644 |
Level 2 [Member] | ||
Assets: | ||
Assets at fair value | 109,427 | 55,450 |
Liabilities: | ||
Derivative liability | 46 | |
Level 3 [Member] | ||
Liabilities: | ||
Derivative liability | 556 | |
Derivative Liability Exit Fee [Member] | ||
Liabilities: | ||
Derivative liability | 556 | |
Derivative Liability Exit Fee [Member] | Level 3 [Member] | ||
Liabilities: | ||
Derivative liability | 556 | |
Foreign Exchange Contract [Member] | ||
Liabilities: | ||
Derivative liability | 46 | |
Foreign Exchange Contract [Member] | Level 2 [Member] | ||
Liabilities: | ||
Derivative liability | 46 | |
Money Market Funds [Member] | ||
Assets: | ||
Assets at fair value | 66,235 | 68,651 |
Money Market Funds [Member] | Level 1 [Member] | ||
Assets: | ||
Assets at fair value | 66,235 | 68,651 |
U.S. Treasury Securities [Member] | ||
Assets: | ||
Assets at fair value | 7,957 | 3,993 |
U.S. Treasury Securities [Member] | Level 1 [Member] | ||
Assets: | ||
Assets at fair value | 7,957 | 3,993 |
Corporate Bonds [Member] | ||
Assets: | ||
Assets at fair value | 36,439 | 26,827 |
Corporate Bonds [Member] | Level 2 [Member] | ||
Assets: | ||
Assets at fair value | 36,439 | 26,827 |
Commercial Paper [Member] | ||
Assets: | ||
Assets at fair value | 65,105 | 20,420 |
Commercial Paper [Member] | Level 2 [Member] | ||
Assets: | ||
Assets at fair value | 65,105 | 20,420 |
Asset-Backed Securities [Member] | ||
Assets: | ||
Assets at fair value | 7,883 | 8,203 |
Asset-Backed Securities [Member] | Level 2 [Member] | ||
Assets: | ||
Assets at fair value | $ 7,883 | $ 8,203 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Detail) $ in Thousands | Sep. 30, 2018USD ($) |
Fair Value Measurements | |
Transfer of assets from Level 1 to Level 2 | $ 0 |
Transfer of assets from Level 2 to Level 1 | $ 0 |
Fair Value Measurements - Loan
Fair Value Measurements - Loan and Security Agreement (Details) - Solar Capital and Western Alliance Bank Loan Agreement [Member] - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
May 31, 2018 | Sep. 30, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | |
Fair Value Measurements | ||||
Exit Fee | $ 1,500,000 | |||
Level 3 [Member] | ||||
Fair Value Measurements | ||||
Potential payment to Solar Capital Ltd. and Western Alliance Bank | $ 1,500,000 | |||
Percentage of increase in risk component | 10.00% | 10.00% | ||
Percentage decrease in risk component | 10.00% | 10.00% | ||
Fair value fluctuation due to increase in risk component | $ 100,000 | $ 100,000 | ||
Fair value fluctuation due to decrease in risk component | 100,000 | 100,000 | ||
Derivative Liability Exit Fee [Member] | ||||
Fair Value Measurements | ||||
Increase in estimated fair value of exit fee | 10,000 | |||
Derivative Liability Exit Fee [Member] | Accrued and other liabilities | ||||
Fair Value Measurements | ||||
Estimated fair value of Exit Fee | $ 556,000 | $ 556,000 | $ 546,000 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in fair value of recurring measurements (Details) - Derivative Liability Exit Fee [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Sep. 30, 2018 | Jun. 30, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Beginning Balance | $ 546 | |
Change in estimated fair value of derivative liability for exit fee | 10 | $ 546 |
Ending Balance | $ 556 | $ 546 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Schedule of Derivative Instruments) (Details) - Foreign Exchange Contract [Member] SFr in Thousands | 9 Months Ended |
Sep. 30, 2018CHF (SFr)contract | |
Derivative [Line Items] | |
Number of Contracts | contract | 2 |
Aggregate Notional Amount in Foreign Currency | SFr | SFr 6,002 |
Minimum [Member] | |
Derivative [Line Items] | |
Maturity Date | Nov. 1, 2018 |
Maximum [Member] | |
Derivative [Line Items] | |
Maturity Date | Mar. 1, 2019 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Additional Information) (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Derivative [Line Items] | |
Notional amount | $ 45,566 |
Gain (loss) on derivative instruments | (45,566) |
Foreign Exchange Contract [Member] | |
Derivative [Line Items] | |
Notional amount | 6,200,000 |
Gain (loss) on derivative instruments | $ (600,000) |
Borrowings (Details)
Borrowings (Details) - USD ($) $ in Thousands | May 16, 2018 | Sep. 30, 2018 |
Term Loans | ||
Amount of term loan facility | $ 50,000 | |
Net proceeds from the loan | $ 49,300 | $ 49,292 |
Percentage of premium payable on redemption of the term loan | 1.00% | |
Amount of fee payable upon closing of the term loan | $ 500 | |
Exit fee (as a percent) | 3.00% | |
Expiration term of exit fee | 10 years | |
Minimum unrestricted cash and cash equivalents to be maintained | $ 50,000 | |
Additional default interest rate | 4.00% | |
Future debt payment obligations | ||
2,020 | 2,083 | |
2,021 | 25,000 | |
2,022 | 24,892 | |
Total | 51,975 | |
Less: Unamortized discount and debt issuance costs | (1,144) | |
Less: Unaccreted value of final fee | (1,811) | |
Loan payable, long term | $ 49,020 | |
At Maturity | ||
Term Loans | ||
Final payment fee (as a percent) | 3.95% | |
Prior to first anniversary of closing date | ||
Term Loans | ||
Prepayment fee (as a percent) | 3.00% | |
After first anniversary of closing date | ||
Term Loans | ||
Prepayment fee (as a percent) | 2.00% | |
After second anniversary to maturity date | ||
Term Loans | ||
Prepayment fee (as a percent) | 1.00% | |
LIBOR | ||
Term Loans | ||
Floating interest rate | 7.45% |
Shareholders Equity (Details)
Shareholders Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 25, 2018 | May 25, 2018 | May 22, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued | 14,375,000 | 62,106,121 | 47,534,979 | ||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||
Net proceeds | $ 53.8 | ||||
Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued | 12,500,000 | ||||
Common stock, par value | $ 0.0001 | ||||
Public offering price | $ 4 | ||||
Net proceeds | $ 46.7 | ||||
Underwriters' option | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued | 1,875,000 | 1,875,000 | |||
Public offering price | $ 4 | ||||
Purchase price | $ 3.76 | ||||
Number of days to underwriters to sell additional common shares | 30 days | ||||
Net proceeds | $ 7.1 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-Based Compensation Expense Recognized (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 1,948 | $ 2,102 | $ 6,976 | $ 7,001 |
Research and Development [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | 880 | 916 | 2,770 | 3,361 |
General and Administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation | $ 1,068 | $ 1,186 | $ 4,206 | $ 3,640 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Aug. 31, 2018 | Jul. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of options exercised | 0 | 0 | ||||||
Proceeds from exercise of stock options | $ 0 | $ 0 | ||||||
Issuance of common stock for services (Shares) | 0 | 0 | 75,183 | 46,858 | ||||
Issuance of common stock for services, amount | $ 300 | $ 200 | $ 300 | $ 200 | ||||
Options to Purchase Common Stock [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized stock based compensation expense | 14,400 | $ 14,400 | ||||||
Unrecognized stock based compensation expense, weighted-average remaining recognition period | 2 years 9 months 18 days | |||||||
Number of options exercised | 4,833 | 33,159 | ||||||
Restricted Stock Units (RSUs) [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized stock based compensation expense | $ 1,200 | $ 1,200 | ||||||
Unrecognized stock based compensation expense, weighted-average remaining recognition period | 1 year 8 months 12 days | |||||||
Number of shares issued upon vesting of restricted stock units | 0 | 0 | 0 | 15,188 | ||||
Performance-Based Restricted Stock Units (PSRUs) [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares, Granted | 903,374 | 161,865 | ||||||
Number of shares, Outstanding | 903,374 | 125,895 | ||||||
Number of vested shares | 0 | 0 | 0 | 0 | ||||
Recognized stock-based compensation related expense in connection with vesting of award granted | $ 100 | $ 500 | ||||||
Unrecognized stock based compensation expense | 100 | $ 100 | ||||||
Unrecognized stock based compensation expense, weighted-average remaining recognition period | 1 month 6 days | |||||||
Employee Stock Purchase Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Unrecognized stock based compensation expense | $ 100 | $ 100 | ||||||
Unrecognized stock based compensation expense, weighted-average remaining recognition period | 4 months 24 days | |||||||
Number of shares issued under ESPP | 52,370 | 68,589 | ||||||
Purchase price | $ 3.66 | $ 4.38 | ||||||
Proceeds | $ 200 | $ 300 |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Loss Per Share Attributable to Common Stockholders (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator: | ||||
Net loss | $ (24,126) | $ (20,724) | $ (63,436) | $ (74,453) |
Denominator: | ||||
Weighted average common shares outstanding - basic and diluted | 62,071,397 | 47,464,310 | 54,204,907 | 47,404,039 |
Net loss per share - basic and diluted | $ (0.39) | $ (0.44) | $ (1.17) | $ (1.57) |
Net Loss Per Share - Additional
Net Loss Per Share - Additional Information (Detail) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Loss Per Share | ||||
Anti-dilutive securities excluded from computation of diluted net loss per share attributable to common stockholders | 8.3 | 7 | 8.1 | 6.6 |
Accrued and Other Liabilities -
Accrued and Other Liabilities - Schedule of Accrued Liabilities and Other Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Accrued and Other Liabilities | |||
Accrued clinical and non-clinical expenses | $ 6,792 | $ 5,447 | |
Accrued contract manufacturing expenses | 977 | 3,980 | |
Accrued professional and consulting services | 627 | 530 | |
Derivative liability for exit fee | 556 | ||
Foreign currency derivative contract | 46 | ||
Other | 976 | 752 | |
Accrued liabilities and other liabilities | $ 9,974 | $ 10,709 | [1] |
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |
Collaboration and Licensing A_2
Collaboration and Licensing Agreements - Additional Information (Detail) $ in Thousands, $ in Millions, ¥ in Billions | Nov. 02, 2018USD ($) | Dec. 31, 2017USD ($) | Nov. 30, 2017USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2018CAD ($) | Sep. 30, 2018JPY (¥) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 02, 2018USD ($) | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Current assets | $ 149,712 | [1] | $ 199,322 | $ 199,322 | $ 149,712 | [1] | $ 5,000 | |||||
Current liabilities | 17,871 | [1] | 15,549 | 15,549 | 17,871 | [1] | 1,000 | |||||
Revenues | 172 | 2,522 | ||||||||||
Cost of revenue | 2 | 466 | ||||||||||
Other | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Revenues | 172 | 202 | ||||||||||
Adjustments | ASU 2014-09 | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Current assets | 5,000 | 5,000 | 5,000 | |||||||||
Current liabilities | 1,000 | 1,000 | 1,000 | |||||||||
Kyowa Hakko Kirin [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Upfront payment received | $ 30,000 | |||||||||||
Kyowa Hakko Kirin [Member] | Product supply | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Revenues | 200 | 200 | ||||||||||
Kyowa Hakko Kirin [Member] | Adjustments | ASU 2014-09 | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Current assets | 5,000 | |||||||||||
Current liabilities | $ 1,000 | |||||||||||
Kyowa Hakko Kirin [Member] | Development and Commercialization [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Development milestones | 55,000 | |||||||||||
Commercialization milestones | ¥ | ¥ 8.5 | |||||||||||
Shanghai Fosun Pharmaceutical Industrial Development [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Upfront payment received | $ 12,000 | |||||||||||
Revenues | 0 | 0 | ||||||||||
Future development milestones | $ 113,000 | |||||||||||
Threshold percentage of net sales for tiered royalties | 20.00% | |||||||||||
Shanghai Fosun Pharmaceutical Industrial Development [Member] | Development and Commercialization [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Cost of revenue | 2,400 | |||||||||||
AstraZeneca [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Upfront payment received | $ 75,000 | |||||||||||
AstraZeneca [Member] | Development and Commercialization [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Cost of revenue | 1,000 | |||||||||||
AstraZeneca [Member] | Termination Agreement [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Cost of revenue | 500 | |||||||||||
Knight Therapeutics Inc [Member] | Development and Commercialization [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Revenues | 0 | 2,300 | ||||||||||
Total payments, including an up-front payment and development and sales milestones to be received | $ 25 | |||||||||||
Cost of revenue | $ 6,000 | |||||||||||
Knight Therapeutics Inc [Member] | Termination Agreement [Member] | ||||||||||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||||||||||||
Cost of revenue | $ 9,900 | $ 0 | $ 500 | |||||||||
[1] | Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10K for the year ended December 31, 2017. |