Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Neos Therapeutics, Inc. | |
Entity Central Index Key | 1,467,652 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,942,546 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 102,896 | $ 13,343 |
Short term investments | 3,000 | |
Accounts receivable, net of allowance of $1 and $204, respectively | 50 | 367 |
Inventories | 2,661 | 2,031 |
Other current assets | 819 | 264 |
Total current assets | 106,426 | 19,005 |
Property and equipment, net | 5,210 | 5,831 |
Intangible assets, net | 17,046 | 18,167 |
Other assets | 2,427 | 2,227 |
Total assets | 131,109 | 45,230 |
Current Liabilities: | ||
Accounts payable | 2,376 | 1,257 |
Accrued expenses | 5,086 | 2,715 |
Current portion of long-term debt | 5,775 | 1,653 |
Total current liabilities | 13,237 | 5,625 |
Long-Term Liabilities: | ||
Long-term debt, net of current portion | 28,579 | 23,121 |
Earnout liability | 353 | 756 |
Deferred gain on leaseback | 760 | 1,383 |
Deferred rent | 1,163 | 1,189 |
Warrant liabilities | 1,789 | |
Total long-term liabilities | $ 30,855 | 28,238 |
Redeemable Preferred Stock | ||
Redeemable preferred stock | $ 90,149 | |
Stockholders' Equity (Deficit): | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no share issued or outstanding at September 30, 2015; no shares authorized, issued or outstanding as of December 31, 2014 | ||
Common stock, $0.001 par value, 100,000,000 authorized; 15,839,064 issued and outstanding as of September 30, 2015 and 35,000,000, 938,859 and 882,954 authorized, issued and outstanding at December 31, 2014, respectively | $ 16 | $ 1 |
Additional paid-in capital | 194,682 | 4,831 |
Accumulated deficit | (107,681) | (83,614) |
Total stockholders' equity (deficit) | 87,017 | (78,782) |
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ 131,109 | 45,230 |
Series A preferred stock | ||
Redeemable Preferred Stock | ||
Redeemable preferred stock | 1,068 | |
Series B preferred stock | ||
Redeemable Preferred Stock | ||
Redeemable preferred stock | 14,559 | |
Series B-1 preferred stock | ||
Redeemable Preferred Stock | ||
Redeemable preferred stock | 32,391 | |
Series C preferred stock | ||
Redeemable Preferred Stock | ||
Redeemable preferred stock | $ 42,131 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Receivables allowance (in dollars) | $ 1 | $ 204 |
Redeemable preferred stock, par value (in dollars per share) | $ 0.001 | |
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Preferred stock, authorized shares | 5,000,000 | 0 |
Preferred Stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized shares | 100,000,000 | 35,000,000 |
Common stock, issued shares | 15,839,064 | 938,859 |
Common stock, outstanding shares | 15,839,064 | 882,954 |
Series A preferred stock | ||
Redeemable preferred stock, authorized shares | 0 | 1,170,000 |
Redeemable preferred stock, issued shares | 0 | 1,170,000 |
Redeemable preferred stock, outstanding shares | 0 | 1,170,000 |
Redeemable preferred stock, liquidation preference (in dollars) | $ 5,850 | |
Series B preferred stock | ||
Redeemable preferred stock, authorized shares | 0 | 4,000,000 |
Redeemable preferred stock, issued shares | 0 | 3,113,099 |
Redeemable preferred stock, outstanding shares | 0 | 3,113,099 |
Redeemable preferred stock, liquidation preference (in dollars) | $ 15,565 | |
Series B-1 preferred stock | ||
Redeemable preferred stock, authorized shares | 0 | 8,830,000 |
Redeemable preferred stock, issued shares | 0 | 5,461,802 |
Redeemable preferred stock, outstanding shares | 0 | 5,461,802 |
Redeemable preferred stock, liquidation preference (in dollars) | $ 61,647 | |
Series C preferred stock | ||
Redeemable preferred stock, authorized shares | 0 | 13,500,000 |
Redeemable preferred stock, issued shares | 0 | 8,753,547 |
Redeemable preferred stock, outstanding shares | 0 | 8,753,547 |
Redeemable preferred stock, liquidation preference (in dollars) | $ 43,768 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Product | $ 221 | $ (120) | $ 2,133 | $ (120) |
Manufacturing | 113 | |||
Development | 67 | 160 | ||
Profit sharing | 28 | 169 | ||
Total revenue: | 221 | (25) | 2,133 | 322 |
Cost of good sold | 1,079 | 782 | 3,833 | 2,225 |
Gross loss | (858) | (807) | (1,700) | (1,903) |
Operating Expenses | ||||
Research and development | 2,701 | 2,727 | 9,123 | 8,195 |
Selling and marketing expenses | 1,343 | 106 | 2,271 | 117 |
General and administrative expenses | 2,073 | 1,245 | 5,069 | 4,196 |
Loss from operations | (6,975) | (4,885) | (18,163) | (14,411) |
Interest expense, net | (1,044) | (562) | (2,685) | (2,199) |
Other income, net | 518 | 208 | 623 | 618 |
Change in fair value of earnout and warrant liabilities | (1,867) | (1,452) | ||
Net loss | (9,368) | (5,239) | (21,677) | (15,992) |
Net loss | ||||
Net loss | (9,368) | (5,239) | (21,677) | (15,992) |
Preferred stock accretion to redemption value | (99) | (268) | (1,169) | (850) |
Preferred stock dividends | (138) | (551) | (1,221) | (1,634) |
Net loss attributable to common stock | $ (9,605) | $ (6,058) | $ (24,067) | $ (18,476) |
Weighted average common shares outstanding | ||||
Weighted average common shares outstanding used to compute net loss per share, basic and diluted | 12,403,182 | 878,929 | 4,767,479 | 874,480 |
Net loss per share | ||||
Net loss per share attributable to common stock, basic and diluted | $ (0.77) | $ (6.89) | $ (5.05) | $ (21.13) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Common StockIPO | Common Stock | Treasury Stock. | Additional Paid-in CapitalIPO | Additional Paid-in Capital | Accumulated DeficitSeries B preferred stock | Accumulated DeficitSeries B-1 preferred stock | Accumulated DeficitSeries C preferred stock | Accumulated Deficit | Series B preferred stock | Series B-1 preferred stock | Series C preferred stock | IPO | Total |
Balance, beginning at Dec. 31, 2014 | $ 1 | $ 4,831 | $ (83,614) | $ (78,782) | ||||||||||
Balance, beginning (in shares) at Dec. 31, 2014 | 938,859 | (55,905) | ||||||||||||
Increase (Decrease) in Stockholders Equity | ||||||||||||||
Proceeds from exercise of options and warrants | 72 | 72 | ||||||||||||
Proceeds from exercise of options and warrants (in shares) | 139,201 | |||||||||||||
Share-based compensation expense | 552 | 552 | ||||||||||||
Cancellation of treasury stock | (55,905) | 55,905 | ||||||||||||
Preferred Stock accretion to redemption value | $ (192) | $ (370) | $ (607) | $ (192) | $ (370) | $ (607) | ||||||||
Accrued dividend | $ (1,221) | $ (1,221) | ||||||||||||
Conversion of Redeemable Preferred Stock | $ 9 | 110,767 | 110,776 | |||||||||||
Conversion of Redeemable Preferred Stock (in shares) | 9,217,983 | |||||||||||||
Cashless exercise of Series C warrants issued with Series C financing | 2,842 | 2,842 | ||||||||||||
Cashless exercise of Series C warrants issued with Series C financing (in shares) | 78,926 | |||||||||||||
Reclassification of Series C warrants issued with senior debt | 611 | 611 | ||||||||||||
Net proceeds from issuance of common stock | $ 6 | $ 75,007 | $ 75,013 | |||||||||||
Net proceeds from issuance of common stock (in shares) | 5,520,000 | |||||||||||||
Net loss | (21,677) | (21,677) | ||||||||||||
Balance, ending at Sep. 30, 2015 | $ 16 | $ 194,682 | $ (107,681) | $ 87,017 | ||||||||||
Balance, ending (in shares) at Sep. 30, 2015 | 15,839,064 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (21,677,000) | $ (15,992,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization of property and equipment | 1,277,000 | 1,228,000 |
Amortization of intangible assets | 1,121,000 | 664,000 |
Changes in fair value of warrant and earnout liabilities | 1,452,000 | |
Amortization of patents | 17,000 | 0 |
Amortization and write-off of senior debt fees | 426,000 | 487,000 |
Gain on sale of equipment | (623,000) | (616,000) |
Provision for bad debts | (204,000) | |
Share-based compensation expense | 552,000 | 136,000 |
Interest accrued on note payable | 372,000 | 414,000 |
Change in deferred rent | (26,000) | 49,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 317,000 | 558,000 |
Inventories | (630,000) | (1,174,000) |
Other current assets | (555,000) | (1,000) |
Other assets | (217,000) | (136,000) |
Accounts payable | 919,000 | 35,000 |
Accrued expenses | 2,356,000 | 1,087,000 |
Net cash used in operating activities | (14,919,000) | (13,465,000) |
Cash Flows From Investing Activities: | ||
Net proceeds from sale (purchase) of short-term investments | 3,000,000 | 4,499,000 |
Capital expenditures | (656,000) | (105,000) |
Intangible asset acquisition | (6,283,000) | |
Net cash provided by (used in) investing activities | 2,344,000 | (1,889,000) |
Cash Flows from Financing Activities: | ||
Proceeds from senior debt note | 10,000,000 | 15,000,000 |
Proceeds from sale of equipment | 795,000 | |
Net proceeds from issuance of common and preferred stock | 18,119,000 | 9,906,000 |
Net proceeds from initial public offering, net of underwriting discounts and commissions | 77,004,000 | |
Payments of initial public offering costs | (1,778,000) | |
Payments made on borrowings | (1,217,000) | (11,293,000) |
Deferred financing costs | (563,000) | |
Net cash provided by financing activities | 102,128,000 | 13,845,000 |
Increase (decrease) in cash and cash equivalents | 89,553,000 | (1,509,000) |
Cash and Cash Equivalents: | ||
Beginning | 13,343,000 | 11,947,000 |
Ending | 102,896,000 | 10,438,000 |
Supplemental Noncash Investing and Financing Activities | ||
Earout liability incurred in connection with intangible assets acquisition | 589,000 | |
Initial public offering costs included in account payable and accrued expenses | 213,000 | |
Issuance of stock warrants | 2,131,000 | 372,000 |
Exercise of Series c warrants for Series C Preferred Stock | 2,322,000 | |
Cashless exercise of Series C warrants from Series C financing in IPO closing | 2,842,000 | |
Conversion of redeemable preferred stock into common stock | 110,776,000 | |
Reclassification of Series C warrants issued with senior debt upon IPO closing | 611,000 | |
Preferred stock accretion | 1,169,000 | 850,000 |
Preferred stock dividend | 1,221,000 | 1,634,000 |
Supplemental Cash Flow Information: | ||
Interest paid | $ 1,820,000 | $ 1,314,000 |
Basis of presentation
Basis of presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of presentation | |
Basis of presentation | Note 1. Basis of presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, and cash flows. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results of operations for and financial condition as of the end of the interim period have been included. Results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results for the year ending December 31, 2015 or any period thereafter. The audited consolidated financial statements as of and for the year ended December 31, 2014 included information and footnotes necessary for such presentation and were included in the Neos Therapeutics, Inc. final prospectus dated as of July 22, 2015 and filed with the SEC, on July 24, 2015 (“Final Prospectus”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2014. |
Organization and nature of oper
Organization and nature of operations | 9 Months Ended |
Sep. 30, 2015 | |
Organization and nature of operations | |
Organization and nature of operations | Note 2. Organization and nature of operations Neos Therapeutics, Inc., a Delaware corporation, and its subsidiaries (the “Company”) is a fully integrated pharmaceutical company. The Company has developed a broad, proprietary modified-release drug delivery technology that enables the manufacture of single and multiple ingredient extended-release pharmaceuticals in patient- and caregiver-friendly orally disintegrating tablet and liquid suspension dosage forms. The Company has a pipeline of extended-release pharmaceuticals including three proprietary product candidates for the treatment of attention deficit hyperactivity disorder (“ADHD”) which are in late-stage development and/or regulatory review. In addition, the Company manufactures and markets a generic Tussionex (hydrocodone and chlorpheniramine) (“generic Tussionex”) extended-release liquid suspension for the treatment of cough and upper respiratory symptoms of a cold. These products are developed and manufactured using the Company’s proprietary and patented modified-release drug delivery technology. The Company’s predecessor company was incorporated in Texas on November 30, 1994 as PharmaFab, Inc. and subsequently changed its name to Neostx, Inc. On June 15, 2009, the Company completed a reorganization pursuant to which substantially all of the capital stock of Neostx, Inc. was acquired by a newly formed Delaware corporation, named Neos Therapeutics, Inc. The remaining capital stock of Neostx, Inc. was acquired by the Company on June 29, 2015. Historically, the Company was primarily engaged in the development and contract manufacturing of unapproved or Drug Efficacy Study Indication (“DESI”), pharmaceuticals and, to a lesser extent, nutraceuticals for third parties. The unapproved or DESI pharmaceuticals contract business was discontinued in 2007 and the manufacturing of nutraceuticals for third parties was discontinued in March 2013. On August 28, 2014, the Company completed an acquisition of all of the rights to the Tussionex Abbreviated New Drug Application (“Tussionex ANDA”), which included the rights to produce, develop, market and sell, as well as all the profits from such selling activities, the Company’s generic Tussionex, which the Company previously owned the rights to manufacture, but which was marketed and sold by the generic drug division of Cornerstone Biopharma, Inc. (“Cornerstone”). These rights were acquired from the collaboration of the Company, Cornerstone and Coating Place, Inc. (“CPI”), a supplier of the resins for the product (see Note 8). Prior to the acquisition, the Company, Cornerstone and CPI shared profits generated by the sale and manufacture of the product under a development and manufacturing agreement with those companies. On July 28, 2015, the Company closed its initial public offering (“IPO”) whereby the Company sold 5,520,000 shares of common stock, at a public offering price of $15.00 per share, which includes 720,000 shares of common stock resulting from the underwriters’ exercise of their over-allotment option at the IPO price on July 23, 2015. Proceeds from the Company’s IPO, net of underwriting discounts and commissions and other offering costs, were $75.0 million. In connection with the IPO, the Company’s Board of Directors approved a 1-for-2.4 reverse stock split of the Company’s common stock which also resulted in a proportional adjustment to the conversion ratios of the preferred stock and the preferred stock warrants. All references to common stock and per share amounts in these condensed financial statements and accompanying footnotes have been retroactively adjusted for all periods presented to give effect to this reverse stock split. Between June 30, 2015 and July 27, 2015, the Company issued a total of 1,000,000 shares of its Series C redeemable convertible preferred stock (“Series C preferred stock”) to several existing investors upon the exercise of warrants to purchase Series C preferred stock (“Series C warrants”) held by those investors at an exercise price of $5.00 per share, for an aggregate exercise price of $5.0 million. On the IPO closing date, all outstanding shares of redeemable preferred stock converted into 9,217,983 shares of common stock and all remaining outstanding Series C warrants issued in conjunction with purchases of Series C preferred stock were net exercised at the IPO price for 78,926 shares of common stock. Upon the closing of the Company’s IPO, all of the shares of the Company’s redeemable convertible preferred stock (“Preferred Shares”) were retired and cancelled and shall not be reissued as shares of such series, and all rights and preferences of those Preferred Shares were cancelled including the right to receive undeclared accumulated dividends. These transactions produced a significant increase in the number of shares outstanding which will impact the year-over-year comparability of the Company’s loss per share calculations. Additionally, in connection with the closing of the IPO, the Company amended and restated its certificate of incorporation to increase the number of authorized shares of common stock to 100,000,000 and to authorize 5,000,000 shares of undesignated preferred stock. |
Summary of significant accounti
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2015 | |
Summary of significant accounting policies | |
Summary of significant accounting policies | Note 3. Summary of significant accounting policies With the closing of the Company’s IPO, the Company is no longer accruing preferred stock dividends or accreting the redeemable preferred stock to its redemption value as these Preferred Shares were retired and cancelled as stated above. There have been no other material changes to the significant accounting policies previously disclosed in the Company’s Final Prospectus for the year ended December 31, 2014. Principles of consolidation: At September 30, 2015, the consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. At December 31, 2014, Neos Therapeutics, Inc. owned, directly or indirectly, 100% of two of its subsidiaries and 99.9% of the third subsidiary, Neostx, Inc. (“NTX”). The remaining 0.1% ownership of NTX was held by a third party and all such remaining capital stock was acquired by the Company on June 29, 2015, and NTX was merged with and into the Company. The amounts attributable to the noncontrolling interest were not material to the consolidated financial statements. On September 16, 2015, the Company established two new wholly-owned subsidiaries, Neos Therapeutics Brands, LLC and Neos Therapeutics Commercial, LLC. All significant intercompany transactions have been eliminated. Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. Short-term investments: Short-term investments consist of U.S. Treasury Bills that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. These investments are recorded at fair value. Realized gains and losses are reported in the consolidated statements of operations. Unrealized gains and losses are immaterial. Fair value of financial instruments: The carrying value of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, accrued expenses, and debt, approximates fair value due to the short-term nature of the instruments and/or the current interest rates payable in relation to current market conditions. The fair value of the Company’s warrants and earnout liabilities is disclosed in Note 5. Inventories: Inventories, comprised of raw materials, labor, and manufacturing overhead, as well as finished goods inventory, are stated at the lower of cost (actual, which approximates first-in, first-out) or market, net of an allowance for obsolete inventory. Intangible assets: Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology and the costs to acquire the rights to Tussionex ANDA, are recorded at cost and amortized over the estimated lives of the assets ranging from 10 to 20 years. Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (non-current) until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the financing. Revenue recognition: Revenue is generated from product sales, recorded on a net sales basis, and historically, manufacturing, development and profit sharing from a development and manufacturing agreement. Product revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (1) the price to the buyer is substantially fixed or determinable at the date of sale, (2) the buyer has paid for the product, or the buyer is obligated to pay for the product and the obligation is not contingent on resale of the product, (3) the buyer’s obligation to pay would not be changed in the event of theft or physical destruction or damage of the product, (4) the buyer acquiring the product for resale has economic substance apart from that provided by the Company, (5) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (6) the amount of future returns can be reasonably estimated. The Company sells its generic Tussionex to a limited number of pharmaceutical wholesalers. Pharmaceutical wholesalers buy drug products directly from manufacturers. Title to the product passes upon delivery to the wholesalers, when the risks and rewards of ownership are assumed by the wholesaler (freight on board destination). These wholesalers then resell the product to retail customers such as food, drug and mass merchandisers. The Company expects that manufacturing, profit sharing and development revenue will end as the Company has terminated the Company’s development and manufacturing agreement. As a result of the Company’s acquisition of the rights to commercialize and derive future profits from the Tussionex ANDA, the Company will utilize its manufacturing capability to derive revenue directly from sales made by the Company, rather than through the Company’s former commercial partner. Net product sales Net product sales for the Company’s generic Tussionex product represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments include wholesaler fees and estimated allowances for product returns, government rebates, chargebacks and prompt-payment discounts to be incurred on the selling price of the respective product sales. Wholesale distribution fees are incurred on the management of these products by wholesalers and are recorded within net product sales based on definitive contractual agreements. The Company estimates gross to net sales adjustments for allowances for product returns, government rebates and chargebacks based upon analysis of third-party information, including information obtained from the Company’s third party logistics provider (“3PL”), with respect to its inventory levels and sell-through to the wholesalers’ customers, data available from third parties regarding prescriptions written for the Company’s products, as well as actual experience as reported by the Company’s customers and previous commercialization partners. Due to estimates and assumptions inherent in determining the amount of returns, rebates and chargebacks, the actual amount of returns and claims for rebates and chargebacks may be different from the estimates, at which time reserves would be adjusted accordingly. Allowances and accruals are recorded in the same period that the related revenue is recognized. Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Generic Tussionex product returns are estimated based upon data available from sales of the Company’s product by its former commercialization partner and from actual experience as reported by retailers. Historical trend of returns will be continually monitored and may result in future adjustments to such estimates. On August 26, 2014, the U.S. Drug Enforcement Agency (“DEA”) reclassified the Company’s generic Tussionex from a Schedule III controlled substance to a Schedule II controlled substance which had the effect of requiring unsold product at the wholesalers and the 3PL to either be relabeled or returned. This new ruling was effective October 6, 2014. As such, the Company established reserves for the estimated returns of such product outstanding at the wholesalers as of October 6, 2014. The Company had no inventory labeled as Schedule III at the 3PL as of the effective date. Medicaid rebates The Company’s products are subject to state government-managed Medicaid programs whereby discounts and rebates are provided to participating state governments. Estimated rebates payable under governmental programs, including Medicaid, are recorded as a reduction of revenue at the time revenues are recorded. Calculations related to these rebate accruals are estimated based on sales of the Company’s product by its former commercialization partner. Historical trend of Medicaid rebates will be continually monitored and may result in future adjustments to such estimates. Wholesaler Chargebacks The Company’s products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Chargebacks are accounted for by establishing an accrual in an amount equal to the Company’s estimate of chargeback claims at the time of product sale based on information provided by the distributor. Due to estimates and assumptions inherent in determining the amount of chargebacks, the actual amount of claims for chargebacks may be different from estimates, which may result in adjustments to such reserves. Manufacturing Manufacturing revenue is derived from product manufactured by the Company and sold by the Company’s former commercial partner under a development and manufacturing agreement. Manufacturing revenue is derived from a contractual supply price paid to the Company by the Company’s commercial partners. Profit sharing Profit sharing revenue is recorded as the product is sold by the Company’s former commercial partner. The profit share is the Company’s share of the net profits after taking into account net revenue, which is gross product sales by the Company’s former commercial partner, net of discounts, returns and allowances incurred by the Company’s former commercial partner, less collaboration expenses. Development revenue Development revenue from the development and manufacturing agreement has been recognized as the related services are completed. Development revenue in the form of milestone payments is recognized upon achievement of the related milestones and provided that collectability is reasonably assured and other revenue recognition criteria are met. Amounts received under cost reimbursement arrangements for production and research and development are recorded as offsets to the costs incurred and not recognized as revenue. Research and development costs: Research and development costs are charged to operations when incurred and include salaries and benefits, facilities costs, overhead costs, clinical trial costs, contract services, fees paid to regulatory authorities for review and approval of the Company’s product candidates and other related costs. Income taxes: Income taxes are accounted for using the liability method, under which deferred taxes are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. Management evaluates the Company’s tax positions in accordance with guidance on accounting for uncertainty in income taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination. As of December 31, 2014 and September 30, 2015, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the consolidated financial statements. Tax benefits are recognized when it is more likely than not that a tax position will be sustained during an audit. Deferred tax assets are reduced by a valuation allowance if current evidence indicates that it is considered more likely than not that these benefits will not be realized. At December 31, 2014 and September 30, 2015, based on the level of historical operating results and projections for the taxable income for the future, the Company has determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. At December 31, 2014, the Company had a net operating loss carry-forward of $86,551,000 and research and development credits of $2,029,000, which begin to expire in 2024. The Company analyzed the impact of any ownership change(s) under Section 382 of the Internal Revenue Code and determined that there would not be a material limitation in the utilization of the net operating loss carry-forwards and credits due to any ownership changes. Warrants: The Company accounts for its warrants and other derivative financial instruments as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants classified as derivative liabilities are recorded on the Company’s balance sheet at their fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized as increases or reductions to other income (expense) in the statements of operations. The Company estimates the fair value of its derivative liabilities using third party valuation analysis that utilizes option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life, yield, and risk-free interest rate. Prior to the closing of the IPO, the Company’s Series C warrants were determined to be derivative liabilities and they were revalued at each subsequent balance sheet date. Upon closing the IPO, the warrants issued in conjunction with the Series C preferred stock financing were exchanged in a cashless exercise for 947,185 shares of Series C preferred stock which converted into 78,926 shares of the Company’s common stock. The remaining Series C warrants issued with the senior debt to purchase 170,000 pre-split shares of Series C preferred stock (“Hercules Warrants”) were converted into warrants to purchase 70,833 shares of the Company’s common stock and the warrant liability was reclassified to Additional Paid in Capital within Stockholders’ Equity (Deficit). Share-based compensation: Share-based compensation awards, including grants of employee stock options and restricted stock and modifications to existing stock options, are recognized in the statement of operations based on their fair values. Compensation expense related to awards to employees is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. Due to the previous lack of a public market for the trading of its common stock and a lack of company-specific historical and implied volatility data, the Company has, prior to the IPO, historically utilized third party valuation analyses to determine the fair value. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Segment information: Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. Liquidity: During 2014 and the three and nine months ended September 30, 2015 and 2014, the Company produced operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from pharmaceutical products developed with its extended-release technologies. The Company does not anticipate it will be profitable until after the launch of one or more of its ADHD product candidates. With the completion of the Company’s IPO in July 2015, management believes the Company presently has sufficient liquidity to continue to operate for at least the next 12 months. Application of revised accounting standards: In April 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”), was enacted in the United States. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has irrevocably elected not to avail itself of this extended transition period and, as a result, will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. Recent accounting pronouncements: In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory—Simplifying the Measurement of Inventory (Topic 330). The amendments in this ASU require an entity to measure inventory that is not measured using the last-in, first-out (LIFO) or retail inventory methods at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this standard on its ongoing financial reporting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company does not expect the adoption of this standard will have a material impact on the Company’s financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU is for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of this standard will have a material impact on the Company’s financial statements. From time to time, additional new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Reclassifications: Certain reclassifications have been made to the prior year’s consolidated financial statements to conform to the current year’s presentation. Subsequent events: The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. |
Net loss per share
Net loss per share | 9 Months Ended |
Sep. 30, 2015 | |
Net loss per share | |
Net loss per share | Note 4. Net loss per share Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. Potentially dilutive securities which include redeemable convertible preferred stock, warrants and outstanding stock options under the stock option plan have been excluded from the computation of diluted net loss per share as they would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company’s net loss position. The following potentially dilutive securities outstanding as of September 30, 2015 and 2014 were excluded from consideration in the computation of diluted net loss per share of common stock for the three and nine months ended September 30, 2015 and 2014, respectively, because including them would have been anti-dilutive: September 30, September 30, 2015 2014 Series A Redeemable Convertible Preferred Stock (as converted) — Series B Redeemable Convertible Preferred Stock (as converted) — Series B-1 Redeemable Convertible Preferred Stock (as converted) — Series C Redeemable Convertible Preferred Stock (as converted) — Series C Redeemable Convertible Preferred Stock Warrants (as converted) Common Stock Warrants (as converted) Stock options |
Fair value of financial instrum
Fair value of financial instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair value of financial instruments | |
Fair value of financial instruments | Note 5. Fair value of financial instruments Financial instruments are categorized into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (“Level 1”) and the lowest priority to unobservable inputs (“Level 3”). If the inputs used to measure fair value fall within different levels of the hierarchy, the categorization of the financial instrument is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Company’s consolidated balance sheets are categorized as follows: Level 1: Unadjusted quoted prices for identical assets in an active market. Level 2: Quoted prices in markets that are not active or inputs that are observable either directly or indirectly for substantially the full-term of the asset. Level 2 inputs include the following: Quoted prices for similar assets in active markets. Quoted prices for identical or similar assets in nonactive markets. Inputs other than quoted market prices that are observable. Inputs that are derived principally from or corroborated by observable market data through correlation or other means. Level 3: Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset. The following table presents the hierarchy for the Company’s financial instruments measured at fair value on a recurring basis for the indicated dates: Fair Value as of December 31, 2014 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Short term investments — — Earnout liability — — Series C Redeemable Preferred Stock Warrants — — $ $ — $ $ Fair Value as of September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Earnout liability — — $ $ — $ $ The Company’s Level 1 assets include bank deposits, U.S. Treasury bills and money market funds with quoted prices in active markets. Level 3 liabilities included the fair values of the earnout liability and the outstanding Series C warrants at December 31, 2014. There were no outstanding warrants to purchase preferred stock as of September 30, 2015. Various methodologies were utilized to value the Level 3 liabilities including Black-Scholes, Probability-Weighted Expected Return (“PWERM”), Option Pricing and Monte Carlo. The methodologies and significant inputs used in the determination of the fair value of the Hercules Warrants were as follows: Revalue Series C Revalue Series C Revalue Series C Revalue Series C Warrants Issued with Warrants Issued with Warrants Issued with Warrants Issued with Senior Debt at Senior Debt at Senior Debt at Senior Debt at December 31, 2014 March 31, 2015 June 30, 2015 July 22, 2015 (Dollars in thousands, except $5 and $12 Exercise Prices) Date of Valuation 12/31/2014 3/31/2015 6/30/2015 7/22/2015 Valuation Method PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing Black-Scholes-Merton Option-Pricing Dividend yield (per share) Exercise price $ $ $ $ Volatility (annual) Risk-free rate (annual) .25% - 2.47% .19% - 2.31% .14% - 2.83% Contractual term (years) 1 - 5 .75 - 5 .5 - 5 Number of warrants Fair value of liability at valuation date $ $ $ $ As the Hercules Warrants converted into warrants for common stock, with a term of five years from the IPO date, it was determined that the Black-Scholes-Merton Option-Pricing model would provide a better indication of the fair value as it was designed to calculate the value of a put or call option over time. The methodologies and significant inputs used in the determination of the fair value of the Series C warrants issued with the Series C preferred stock were as follows: Initial Valuation of December 31, 2014 Initial Valuation Initial Valuation Revalue All Warrants Revalue All Warrants Revalue All Warrants Warrants Issued of January 2015 of February 2015 Issued With Series C Issued With Series C Issued With Series C With Series C Warrants Issued With Warrants Issued With Redeemable Preferred Redeemable Preferred Redeemable Preferred Redeemable Series C Redeemable Series C Redeemable Stock at Stock at Stock at Preferred Stock Preferred Stock Preferred Stock March 31, 2015 June 30, 2015 July 22, 2015 (Dollars in thousands, except $5 and $12 Exercise Prices) Date of Valuation 12/31/2014 1/31/2015 2/28/2015 3/31/2015 6/30/2015 7/22/2015 Valuation Method PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing Dividend yield (per share) Exercise price $ $ $ $ $ $ Volatility (annual) Risk-free rate (annual) .25% - 2.47% .25% - 2.47% .25% - 2.47% .19% - 2.31% .14% - 2.83% Contractual term (years) 1 - 5 1 - 5 1 - 5 .75 - 5 .5 - 5 Number of warrants Fair value of liability at valuation date $ $ $ $ $ $ Immediately after the July 22, 2015 revaluation, the Series C warrants issued with the Series C preferred stock were exchanged in a post-split net exercise whereby the option to purchase one share of Series C preferred stock plus the adjusted exercise price of $12.00 was exchanged for one share of common stock with an initial “price to the public” of $15.00; therefore, the value of these Series C warrants was determined to be its intrinsic value of $3.00 per share. The methodologies and significant inputs used in the determination of the fair value of the earnout liability were as follows: December 31, 2014 March 31, 2015 June 30, 2015 September 30, 2015 Earnout Liability Earnout Liability Earnout Liability Earnout Liability (Dollars in thousands) Date of Valuation 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Valuation Method Monte Carlo Monte Carlo Monte Carlo Monte Carlo Volatility (annual) Risk-free rate (annual) .15% - 3.21% .14% - 3.00% .09% - 3.51% .15% - 3.21% Time period from valuation until end of earnout .5 - 9.5 .375 - 9.375 .25 - 9.0 .125 - 8.75 Earnout Target 1 $ $ $ $ Earnout Target 2 $ $ $ $ Discount rate 7.96% - 11.03% 8.18% - 11.04% 7.96% - 11.39% 8.16% - 11.22% Fair value of liability at valuation date $ $ $ $ Significant changes to these assumptions would result in increases/decreases to the fair value of the earnout liability and the outstanding Series C warrants for the periods presented. Changes in Level 3 liabilities measured at fair value for the periods indicated were as follows: Series C Warrants Series C Warrants Issued Earnout Issued With With Series C Redeemable Liability Senior Debt Preferred Stock Financing (in thousands) Balance at December 31, 2014 $ $ $ Additions during the period — — Changes in fair value ) Warrants exercised — — ) Cashless warrant exercise due to IPO — — ) Conversion to common stock warrant — ) Balance at September 30, 2015 $ $ — $ — The reductions in fair value of the earnout liability shown above resulted from new information regarding the projected impact of the DEA’s reclassification of Tussionex from a Schedule III controlled substance to a Schedule II controlled substance and a review of the launch dates of the Company’s three ADHD product candidates. The increases in the fair value of the Series C warrants were due to the increased weighting of the IPO scenario in the PWERM model. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Inventories | |
Inventories | Note 6. Inventories Inventories at the indicated dates consist of the following: September 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in progress Finished goods Inventory at cost Inventory reserve ) ) $ $ |
Sale-leaseback transaction
Sale-leaseback transaction | 9 Months Ended |
Sep. 30, 2015 | |
Sale-leaseback transaction | |
Sale-leaseback transaction | Note 7. Sale-leaseback transaction In the aggregate, the Company sold groups of assets for $5.5 million and $795,000 in five separate tranches that occurred in February, July and November 2013, and March 2014, which resulted in a net gains of approximately $2.7 million and $116,000, in the years ended December 31, 2013 and 2014, respectively, and executed capital leases for these assets with repurchase options at the end of each respective lease term. Gains on the transactions are recognized on a straight-line basis over each respective 42-month lease term. For the three months ended September 30, 2015 and 2014, approximately $207,000 and $208,000, respectively, and for the nine months ended September 30, 2015 and 2014 approximately $623,000 and $616,000, respectively, of the net gain was recognized in other income on the consolidated statements of operations. |
Intangible assets, net
Intangible assets, net | 9 Months Ended |
Sep. 30, 2015 | |
Intangible assets, net | |
Intangible assets, net | Note 8. Intangible assets, net Intangible assets, net at the indicated dates consist of the following: September 30, December 31, 2015 2014 (in thousands) Proprietary modified-release drug delivery technology $ $ Tussionex ANDA CPI profit sharing Other Accumulated amortization ) ) $ $ The $15.6 million of proprietary modified-release drug delivery technology is being amortized over 20 years. Amortization expense of $195,000 was recorded for both the three months ended September 30, 2015 and 2014 and amortization expense of $585,000 was recorded for both the nine months ended September 30, 2015 and 2014. On August 28, 2014, the Company completed an acquisition of the rights to Tussionex ANDA from Cornerstone and CPI which was accounted for as an asset acquisition. Prior to the acquisition, the Company, Cornerstone and CPI shared profits generated by the sale and manufacture of the product under a development and manufacturing agreement, and Cornerstone had commercialization rights to the product. The Company paid $4.2 million to Cornerstone to buy out its rights to commercialize and derive future profits from the product and entered into an agreement whereby Cornerstone transferred certain assets associated with the product to the Company. Legal fees of $90,000 associated with this buyout agreement have been capitalized as part of the purchase price. Additional estimated earnout costs due to Cornerstone of $589,000, recorded at fair value by the Company based upon a valuation provided by a third party valuation firm, were capitalized as part of the purchase price of this intangible asset. This earnout amount was revalued at September 30, 2015, resulting in a $3,000 decrease in the estimated fair value of the earnout which is recorded in other income (expense), net in the Company’s consolidated statement of operations for the three months ended September 30, 2015. The net decrease of $403,000 for the nine months ended September 30, 2015 resulted from new information regarding the projected impact of the DEA’s reclassification of Tussionex from a Schedule III controlled substance to a Schedule II controlled substance. In addition, the Company paid $2.0 million to CPI to buy out its rights to future profits from the collaboration and entered into an agreement whereby CPI will continue to supply a component of the product. Legal fees of $43,000 associated with this buyout agreement have been capitalized as part of the purchase price of this intangible asset. These two intangible assets have an expected life of ten years and are being amortized on a straight-line basis beginning September 2014. Total amortization expense related to these intangible assets was $172,000 and $515,000 for the three and nine months ended September 30, 2015, respectively, and $57,000 and $57,000 for the three and nine months ended September 30, 2014, respectively. |
Other assets
Other assets | 9 Months Ended |
Sep. 30, 2015 | |
Other assets | |
Other assets | Note 9. Other assets Other assets at the indicated dates consist of the following: September 30, December 31, 2015 2014 (in thousands) Patents $ $ Deposits $ $ Patents utilized in the manufacturing of the Company’s generic Tussionex product which total $231,000 are being amortized over their expected useful life of 10 years. For the three and nine months ended September 30, 2015, $5,000 and $17,000, respectively, of patent amortization expense was recorded. There was no patent amortization expense for the three and nine months ended September 30, 2014. After consummation of the Company’s IPO, the $1,991,000 balance of Deferred IPO Offering Costs incurred in 2015 was reclassified to stockholders’ equity (deficit) as a reduction of additional paid-in capital. |
Long-term debt
Long-term debt | 9 Months Ended |
Sep. 30, 2015 | |
Long-term debt. | |
Long-term debt | Note 10. Long-term debt Long-term debt at the indicated dates consists of the following: September 30, December 31, 2015 2014 (in thousands) Senior debt, net of discount of $1,317 and $1,743 $ $ 10% subordinated note payable to a related party Capital leases, maturing through August 2017 Less current portion ) ) Long-term debt $ $ Senior debt: In March 2014, the Company entered into a Loan and Security Agreement (“LSA”) with Hercules which was subsequently amended in August 2014, September 2014, December 2014 and June 2015. As amended, the LSA provides a total commitment of $25.0 million, available in four draws. Borrowings under the LSA are collateralized by substantially all of the Company’s assets, except the Company’s intellectual property and assets under capital lease. The first draw of $10.0 million, (“Tranche 1”), was issued during March 2014 and was used in its entirety to repay outstanding principal under a previous credit facility. The second draw of $5.0 million, (“Tranche 2”), was issued during September 2014. The third draw (“Tranche 3”) in the amount of $5.0 million was issued in March 2015. In June 2015, the fourth and final draw of $5.0 million, (“Tranche 4”), was issued prior to meeting the Tranche 4 milestones. The Company met the Tranche 4 Milestones stated in the LSA prior to July 31, 2015. Each draw is to be repaid in monthly installments, comprised of interest-only monthly payments until May 2016, when installments of interest and principal calculated over a thirty-month amortization period commence. A balloon payment of the entire principal balance outstanding on October 1, 2017 and all accrued but unpaid interest thereunder is due and payable on October 1, 2017. The interest rate is 9% per annum for Tranche 1 and Tranche 4 and 10.5% per annum for Tranche 2 and Tranche 3. An end of term charge of $1.1 million is payable at the earliest to occur of (1) October 1, 2017, (2) the date the Company prepays its outstanding Secured Obligations, as defined therein, or (3) the date the Secured Obligations become due and payable. The LSA, as amended, also contains certain financial and nonfinancial covenants, including limitations on the Company’s ability to transfer assets, engage in a change of control, merge or acquire with or into another entity, incur additional indebtedness, repurchase or redeem stock or other equity interest other than pursuant to employee stock repurchase plans or other similar agreements, make investments and engage in transactions with affiliates. Upon an event of default, the lender may declare the unpaid principal amount of all outstanding loans and interest accrued under the loan and security agreement to be immediately due and payable, and exercise its security interests and other rights. As of December 31, 2014 and September 30, 2015, the Company was in compliance with the covenants under the LSA, as amended. In connection with the LSA, the Company issued the Hercules Warrants which consisted of 60,000 Series C warrants in March 2014 and 110,000 Series C warrants in September 2014 at the then current price of $5.00 per share. The Hercules Warrants became warrants for the purchase of 70,833 shares of common stock at a price of $12.00 per shares upon the closing of the Company’s IPO and were therefore reclassified from warrant liability to Additional Paid in Capital within Shareholders’ Equity (Deficit). The fair value of the 60,000 Hercules Warrants issued March 28, 2014 as part of the initial draw-down described above was $124,000 and the residual proceeds of $9,876,000 were allocated to the $10.0 million interest bearing note. The fair value of the 110,000 Hercules Warrants issued September 25, 2014 as part of the second draw-down described above was $248,000 and the residual proceeds of $4,752,000 were allocated to the $5.0 million interest bearing note. The warrants were recorded as a liability with a related debt discount to be amortized as interest over the term of the LSA. End of term charge amortization totaled $79,000 and $230,000 for the three and nine months ended September 30, 2015, respectively. End of term charge amortization totaled $22,000 and $53,000 for the three and nine months ended September 30, 2014, respectively. Debt discount amortization to interest expense for the senior debt totaled $67,000 and $196,000 for the three and nine months ended September 30, 2015, respectively. Debt discount amortization to interest expense for the senior debt totaled $36,000 and $64,000 for the three and nine months ended September 30, 2014, respectively. As of July 22, 2015, the fair values of the Hercules Warrants were remeasured and the change in fair value of approximately $38,000 for the three months ended September 30, 2015 has been recorded in other income (expense), net in the Company’s consolidated statements of operations and cumulatively for the nine months ended September 30, 2015, a total of $157,000 has been recorded in other income (expense), net in the Company’s consolidated statements of operations. Credit Agreement: Previously, the Company had a credit agreement entered into on August 20, 2012 (the “Credit Agreement”) with a financial institution. The Credit Agreement provided for a four-year $10.0 million term loan, with an annual interest rate of 9.5% payable monthly. In addition, a $250,000 fee payable at maturity was being amortized using the effective interest method. The proceeds from the initial $10.0 million draw on the LSA were used to repay the outstanding $10.0 million Credit Agreement balance and $697,000 of interest expense related to the Credit Agreement in March 2014. The early prepayment of the Credit Agreement resulted in a $445,000 loss (due to recording the $98,000 prepayment penalty and writing off the $154,000 unamortized exit fee and the $193,000 of unamortized loan cost) reflected in interest expense for the nine months ended September 30, 2014. 10% subordinated related party note: The Company has an amended and restated subordinated note (the “Note”) in the aggregate principal amount of $5.9 million that was issued by the Company to Essex Capital Corporation (“Essex”). Interest accrues and adds to the principal balance until such time as the Company achieves positive EBITDA for three consecutive months. On July 19, 2014, the interest rate on the Note was reduced to 6% for the period from July 19, 2014 through June 28, 2015 pursuant to an amendment to the Note entered into as consideration for the $128,000 payment made by the Company to Essex as part of the Settlement and Release of Claims Agreement with Essex and a third party (see Note 16). The Company recorded this amendment as a loan modification. At each of December 31, 2014 and September 30, 2015, the aggregate principal amount of the Note was $5.9 million, and $511,000 and $883,000 in interest had been accrued through the year ended December 31, 2014 and through the nine months ended September 30, 2015, respectively. Capital lease obligations to related party: As described in Notes 7 and 16, during the years ended December 31, 2013 and 2014, the Company entered into agreements with a related party for the sale-leaseback of existing and newly acquired assets with a total capitalized cost of $5.5 million and $795,000, respectively, which are classified as capital leases. The approximate imputed interest rate on these leases is 14.5% and interest expense on these leases was $110,000 and $371,000 for the three months ended September 30, 2015 and September 30, 2014, respectively, and $169,000 and $507,000 for the nine months ended September 30, 2015 and 2014, respectively. Future principal payments of long-term debt, including capital leases, are as follows: September 30, Period ending: 2015 (in thousands) 2015 $ 2016 2017 Future principal payments $ Less unamortized debt discount ) Less current portion of long-term debt ) Total long-term debt $ |
Common stock and redeemable con
Common stock and redeemable convertible preferred stock | 9 Months Ended |
Sep. 30, 2015 | |
Common stock and redeemable convertible preferred stock | |
Common stock and redeemable convertible preferred stock | Note 11. Common stock and redeemable convertible preferred stock The following table summarizes the authorized, issued and outstanding shares of the Company by class of stock as of September 30, 2015 and December 31, 2014. All shares have a par value of $0.001 per share: September 30, 2015 December 31, 2014 Issued and Issued and Authorized Outstanding Authorized Outstanding Shares Shares Shares Shares Common Stock Preferred Stock — — — Series A Preferred Stock — — Series B Preferred Stock — — Series B-1 Preferred Stock — — Series C Preferred Stock — — Total Shares Issued Treasury Stock — ) Total Outstanding Shares Total Authorized Shares Reverse Stock Split On July 10, 2015, the Company filed an amendment to its amended and restated certificate of incorporation, effecting a 1-for-2.4 reverse stock split of the Company’s issued and outstanding shares of common stock as approved by the board of directors on July 9, 2015. All issued and outstanding common stock and per share amounts contained in the Company’s financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. Authorized Shares In connection with the closing of the Company’s IPO on July 28, 2015, the Company amended and restated its certificate of incorporation to authorize 5,000,000 shares of preferred stock, par value $0.001 per share, and 100,000,000 shares of common stock, par value $0.001 per share. Public Offerings and Related Transactions On July 28, 2015, the Company closed its IPO whereby the Company sold 5,520,000 shares of common stock, at a public offering price of $15.00 per share, which includes 720,000 shares of common stock resulting from the underwriters’ exercise of their over-allotment option at the IPO price on July 23, 2015. Proceeds from the Company’s IPO, net of underwriting discounts and commissions and other offering costs, were $75.0 million. Upon the closing of the Company’s IPO, all of the Company’s Preferred Shares converted into shares of the Company’s Common Stock, all such Preferred Shares were retired and cancelled and shall not be reissued as shares of such series, and all rights and preferences of those Preferred Shares were cancelled including the right to receive undeclared accumulated dividends. Each of the following occurred in connection with the closing of the Company’s IPO on July 28, 2015: the conversion of all outstanding shares of convertible preferred stock into 9,217,983 shares of the Company’s common stock; the conversion of the Hercules Warrants to purchase 170,000 shares of Series C convertible preferred stock into warrants to purchase 70,833 shares of the Company’s common stock and the resultant reclassification of the warrant liability to Additional Paid in Capital within Stockholders’ Equity (Deficit); and the net exercise of outstanding Series C warrants issued in conjunction with the Series C preferred stock financing to purchase 947,185 shares of Series C preferred stock for 78,926 shares of the Company’s common stock. The Company had classified its classes of redeemable convertible preferred stock as mezzanine equity based upon the terms and conditions which contain various redemption and conversion features. In conjunction with the Company’s Series B-1 financing in 2012, the Series B-1 investors also received warrants (“Series B-1 warrants”) to purchase 389,474 shares of common stock at an exercise price of $0.0024 per share. There were no exercises of Series B-1 warrants in the year ended December 31, 2014. During the nine months ended September 30, 2015, the Company issued a total of 101,431 shares of its common stock upon the exercise of Series B-1 warrants held by several investors at an exercise price of $0.0024 per share. As of September 30, 2015, Series B-1 warrants to purchase 235,695 shares of common stock remained outstanding, and expire in 2016. Between October 1 and October 28, 2015, the Company issued 112,402 shares of its common stock upon the exercise of Series B-1 warrants held by several investors at an exercise price of $0.0024 per share (see Note 17). In February and March 2014, the Company closed on additional Series C financings totaling 1,986,586 shares, raising $9.9 million. Between December 2014 and February 2015, the Company closed on an additional Series C financing raising a total of $20.6 million, including $7.5 million in December 2014 and $13.1 million during the nine months ended September 30, 2015. The Company issued 1,499,935 shares in December 2014 and 2,624,936 shares during the three months ended March 31, 2015 of Series C preferred stock. In addition, the Company issued a Series C warrant to purchase one additional share of Series C preferred stock at a purchase price of $5.00 per share for every two purchased shares of Series C preferred stock, provided the investor purchased its pro-rata share of the Series C preferred stock. In the event that the Company’s Series C preferred stock converted into common stock or another class of the Company’s stock (“Conversion Stock”) during the warrant exercise period, then the warrants would become exercisable for the Conversion Stock and the exercise price of those warrants was to be ratably adjusted. The Company issued Series C warrants to purchase 749,967 shares of Series C preferred stock in December 2014 and 1,197,218 shares of Series C preferred stock during the nine months ended September 30, 2015 (see warrant liability section below). On June 30, 2015, the Company issued a total of 150,000 shares of its Series C preferred stock to an investor upon the exercise of warrants held by that investor at an exercise price of $5.00 per share, for an aggregate exercise price of $750,000. Between July 6 and July 27, 2015, the Company issued 850,000 shares of its Series C preferred stock to several investors upon the exercise of Series C warrants held by those investors at an exercise price of $5.00 per share, for an aggregate exercise price of $4.25 million. Dividends: From and after the date of the issuance of the Company’s Series B-1 redeemable convertible preferred stock (“Series B-1 preferred stock”) until the retirement and cancellation of Series B-1 preferred stock in conjunction with the Company’s IPO, dividends at the rate per annum of 8% of the Series B-1 preferred stock original issuance price of $5.00 were accrued on such shares of Series B-1 preferred stock. Dividends accrued from day to day, whether or not declared, and were cumulative. The accruing dividends was to be payable in additional shares of Series B-1 preferred stock, valued at the Series B-1 preferred stock original issuance price, unless the board of directors of the Company elected to pay all or any portion of the accruing dividends in cash. In accordance with the conversion provision of the Company’s Third Amended and Restated Certificate of Incorporation, as amended, which was triggered upon the Company’s IPO, all rights with respect to the Preferred Shares of the Company were terminated, including the right to receive undeclared dividends. The Series B-1 preferred stock cumulative dividends were never declared by the Company’s board of directors. Redemption: Prior to the retirement and cancellation of the Company’s Preferred Shares as a result of the IPO, the holders of a majority of the outstanding shares of Series C preferred stock , Series B-1 preferred stock and Series B preferred stock , voting together as a single class, could require the Company to redeem the Series C preferred stock , Series B-1 preferred stock and Series B preferred stock at their original purchase price of $5.00 per share in three annual installments by giving a sixty-day notice at any time on or after March 31, 2017. On March 25, 2014, the Company amended the initial redemption date, extending it to November 1, 2017. On each redemption date, the Company was to redeem, on a pro rata basis in accordance with the number of shares of Series C preferred stock , Series B-1 preferred stock and Series B preferred stock owned by each holder, that number of outstanding shares of Series C preferred stock , Series B-1 preferred stock and Series B preferred stock . If the Company did not have sufficient funds legally available to redeem on any redemption date, the Company was to redeem a pro rata portion of each holder’s Series C preferred stock , Series B-1 preferred stock and Series B preferred stock out of funds legally available. The Series C preferred stock , Series B-1 preferred stock and Series B preferred stock were to be redeemable on November 1, 2017, and their carrying value was being accreted to the minimum redemption value of $5.00 per share or $57,642,000, $27,309,000 and $15,565,000, respectively, over the period from issuance through November 1, 2017 using the effective interest method for issuances through the IPO effective date. The amount of accretion recorded for the three and nine months ended September 30, 2015 and for the three and nine months ended September 30, 2014 for Series C preferred stock amounted to $37,000, $607,000, $21,000 and $66,000, respectively. The amount of accretion recorded for the three and nine months ended September 30, 2015 and for the three and nine months ended September 30, 2014 for Series B-1 preferred stock was $41,000, $370,000, $162,000 and $516,000, respectively. The amount of accretion recorded for the three and nine months ended September 30, 2015 and for the three and nine months ended September 30, 2014 for Series B preferred stock amounted to $21,000, $192,000, $84,000 and $268,000, respectively. In accordance with the conversion provision of the Company’s Third Amended and Restated Certificate of Incorporation, as amended, which was triggered upon the Company’s IPO, all rights with respect to the Preferred Shares of the Company were terminated, including redemption rights. Warrant liability: In connection with the December 2014 $7.5 million additional Series C preferred stock financing (see above), the Company issued warrants to purchase an aggregate 749,967 shares of the Series C preferred stock. The proceeds from the December 2014 additional Series C preferred stock financing with Series C warrants were allocated to the two elements based on the fair value of the Series C warrants at time of issuance. The remainder of the proceeds was allocated to the redeemable convertible preferred instrument portion of the transaction, resulting in a discount. The portion of the proceeds so allocated to the warrants was accounted for as a warrant liability and periodically adjusted to fair value through the statement of operations. The related preferred stock discount was amortized as preferred stock accretion to redemption value over the remaining term until the redemption date using the effective interest method. The fair value of the 749,967 Series C Warrants was $1,335,000, with the residual $6,108,000, net of legal fees of $57,000, allocated to the 1,499,935 shares of Series C preferred stock as of December 2014. The proceeds from the 2015 additional Series C preferred stock financing with stock purchase warrants were allocated to the two elements based on the fair value of the Series C warrants at time of issuance. The remainder of the proceeds was allocated to the redeemable convertible preferred instrument portion of the transaction, resulting in a discount. The portion of the proceeds so allocated to the Series C warrants was accounted for as a warrant liability and periodically adjusted to fair value through the statement of operations. The related preferred stock discount is amortized as preferred stock accretion to redemption value over the remaining term until the redemption date using the effective interest method. The fair value of the 1,197,218 Series C warrants was $2,131,000, with the residual $10,916,000, net of legal fees of $78,000, allocated to the 2,624,936 shares of Series C preferred stock. On the IPO effective date of July 22, 2015, the Series C warrant fair values were remeasured for a final time and an increase in fair value of approximately $1,522,000 and $ $1,698,000 has been recorded in other income (expense), net in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2015. Upon the closing of the Company’s IPO, all of the shares of the Company’s redeemable convertible preferred stock (“Preferred Shares”) were retired and cancelled and shall not be reissued as shares of such series, and all rights and preferences of those Preferred Shares were cancelled including the right to receive undeclared accumulated dividends. On the IPO closing date, all outstanding shares of redeemable preferred stock converted into 9,217,983 shares of common stock and all remaining outstanding Series C warrants issued in conjunction with purchases of Series C preferred stock were net exercised at the IPO price for 78,926 shares of common stock. |
Stock options, restricted stock
Stock options, restricted stock and performance stock options | 9 Months Ended |
Sep. 30, 2015 | |
Stock options, restricted stock and performance stock options | |
Stock options, restricted stock and performance stock options | Note 12. Stock options, restricted stock and performance stock options In July 2015, the Company adopted the Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan (“2015 Plan”) which became effective immediately prior to the closing of the IPO and initially had 767,330 shares of common stock reserved for issuance. On January 1, 2016 and each January 1 thereafter, the number of shares of common stock reserved and available for issuance under the 2015 Plan shall be cumulatively increased by five percent of the number of shares of stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares determined by the administrator of the 2015 Plan. The 2015 Plan superseded the Neos Therapeutics, Inc. 2009 Equity Plan (“2009 Plan”), originally adopted in November 2009 and which had 1,375,037 shares for reserved and available for issuance. Effective upon closing of the IPO, the board of directors determined not to grant any further awards under the 2009 Plan. The shares of common stock underlying any awards that are forfeited, canceled, reacquired by the Company prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise) under the 2009 Plan will be added to the shares of common stock available under the 2015 Plan. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The 2015 Plan is administered by the Company’s compensation committee. The Company’s compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants and to determine the specific terms and conditions of each award, subject to the provisions of the 2015 Plan. The Company’s compensation committee may delegate authority to grant certain awards to the Company’s chief executive officer. The exercise price per share for the stock covered by a stock option granted shall be determined by the administrator at the time of grant but shall not be less than 100 percent of the fair market value on the date of grant. The Board of Directors approved option grants covering a total of 37,500 shares of common stock to certain non-employee directors on July 9, 2015 under the 2015 Plan. These option grants were effective immediately after the effectiveness of the Company’s registration statement. The exercise price of these option grants was equal to the IPO price of $15.00. The Board of Directors approved option grants covering a total of 445,210 shares of common stock to certain non-employee directors and employees on August 20, 2015 under the 2015 Plan. These option grants were effective September 1, 2015. The exercise price of these option grants was equal to the market price of $25.50. The 2009 Plan allowed the Company to grant options to purchase shares of the Company’s common stock. Options were granted to officers, employees, nonemployee directors and consultants, and independent contractors of the Company. The Company also granted performance based awards to selected management. The performance options vest over a three-year period based on achieving certain operational milestones. Unexercised options expire after the earlier of 10 years or termination of employment, except in the case of any unexercised vested options, which generally expire 90 days after termination of employment. All terminated options are available for reissuance under the 2015 Plan. During the third quarter of 2015, 2,083 shares related to forfeited 2009 Plan options were transferred into the shares available under the 2015 Plan. As of September 30, 2015, 284,620 shares of common stock remain available for grant under the 2015 Plan. The Company estimates the fair value of all stock option awards on the grant date by applying the Black-Scholes option pricing valuation model. The application of this valuation model involves assumptions that are highly subjective, judgmental and sensitive in the determination of compensation cost. Prior to the IPO, given the absence of an active market for the Company’s common stock prior to its IPO, the Company’s board of directors was required to estimate the fair value of its common stock at the time of each option grant primarily based upon valuations performed by a third party valuation firm. The weighted-average key assumptions used in determining the fair value of options granted during the periods indicated are as follows: Three Months Nine Months Ended September 30, Ended September 30, 2015 2015 Estimated dividend yield % % Expected stock price volatility % % Weighted-average risk-free interest rate % % Expected life of option in years Weighted-average option fair value at grant $ $ Total compensation cost that has been charged to selling, general and administrative expense related to stock options was $291,000 and $480,000 for the three and nine months ended September 30, 2015, respectively, and $36,000 and $68,000 for the three and nine months ended September 30, 2014, respectively. At September 30, 2015, there was $7.1 million of unrecognized compensation cost, adjusted for estimated forfeitures, related to unamortized stock options compensation which is expected to be recognized over the weighted-average remaining contractual life of options outstanding of approximately 9.1 years. For the nine months ended September 30, 2015, the Company issued 37,753 shares of the Company’s common stock upon the exercise of outstanding stock options and received proceeds of $72,000 and realized no tax benefit from the exercised stock options. A summary of outstanding and exercisable options as of September 30, 2015 and December 31, 2014 and the activity from December 31, 2014 through September 30, 2015, is presented below: Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2014 $ $ Exercisable at December 31, 2014 $ $ Granted Exercised ) Expired, forfeited or cancelled ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ The weighted-average remaining contractual life of options outstanding and exercisable on December 31, 2014 was 8.7 and 7.3 years, respectively. The option exercise price for all options granted in 2014 ranged from $2.91 to $7.49 per share. The weighted-average remaining contractual life of options outstanding and exercisable on September 30, 2015 was 9.1 and 7.3 years, respectively. The option exercise price for all options granted in the nine months ended September 30, 2015 ranged from $9.32 to $25.50 per share. Restricted stock: Under the 2009 Plan, the Company granted restricted stock awards to members of its management and selected members of the board of directors. Restricted stock awards are recorded as deferred compensation and amortized into compensation expense, on a straight-line basis over a defined vesting period ranging from 1 to 48 months. For the year ended December 31, 2013, the Company issued 149,244 shares of restricted stock at a grant date fair value of $2.55 per share. Of these shares, 7,195 vested immediately and the remaining 142,049 of these shares vest over 48 months in four equal tranches on the anniversary of the issue date. Restricted stock compensation cost of $27,000 and $72,000 for the three and nine months ended September 30, 2015, respectively, and $23,000 and $68,000 for the three and nine months ended September 30, 2014, respectively, has been charged to selling, general and administrative expenses. At September 30, 2015 and 2014, there was $185,000 and $278,000, respectively, of unrecognized compensation cost related to restricted stock. No vested restricted stock awards were settled during the nine months ended September 30, 2015. On October 16, 2015, the Company settled certain vested restricted stock awards which were settled having a value of $658,000 in cash, and the company realized a tax benefit of $224,000. On October 16, 2015, 9,197 shares of restricted stock were surrendered by the holder to the Company to cover taxes associated with vesting of restricted stock. The fair value of such shares was determined to be $18.54 per share, the closing price of the Company’s stock on such date. The Company had 106,537 shares of unvested restricted stock with a weighted average fair value of $2.55 as of September 30, 2015 and December 31, 2014. For the nine months ended September 30, 2015, there were no shares granted, vested or forfeited. |
Treasury stock
Treasury stock | 9 Months Ended |
Sep. 30, 2015 | |
Treasury stock | |
Treasury stock | Note 13. Treasury stock The Company has the authority to repurchase common stock from former employees, officers, directors or other persons who performed services for the Company at the lower of the original purchase price or the then-current fair market value. On February 19, 2015, the Company’s board of directors approved the cancellation of the Company’s 55,905 shares of treasury stock which had been repurchased at the original purchase price of $0.002 in 2013. On October 16, 2015, 9,197 shares of restricted stock were surrendered by the holder to the Company to cover taxes associated with vesting of restricted stock and such shares were added back into the treasury stock of the Company. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and contingencies | |
Commitments and contingencies | Note 14. Commitments and contingencies Operating lease: The Company leases its office space and manufacturing facility under an operating lease which expires in 2024. The Company accounts for rent expense on long-term operating leases on a straight-line basis over the life of the lease resulting in a deferred rent balance of $1,163,000 and $1,189,000 at September 30, 2015 and December 31, 2014, respectively. The Company is also liable for a share of operating expenses for the premises as defined in the lease agreement. The Company’s share of these operating expenses was $59,000 and $178,000 for the three and nine months ended September 30, 2015, respectively, and $62,000 and $188,000 for the three and nine months ended September 30, 2014, respectively. Rent expense, excluding the share of operating expenses, for the three and nine months ended September 30, 2015 was $218,000 and $654,000, respectively, and $223,000 and $678,000 for the three and nine months ended September 30, 2014, respectively. Cash incentive bonus plan: In July 2015, the Company adopted the Senior Executive Cash Incentive Bonus Plan (“Bonus Plan”). The Bonus Plan provides for cash payments based upon the attainment of performance targets established by the Company’s compensation committee. The payment targets will be related to financial and operational measures or objectives with respect to the Company, or corporate performance goals, as well as individual targets. The Company has recorded $295,000 and $673,000 of bonus expense for the three and nine months ended September 30, 2015. |
License agreements
License agreements | 9 Months Ended |
Sep. 30, 2015 | |
License agreements | |
License agreements | Note 15. License agreements On July 23, 2014, the Company entered into a Settlement Agreement and an associated License Agreement with Shire LLC for a non-exclusive license to certain patents for certain activities with respect to the Company’s New Drug Application No. 204326 for an extended-release orally disintegrating amphetamine polistirex tablet (“Neos NDA”). Under the terms of the agreement, the Company is required to pay a lump sum, non-refundable license fee of an amount less than $1.0 million no later than 30 days after receiving regulatory approval by the FDA of the Neos NDA. The Company will also pay a single digit royalty on net sales of the subject product during the life of the patents. Upon receiving such approval by the FDA, the license fee will be capitalized and amortized over the life of the patents. The royalties will be recorded as cost of goods sold in the same period as the net sales upon which they are calculated. |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related party transactions | |
Related party transactions | Note 16. Related party transactions At December 31, 2014 and September 30, 2015, the Company was obligated under a $5,935,000 long-term subordinated note (“Note”) that was issued by the Company to Essex. See Note 10 for further details. On July 21, 2014, the Company, Essex and a third party entered into a Settlement Agreement and Release of Claims Agreement resolving certain issues and disputes whereby Essex paid $256,000 to the third party, the Company paid Essex $128,000 and Essex agreed to reduce the interest rate on the Note from 10% to 6% beginning on July 19, 2014 until such time as the Company recovered the full amount of its payment to Essex, which ended on June 28, 2015, at which time the interest rate on the Note returned to 10%. The third party released both Essex and the Company from any and all claims. As described in Note 7, in 2012, the Company negotiated financing arrangements with a related party that provided for the sale-leaseback of up to $6.5 million of the Company’s property and equipment. In 2013, the Company executed four transactions totaling $5.5 million and in March 2014, the Company completed the final tranche of the sale-leaseback arrangement, raising an additional $795,000. |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent events | |
Subsequent events | Note 17. Subsequent events Between October 1 and October 28, 2015, the Company issued 112,402 shares of its common stock to several investors upon the exercise of Series B-1 warrants held by those investors at an exercise price of $0.0024 per share (see Note 11). On October 16, 2015, the Company settled certain vested restricted stock awards which were settled having a value of $658,000 in cash, and the company realized a tax benefit of $224,000. In October 2015, 9,197 shares of restricted stock were surrendered by the holder to the Company to cover taxes associated with vesting of restricted stock. |
Summary of signifcant accountin
Summary of signifcant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Summary of significant accounting policies | |
Principles of consolidation | Principles of consolidation: At September 30, 2015, the consolidated financial statements include the accounts of the Company and its four wholly-owned subsidiaries. At December 31, 2014, Neos Therapeutics, Inc. owned, directly or indirectly, 100% of two of its subsidiaries and 99.9% of the third subsidiary, Neostx, Inc. (“NTX”). The remaining 0.1% ownership of NTX was held by a third party and all such remaining capital stock was acquired by the Company on June 29, 2015, and NTX was merged with and into the Company. The amounts attributable to the noncontrolling interest were not material to the consolidated financial statements. On September 16, 2015, the Company established two new wholly-owned subsidiaries, Neos Therapeutics Brands, LLC and Neos Therapeutics Commercial, LLC. All significant intercompany transactions have been eliminated. |
Cash equivalents | Cash equivalents: The Company invests its available cash balances in bank deposits and money market funds. The Company considers highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company’s primary objectives for investment of available cash are the preservation of capital and the maintenance of liquidity. |
Short-term investments | Short-term investments: Short-term investments consist of U.S. Treasury Bills that have original maturities greater than three months but less than or equal to one year and are classified as available-for-sale securities. These investments are recorded at fair value. Realized gains and losses are reported in the consolidated statements of operations. Unrealized gains and losses are immaterial. |
Fair value of financial instruments | Fair value of financial instruments: The carrying value of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, accrued expenses, and debt, approximates fair value due to the short-term nature of the instruments and/or the current interest rates payable in relation to current market conditions. The fair value of the Company’s warrants and earnout liabilities is disclosed in Note 5. |
Inventories | Inventories: Inventories, comprised of raw materials, labor, and manufacturing overhead, as well as finished goods inventory, are stated at the lower of cost (actual, which approximates first-in, first-out) or market, net of an allowance for obsolete inventory. |
Intangible assets | Intangible assets: Intangible assets subject to amortization, which principally include proprietary modified-release drug delivery technology and the costs to acquire the rights to Tussionex ANDA, are recorded at cost and amortized over the estimated lives of the assets ranging from 10 to 20 years. |
Deferred Offering Costs | Deferred Offering Costs: The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (non-current) until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the financing. |
Revenue recognition | Revenue recognition: Revenue is generated from product sales, recorded on a net sales basis, and historically, manufacturing, development and profit sharing from a development and manufacturing agreement. Product revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (1) the price to the buyer is substantially fixed or determinable at the date of sale, (2) the buyer has paid for the product, or the buyer is obligated to pay for the product and the obligation is not contingent on resale of the product, (3) the buyer’s obligation to pay would not be changed in the event of theft or physical destruction or damage of the product, (4) the buyer acquiring the product for resale has economic substance apart from that provided by the Company, (5) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (6) the amount of future returns can be reasonably estimated. The Company sells its generic Tussionex to a limited number of pharmaceutical wholesalers. Pharmaceutical wholesalers buy drug products directly from manufacturers. Title to the product passes upon delivery to the wholesalers, when the risks and rewards of ownership are assumed by the wholesaler (freight on board destination). These wholesalers then resell the product to retail customers such as food, drug and mass merchandisers. The Company expects that manufacturing, profit sharing and development revenue will end as the Company has terminated the Company’s development and manufacturing agreement. As a result of the Company’s acquisition of the rights to commercialize and derive future profits from the Tussionex ANDA, the Company will utilize its manufacturing capability to derive revenue directly from sales made by the Company, rather than through the Company’s former commercial partner. |
Net product sales | Net product sales Net product sales for the Company’s generic Tussionex product represent total gross product sales less gross to net sales adjustments. Gross to net sales adjustments include wholesaler fees and estimated allowances for product returns, government rebates, chargebacks and prompt-payment discounts to be incurred on the selling price of the respective product sales. Wholesale distribution fees are incurred on the management of these products by wholesalers and are recorded within net product sales based on definitive contractual agreements. The Company estimates gross to net sales adjustments for allowances for product returns, government rebates and chargebacks based upon analysis of third-party information, including information obtained from the Company’s third party logistics provider (“3PL”), with respect to its inventory levels and sell-through to the wholesalers’ customers, data available from third parties regarding prescriptions written for the Company’s products, as well as actual experience as reported by the Company’s customers and previous commercialization partners. Due to estimates and assumptions inherent in determining the amount of returns, rebates and chargebacks, the actual amount of returns and claims for rebates and chargebacks may be different from the estimates, at which time reserves would be adjusted accordingly. Allowances and accruals are recorded in the same period that the related revenue is recognized. |
Product returns | Product returns Wholesalers’ contractual return rights are limited to defective product, product that was shipped in error, product ordered by customer in error, product returned due to overstock, product returned due to dating or product returned due to recall or other changes in regulatory guidelines. The return policy for expired product allows the wholesaler to return such product starting six months prior to expiry date to twelve months post expiry date. Generic Tussionex product returns are estimated based upon data available from sales of the Company’s product by its former commercialization partner and from actual experience as reported by retailers. Historical trend of returns will be continually monitored and may result in future adjustments to such estimates. On August 26, 2014, the U.S. Drug Enforcement Agency (“DEA”) reclassified the Company’s generic Tussionex from a Schedule III controlled substance to a Schedule II controlled substance which had the effect of requiring unsold product at the wholesalers and the 3PL to either be relabeled or returned. This new ruling was effective October 6, 2014. As such, the Company established reserves for the estimated returns of such product outstanding at the wholesalers as of October 6, 2014. The Company had no inventory labeled as Schedule III at the 3PL as of the effective date. |
Medicaid rebates | Medicaid rebates The Company’s products are subject to state government-managed Medicaid programs whereby discounts and rebates are provided to participating state governments. Estimated rebates payable under governmental programs, including Medicaid, are recorded as a reduction of revenue at the time revenues are recorded. Calculations related to these rebate accruals are estimated based on sales of the Company’s product by its former commercialization partner. Historical trend of Medicaid rebates will be continually monitored and may result in future adjustments to such estimates. |
Wholesaler Chargebacks | Wholesaler Chargebacks The Company’s products are subject to certain programs with wholesalers whereby pricing on products is discounted below wholesaler list price to participating entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. Chargebacks are accounted for by establishing an accrual in an amount equal to the Company’s estimate of chargeback claims at the time of product sale based on information provided by the distributor. Due to estimates and assumptions inherent in determining the amount of chargebacks, the actual amount of claims for chargebacks may be different from estimates, which may result in adjustments to such reserves. |
Manufacturing | Manufacturing Manufacturing revenue is derived from product manufactured by the Company and sold by the Company’s former commercial partner under a development and manufacturing agreement. Manufacturing revenue is derived from a contractual supply price paid to the Company by the Company’s commercial partners. |
Profit sharing | Profit sharing Profit sharing revenue is recorded as the product is sold by the Company’s former commercial partner. The profit share is the Company’s share of the net profits after taking into account net revenue, which is gross product sales by the Company’s former commercial partner, net of discounts, returns and allowances incurred by the Company’s former commercial partner, less collaboration expenses. |
Development revenue | Development revenue Development revenue from the development and manufacturing agreement has been recognized as the related services are completed. Development revenue in the form of milestone payments is recognized upon achievement of the related milestones and provided that collectability is reasonably assured and other revenue recognition criteria are met. Amounts received under cost reimbursement arrangements for production and research and development are recorded as offsets to the costs incurred and not recognized as revenue. |
Research and development costs | Research and development costs: Research and development costs are charged to operations when incurred and include salaries and benefits, facilities costs, overhead costs, clinical trial costs, contract services, fees paid to regulatory authorities for review and approval of the Company’s product candidates and other related costs. |
Income taxes | Income taxes: Income taxes are accounted for using the liability method, under which deferred taxes are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax laws that will be in effect when the differences are expected to reverse. Management evaluates the Company’s tax positions in accordance with guidance on accounting for uncertainty in income taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not that the position will be sustained upon examination. As of December 31, 2014 and September 30, 2015, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the consolidated financial statements. Tax benefits are recognized when it is more likely than not that a tax position will be sustained during an audit. Deferred tax assets are reduced by a valuation allowance if current evidence indicates that it is considered more likely than not that these benefits will not be realized. At December 31, 2014 and September 30, 2015, based on the level of historical operating results and projections for the taxable income for the future, the Company has determined that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company has recorded a valuation allowance to reduce deferred tax assets to zero. The Company may not ever be able to realize the benefit of some or all of the federal and state loss carryforwards, either due to ongoing operating losses or due to ownership changes, which limit the usefulness of the loss carryforwards. At December 31, 2014, the Company had a net operating loss carry-forward of $86,551,000 and research and development credits of $2,029,000, which begin to expire in 2024. The Company analyzed the impact of any ownership change(s) under Section 382 of the Internal Revenue Code and determined that there would not be a material limitation in the utilization of the net operating loss carry-forwards and credits due to any ownership changes. |
Warrants | Warrants: The Company accounts for its warrants and other derivative financial instruments as either equity or liabilities based upon the characteristics and provisions of each instrument. Warrants classified as derivative liabilities are recorded on the Company’s balance sheet at their fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized as increases or reductions to other income (expense) in the statements of operations. The Company estimates the fair value of its derivative liabilities using third party valuation analysis that utilizes option pricing models and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as assumptions for expected volatility, expected life, yield, and risk-free interest rate. Prior to the closing of the IPO, the Company’s Series C warrants were determined to be derivative liabilities and they were revalued at each subsequent balance sheet date. Upon closing the IPO, the warrants issued in conjunction with the Series C preferred stock financing were exchanged in a cashless exercise for 947,185 shares of Series C preferred stock which converted into 78,926 shares of the Company’s common stock. The remaining Series C warrants issued with the senior debt to purchase 170,000 pre-split shares of Series C preferred stock (“Hercules Warrants”) were converted into warrants to purchase 70,833 shares of the Company’s common stock and the warrant liability was reclassified to Additional Paid in Capital within Stockholders’ Equity (Deficit). |
Share-based compensation | Share-based compensation: Share-based compensation awards, including grants of employee stock options and restricted stock and modifications to existing stock options, are recognized in the statement of operations based on their fair values. Compensation expense related to awards to employees is recognized on a straight-line basis, based on the grant date fair value, over the requisite service period of the award, which is generally the vesting term. The fair value of the Company’s stock-based awards to employees and directors is estimated using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends. Due to the previous lack of a public market for the trading of its common stock and a lack of company-specific historical and implied volatility data, the Company has, prior to the IPO, historically utilized third party valuation analyses to determine the fair value. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Ultimately, the actual expense recognized over the vesting period will only be for those options that vest. |
Use of estimates | Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. |
Segment information | Segment information: Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment, which is the development, manufacturing and commercialization of pharmaceuticals. |
Liquidity | Liquidity: During 2014 and the three and nine months ended September 30, 2015 and 2014, the Company produced operating losses and used cash to fund operations. Management intends to achieve profitability through revenue growth from pharmaceutical products developed with its extended-release technologies. The Company does not anticipate it will be profitable until after the launch of one or more of its ADHD product candidates. With the completion of the Company’s IPO in July 2015, management believes the Company presently has sufficient liquidity to continue to operate for at least the next 12 months. |
Application of revised accounting standards | Application of revised accounting standards: In April 2012, the Jumpstart Our Business Startups Act (the “JOBS Act”), was enacted in the United States. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has irrevocably elected not to avail itself of this extended transition period and, as a result, will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. |
Recent accounting pronouncements | Recent accounting pronouncements: In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory—Simplifying the Measurement of Inventory (Topic 330). The amendments in this ASU require an entity to measure inventory that is not measured using the last-in, first-out (LIFO) or retail inventory methods at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this standard on its ongoing financial reporting. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard will become effective for the Company on January 1, 2018. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In June 2014, the FASB issued ASU No. 2014-12, Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company does not expect the adoption of this standard will have a material impact on the Company’s financial statements. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. This ASU is for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of this standard will have a material impact on the Company’s financial statements. From time to time, additional new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. |
Reclassifications | Reclassifications: Certain reclassifications have been made to the prior year’s consolidated financial statements to conform to the current year’s presentation. |
Subsequent events | Subsequent events: The Company considers events or transactions that occur after the balance sheet date but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. |
Net loss per share (Tables)
Net loss per share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Net loss per share | |
Potentially dilutive securities not included in the calculation of dilutive EPS | September 30, September 30, 2015 2014 Series A Redeemable Convertible Preferred Stock (as converted) — Series B Redeemable Convertible Preferred Stock (as converted) — Series B-1 Redeemable Convertible Preferred Stock (as converted) — Series C Redeemable Convertible Preferred Stock (as converted) — Series C Redeemable Convertible Preferred Stock Warrants (as converted) Common Stock Warrants (as converted) Stock options |
Fair value of financial instr26
Fair value of financial instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Methodologies and significant inputs used in the determination of the fair value | |
Hierarchy for financial instruments measured at fair value on a recurring basis | Fair Value as of December 31, 2014 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Short term investments — — Earnout liability — — Series C Redeemable Preferred Stock Warrants — — $ $ — $ $ Fair Value as of September 30, 2015 Level 1 Level 2 Level 3 Total (in thousands) Cash and cash equivalents $ $ — $ — $ Earnout liability — — $ $ — $ $ |
Changes in Level 3 liabilities measured at fair value | Series C Warrants Series C Warrants Issued Earnout Issued With With Series C Redeemable Liability Senior Debt Preferred Stock Financing (in thousands) Balance at December 31, 2014 $ $ $ Additions during the period — — Changes in fair value ) Warrants exercised — — ) Cashless warrant exercise due to IPO — — ) Conversion to common stock warrant — ) Balance at September 30, 2015 $ $ — $ — |
Earnout liability | |
Methodologies and significant inputs used in the determination of the fair value | |
Methodologies and significant inputs used in determination of fair value | Revalue Series C Revalue Series C Revalue Series C Revalue Series C Warrants Issued with Warrants Issued with Warrants Issued with Warrants Issued with Senior Debt at Senior Debt at Senior Debt at Senior Debt at December 31, 2014 March 31, 2015 June 30, 2015 July 22, 2015 (Dollars in thousands, except $5 and $12 Exercise Prices) Date of Valuation 12/31/2014 3/31/2015 6/30/2015 7/22/2015 Valuation Method PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing Black-Scholes-Merton Option-Pricing Dividend yield (per share) Exercise price $ $ $ $ Volatility (annual) Risk-free rate (annual) .25% - 2.47% .19% - 2.31% .14% - 2.83% Contractual term (years) 1 - 5 .75 - 5 .5 - 5 Number of warrants Fair value of liability at valuation date $ $ $ $ |
Series C Warrants Issued with Senior Debt | Derivative liability | |
Methodologies and significant inputs used in the determination of the fair value | |
Methodologies and significant inputs used in determination of fair value | Initial Valuation of December 31, 2014 Initial Valuation Initial Valuation Revalue All Warrants Revalue All Warrants Revalue All Warrants Warrants Issued of January 2015 of February 2015 Issued With Series C Issued With Series C Issued With Series C With Series C Warrants Issued With Warrants Issued With Redeemable Preferred Redeemable Preferred Redeemable Preferred Redeemable Series C Redeemable Series C Redeemable Stock at Stock at Stock at Preferred Stock Preferred Stock Preferred Stock March 31, 2015 June 30, 2015 July 22, 2015 (Dollars in thousands, except $5 and $12 Exercise Prices) Date of Valuation 12/31/2014 1/31/2015 2/28/2015 3/31/2015 6/30/2015 7/22/2015 Valuation Method PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing PWERM and Option Pricing Dividend yield (per share) Exercise price $ $ $ $ $ $ Volatility (annual) Risk-free rate (annual) .25% - 2.47% .25% - 2.47% .25% - 2.47% .19% - 2.31% .14% - 2.83% Contractual term (years) 1 - 5 1 - 5 1 - 5 .75 - 5 .5 - 5 Number of warrants Fair value of liability at valuation date $ $ $ $ $ $ |
Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Derivative liability | |
Methodologies and significant inputs used in the determination of the fair value | |
Methodologies and significant inputs used in determination of fair value | December 31, 2014 March 31, 2015 June 30, 2015 September 30, 2015 Earnout Liability Earnout Liability Earnout Liability Earnout Liability (Dollars in thousands) Date of Valuation 12/31/2014 3/31/2015 6/30/2015 9/30/2015 Valuation Method Monte Carlo Monte Carlo Monte Carlo Monte Carlo Volatility (annual) Risk-free rate (annual) .15% - 3.21% .14% - 3.00% .09% - 3.51% .15% - 3.21% Time period from valuation until end of earnout .5 - 9.5 .375 - 9.375 .25 - 9.0 .125 - 8.75 Earnout Target 1 $ $ $ $ Earnout Target 2 $ $ $ $ Discount rate 7.96% - 11.03% 8.18% - 11.04% 7.96% - 11.39% 8.16% - 11.22% Fair value of liability at valuation date $ $ $ $ |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventories | |
Schedule of Inventory | September 30, December 31, 2015 2014 (in thousands) Raw materials $ $ Work in progress Finished goods Inventory at cost Inventory reserve ) ) $ $ |
Intangible assets, net (Tables)
Intangible assets, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Intangible assets, net | |
Schedule of finite lived intangible assets | September 30, December 31, 2015 2014 (in thousands) Proprietary modified-release drug delivery technology $ $ Tussionex ANDA CPI profit sharing Other Accumulated amortization ) ) $ $ |
Other assets (Tables)
Other assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other assets | |
Schedule of Other assets | September 30, December 31, 2015 2014 (in thousands) Patents $ $ Deposits $ $ |
Long-term debt (Tables)
Long-term debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Long-term debt. | |
Schedule of long-term debt | September 30, December 31, 2015 2014 (in thousands) Senior debt, net of discount of $1,317 and $1,743 $ $ 10% subordinated note payable to a related party Capital leases, maturing through August 2017 Less current portion ) ) Long-term debt $ $ |
Schedule of future principal payments of long-term debt, including capital leases | September 30, Period ending: 2015 (in thousands) 2015 $ 2016 2017 Future principal payments $ Less unamortized debt discount ) Less current portion of long-term debt ) Total long-term debt $ |
Common stock and redeemable c31
Common stock and redeemable convertible preferred stock (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Common stock and redeemable convertible preferred stock | |
Summary of authorized, issued and outstanding shares by class of stock | September 30, 2015 December 31, 2014 Issued and Issued and Authorized Outstanding Authorized Outstanding Shares Shares Shares Shares Common Stock Preferred Stock — — — Series A Preferred Stock — — Series B Preferred Stock — — Series B-1 Preferred Stock — — Series C Preferred Stock — — Total Shares Issued Treasury Stock — ) Total Outstanding Shares Total Authorized Shares |
Stock options, restricted sto32
Stock options, restricted stock and performance stock options (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stock options, restricted stock and performance stock options | |
Schedule of weighted-average key assumptions used in determining fair value of options granted | Three Months Nine Months Ended September 30, Ended September 30, 2015 2015 Estimated dividend yield % % Expected stock price volatility % % Weighted-average risk-free interest rate % % Expected life of option in years Weighted-average option fair value at grant $ $ |
Summary of outstanding and exercisable options | Weighted- Number of Average Intrinsic Options Exercise Price Value (in thousands) Outstanding at December 31, 2014 $ $ Exercisable at December 31, 2014 $ $ Granted Exercised ) Expired, forfeited or cancelled ) Outstanding at September 30, 2015 $ $ Exercisable at September 30, 2015 $ |
Organization and nature of op33
Organization and nature of operations (Details) | 9 Months Ended |
Sep. 30, 2015item | |
Organization and nature of operations | |
Number of proprietary product candidates | 3 |
Organization and nature of op34
Organization and nature of operations (Details 2) $ / shares in Units, $ in Thousands | Jul. 28, 2015USD ($)$ / sharesshares | Jul. 10, 2015 | Jun. 30, 2015USD ($)$ / sharesshares | Jul. 27, 2015USD ($)$ / sharesshares | Jul. 27, 2015USD ($)$ / sharesshares | Sep. 30, 2015shares |
Series C preferred stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | ||||||
Organization and nature of operations | ||||||
Number of shares issued upon exercise of warrants | 150,000 | 1,000,000 | 850,000 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 5 | $ 5 | $ 5 | |||
Proceeds from exercise of warrants (in dollars) | $ | $ 750 | $ 5,000 | $ 4,250 | |||
Common Stock | ||||||
Organization and nature of operations | ||||||
Reverse stock split ratio | 0.4167 | |||||
Common Stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Cashless exercise of redeemable convertible preferred stock warrant into common stock | ||||||
Organization and nature of operations | ||||||
Shares issued on conversion | 78,926 | |||||
Common Stock | All series of redeemable convertible preferred stock | Conversion of redeemable convertible preferred stock into common stock | ||||||
Organization and nature of operations | ||||||
Shares issued on conversion | 9,217,983 | |||||
IPO | Common Stock | ||||||
Organization and nature of operations | ||||||
Net proceeds from issuance of common stock (in shares) | 5,520,000 | 5,520,000 | ||||
Public offering price (in dollars per share) | $ / shares | $ 15 | |||||
Net proceeds from issuance of stock | $ | $ 75,000 | |||||
Over-allotment option | Common Stock | ||||||
Organization and nature of operations | ||||||
Net proceeds from issuance of common stock (in shares) | 720,000 |
Organization and nature of op35
Organization and nature of operations (Details 3) - shares | Sep. 30, 2015 | Jul. 28, 2015 | Dec. 31, 2014 |
Organization and nature of operations | |||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 35,000,000 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | 0 |
Summary of significant accoun36
Summary of significant accounting policies (Details) | 9 Months Ended | |||
Sep. 30, 2015USD ($)segmentsubsidiaryproduct | Jun. 29, 2015 | Dec. 31, 2014USD ($)subsidiary | Oct. 06, 2014USD ($) | |
Significant accounting policies disclosures | ||||
Uncertain tax positions | $ 0 | $ 0 | ||
Deferred tax assets, net of valuation allowance | $ 0 | 0 | ||
Net operating loss carry-forward | 86,551,000 | |||
Number of operating segments | segment | 1 | |||
Minimum number of product candidate launches anticipated before profitability anticipated | product | 1 | |||
Research and development credits | ||||
Significant accounting policies disclosures | ||||
Tax credit carry-forward | $ 2,029,000 | |||
Minimum | ||||
Significant accounting policies disclosures | ||||
Intangible asset - useful life | 10 years | |||
Maximum | ||||
Significant accounting policies disclosures | ||||
Intangible asset - useful life | 20 years | |||
Neostx, Inc. ("NTX") | ||||
Significant accounting policies disclosures | ||||
Ownership acquired (as a percent) | 0.10% | |||
Third party logistics provider - 3PL | ||||
Significant accounting policies disclosures | ||||
Inventory labeled as Schedule III controlled substance that is solely located at the third party logistics provider (does not include inventory at wholesalers) | $ 0 | |||
Wholly-owned subsidiaries | ||||
Significant accounting policies disclosures | ||||
Number of wholly-owned subsidiaries | subsidiary | 4 | 2 | ||
Number of new wholly-owned subsidiaries established | subsidiary | 2 | |||
Percentage ownership by parent (as a percent) | 100.00% | |||
Neostx, Inc. ("NTX") | ||||
Significant accounting policies disclosures | ||||
Percentage ownership by parent (as a percent) | 99.90% |
Summary of significant accoun37
Summary of significant accounting policies (Details 2) | Jul. 28, 2015shares |
Series C Warrants Issued with Senior Debt | Conversion of redeemable convertible preferred stock warrant into common stock warrant | |
Organization and nature of operations | |
Warrants issued (in shares) | 170,000 |
Common Stock Warrant | Conversion of redeemable convertible preferred stock warrant into common stock warrant | |
Organization and nature of operations | |
Warrants issued (in shares) | 70,833 |
Common Stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Cashless exercise of redeemable convertible preferred stock warrant into common stock | |
Organization and nature of operations | |
Shares converted | 947,185 |
Shares issued on conversion | 78,926 |
Common Stock | All series of redeemable convertible preferred stock | Conversion of redeemable convertible preferred stock into common stock | |
Organization and nature of operations | |
Shares issued on conversion | 9,217,983 |
Net loss per share (Details)
Net loss per share (Details) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Series A preferred stock | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 487,494 | |
Series B preferred stock | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 1,297,100 | |
Series B-1 preferred stock | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 2,275,733 | |
Series C preferred stock | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 3,022,306 | |
Warrants | Series C Redeemable Convertible Preferred Stock Warrants | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 70,833 | 70,833 |
Warrants | Common Stock Warrant | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 235,695 | 337,133 |
Employee stock options | ||
Net loss per share disclosures | ||
Potentially dilutive shares not included in the calculation of diluted EPS (as converted if related to warrants or redeemable convertible preferred stock) | 1,224,227 | 523,184 |
Fair value of financial instr39
Fair value of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Short term investments | $ 3,000 | |
Earnout liability | $ 353 | 756 |
Recurring basis | Fair Value | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Cash and cash equivalents | 102,896 | 13,343 |
Short term investments | 3,000 | |
Earnout liability | 353 | 756 |
Total assets and liabilities | 103,249 | 18,888 |
Recurring basis | Fair Value | Series C Redeemable Convertible Preferred Stock Warrants | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Liabilities | 1,789 | |
Recurring basis | Fair Value | Level 1 | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Cash and cash equivalents | 102,896 | 13,343 |
Short term investments | 3,000 | |
Total assets and liabilities | 102,896 | 16,343 |
Recurring basis | Fair Value | Level 3 | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Earnout liability | 353 | 756 |
Total assets and liabilities | $ 353 | 2,545 |
Recurring basis | Fair Value | Level 3 | Series C Redeemable Convertible Preferred Stock Warrants | ||
Hierarchy for financial instruments measured at fair value on a recurring basis | ||
Liabilities | $ 1,789 |
Fair value of financial instr40
Fair value of financial instruments (Details 2) - Series C Warrants Issued with Senior Debt - USD ($) $ / shares in Units, $ in Thousands | Jul. 22, 2015 | Mar. 31, 2015 | Jun. 30, 2015 | Jul. 22, 2015 | Dec. 31, 2014 | Sep. 30, 2015 |
Methodologies and significant inputs used in the determination of the fair value | ||||||
Number of warrants (in shares) | 0 | |||||
Conversion of redeemable convertible preferred stock warrant into common stock warrant | ||||||
Methodologies and significant inputs used in the determination of the fair value | ||||||
Contractual term | 5 years | |||||
Recurring basis | Level 3 | Derivative liability | Probability-Weighted Expected Return and Option Pricing | ||||||
Methodologies and significant inputs used in the determination of the fair value | ||||||
Dividend yield (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 | ||
Exercise price (in dollars per share) | $ 12 | $ 5 | $ 5 | $ 12 | $ 5 | |
Volatility (as a percent) | 60.00% | 60.00% | 60.00% | 60.00% | ||
Risk-free rate (as a percent) | 1.78% | |||||
Contractual term | 5 years | |||||
Number of warrants (in shares) | 70,833 | 170,000 | 170,000 | 70,833 | 170,000 | |
Fair value of liability at valuation date | $ 611 | $ 486 | $ 573 | $ 611 | $ 454 | |
Recurring basis | Level 3 | Derivative liability | Probability-Weighted Expected Return and Option Pricing | Minimum | ||||||
Methodologies and significant inputs used in the determination of the fair value | ||||||
Risk-free rate (as a percent) | 0.19% | 0.14% | 0.25% | |||
Contractual term | 9 months | 6 months | 1 year | |||
Recurring basis | Level 3 | Derivative liability | Probability-Weighted Expected Return and Option Pricing | Maximum | ||||||
Methodologies and significant inputs used in the determination of the fair value | ||||||
Risk-free rate (as a percent) | 2.31% | 2.83% | 2.47% | |||
Contractual term | 5 years | 5 years | 5 years |
Fair value of financial instr41
Fair value of financial instruments (Details 3) $ / shares in Units, $ in Thousands | Jul. 22, 2015USD ($)$ / sharesshares | Jul. 10, 2015 | Mar. 31, 2015USD ($)$ / sharesshares | Feb. 28, 2015USD ($)$ / sharesshares | Jan. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Jan. 31, 2015USD ($)$ / sharesshares | Feb. 28, 2015USD ($)$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Jul. 22, 2015USD ($)$ / sharesshares |
Common Stock | |||||||||||
Methodologies and significant inputs used in the determination of the fair value | |||||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 0.4167 | ||||||||||
Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Conversion of redeemable convertible preferred stock warrant into common stock warrant | Common Stock | |||||||||||
Methodologies and significant inputs used in the determination of the fair value | |||||||||||
Stockholders' Equity Note, Stock Split, Conversion Ratio | 1 | ||||||||||
Exercise price (in dollars per share) | $ 12 | $ 12 | |||||||||
Public offering price (in dollars per share) | 15 | 15 | |||||||||
Class of Warrant, Intrinsic Value of Warrant, Per Share | 3 | 3 | |||||||||
Recurring basis | Level 3 | Derivative liability | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Probability-Weighted Expected Return and Option Pricing | |||||||||||
Methodologies and significant inputs used in the determination of the fair value | |||||||||||
Dividend yield (in dollars per share) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | 0 | |||||
Exercise price (in dollars per share) | $ 12 | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | $ 5 | $ 12 | |
Volatility (as a percent) | 60.00% | 60.00% | 60.00% | 60.00% | 60.00% | ||||||
Number of warrants (in shares) | shares | 1,347,185 | 1,947,185 | 606,312 | 590,906 | 749,967 | 590,906 | 606,312 | 1,947,185 | 1,797,185 | 1,347,185 | |
Fair value of liability at valuation date | $ | $ 4,042 | $ 3,233 | $ 1,079 | $ 1,052 | $ 1,335 | $ 1,052 | $ 1,079 | $ 3,233 | $ 3,361 | $ 4,042 | |
Recurring basis | Level 3 | Derivative liability | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Probability-Weighted Expected Return and Option Pricing | Minimum | |||||||||||
Methodologies and significant inputs used in the determination of the fair value | |||||||||||
Risk-free rate (as a percent) | 0.25% | 0.25% | 0.25% | 0.19% | 0.14% | ||||||
Contractual term | 1 year | 1 year | 1 year | 9 months | 6 months | ||||||
Recurring basis | Level 3 | Derivative liability | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Probability-Weighted Expected Return and Option Pricing | Maximum | |||||||||||
Methodologies and significant inputs used in the determination of the fair value | |||||||||||
Risk-free rate (as a percent) | 2.31% | 2.47% | 2.47% | 2.47% | 2.83% | ||||||
Contractual term | 5 years | 5 years | 5 years | 5 years | 5 years |
Fair value of financial instr42
Fair value of financial instruments (Details 4) - Recurring basis - Level 3 - Earnout liability - Monte Carlo - USD ($) $ in Thousands | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 |
Methodologies and significant inputs used in the determination of the fair value | ||||
Volatility (as a percent) | 50.00% | 50.00% | 50.00% | 50.00% |
Earnout Target 1 | $ 13,700 | $ 13,700 | $ 13,700 | $ 13,700 |
Earnout Target 2 | 18,200 | 18,200 | 18,200 | 18,200 |
Fair value of liability at valuation date | $ 356 | $ 314 | $ 756 | $ 353 |
Minimum | ||||
Methodologies and significant inputs used in the determination of the fair value | ||||
Risk-free rate (as a percent) | 0.09% | 0.14% | 0.15% | 0.15% |
Time period from valuation until end of earnout | 3 months | 4 months 15 days | 6 months | 1 month 15 days |
Discount rate | 7.96% | 8.18% | 7.96% | 8.16% |
Maximum | ||||
Methodologies and significant inputs used in the determination of the fair value | ||||
Risk-free rate (as a percent) | 3.51% | 3.00% | 3.21% | 3.21% |
Time period from valuation until end of earnout | 9 years | 9 years 4 months 15 days | 9 years 6 months | 8 years 9 months |
Discount rate | 11.39% | 11.04% | 11.03% | 11.22% |
Fair value of financial instr43
Fair value of financial instruments (Details 5) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Earnout liability | |
Changes in Level 3 liabilities measured at fair value | |
Balance at beginning of year | $ 756 |
Changes in fair value | (403) |
Balance at end of period | 353 |
Derivative liability | Series C Warrants Issued with Senior Debt | |
Changes in Level 3 liabilities measured at fair value | |
Balance at beginning of year | 454 |
Changes in fair value | 157 |
Conversion to common stock warrant | 611 |
Derivative liability | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | |
Changes in Level 3 liabilities measured at fair value | |
Balance at beginning of year | 1,335 |
Additions | 2,131 |
Changes in fair value | 1,698 |
Warrants exercised | (2,322) |
Cashless warrant exercise due to IPO | $ (2,842) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Inventories | ||
Raw materials | $ 1,149 | $ 646 |
Work in progress | 86 | 82 |
Finished Goods | 1,506 | 1,499 |
Inventory at cost | 2,741 | 2,227 |
Inventory reserve | (80) | (196) |
Inventories net | $ 2,661 | $ 2,031 |
Sale-leaseback transaction (Det
Sale-leaseback transaction (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 14 Months Ended | |||
Mar. 31, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2013USD ($) | Mar. 31, 2014tranche | Dec. 31, 2014USD ($) | |
Sale-leaseback transaction | ||||||||
Proceeds from sale of assets | $ 795,000 | $ 5,500,000 | ||||||
Number of tranches | tranche | 5 | |||||||
Deferred gain | $ 2,700,000 | $ 116,000 | ||||||
Lease term | 42 months | |||||||
Net deferred gain recognized in period on sale leaseback transaction | $ 207,000 | $ 208,000 | $ 623,000 | $ 616,000 |
Intangible assets, net (Details
Intangible assets, net (Details) - USD ($) | Aug. 28, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Intangible assets disclosures | ||||||
Intangible assets, excluding patents, gross | $ 22,756,000 | $ 22,756,000 | $ 22,756,000 | |||
Accumulated amortization | (5,710,000) | (5,710,000) | (4,589,000) | |||
Intangible assets, excluding patents, net | 17,046,000 | 17,046,000 | 18,167,000 | |||
Amortization of intangible assets | 1,121,000 | $ 664,000 | ||||
Payment made to acquire asset | 6,283,000 | |||||
Proprietary modified-release drug delivery technology | ||||||
Intangible assets disclosures | ||||||
Intangible assets, excluding patents, gross | 15,600,000 | $ 15,600,000 | 15,600,000 | |||
Useful life | 20 years | |||||
Amortization of intangible assets | 195,000 | $ 195,000 | $ 585,000 | 585,000 | ||
Tussionex ANDA | ||||||
Intangible assets disclosures | ||||||
Intangible assets, excluding patents, gross | 4,829,000 | 4,829,000 | 4,829,000 | |||
Payment made to acquire asset | $ 4,200,000 | |||||
Legal fees | 90,000 | |||||
Earnout fair value | 589,000 | |||||
Tussionex ANDA | Other income (expense) | ||||||
Intangible assets disclosures | ||||||
Increase (decrease) in fair value of earnout liability | (3,000) | (403,000) | ||||
CPI Profit Sharing | ||||||
Intangible assets disclosures | ||||||
Intangible assets, excluding patents, gross | 2,043,000 | 2,043,000 | 2,043,000 | |||
Payment made to acquire asset | 2,000,000 | |||||
Legal fees | $ 43,000 | |||||
Other | ||||||
Intangible assets disclosures | ||||||
Intangible assets, excluding patents, gross | 284,000 | 284,000 | $ 284,000 | |||
Tussionex ANDA and CPI profit sharing | ||||||
Intangible assets disclosures | ||||||
Useful life | 10 years | |||||
Amortization of intangible assets | $ 172,000 | $ 57,000 | $ 515,000 | $ 57,000 |
Other assets (Details)
Other assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Other assets disclosures | |||||
Patents for product candidates | $ 2,244,000 | $ 2,244,000 | $ 2,051,000 | ||
Deposits | 183,000 | 183,000 | 176,000 | ||
Other assets | 2,427,000 | 2,427,000 | $ 2,227,000 | ||
Amortization of patents | 5,000 | $ 0 | 17,000 | $ 0 | |
Reduction to additional paid-in capital as a result of the IPO | 1,991,000 | 1,991,000 | |||
Generic Tussionex product | |||||
Other assets disclosures | |||||
Patents being amortized | $ 231,000 | $ 231,000 | |||
Useful life | 10 years |
Long-term debt (Details)
Long-term debt (Details) | Jul. 21, 2014USD ($) | May. 31, 2016 | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Sep. 30, 2014USD ($)shares | Mar. 31, 2014USD ($)shares | Sep. 30, 2015USD ($)$ / shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)item$ / shares | Sep. 30, 2014USD ($) | Jun. 28, 2015 | Dec. 31, 2014USD ($) | Jul. 28, 2015$ / sharesshares | Dec. 31, 2013USD ($) |
Long-term debt disclosures | ||||||||||||||
Long-term debt and capital lease obligations, including current maturities | $ 34,354,000 | $ 34,354,000 | $ 24,774,000 | |||||||||||
Less current portion | (5,775,000) | (5,775,000) | (1,653,000) | |||||||||||
Long-term debt, net of current portion | 28,579,000 | 28,579,000 | 23,121,000 | |||||||||||
Unamortized discount on debt | 1,317,000 | 1,317,000 | 1,743,000 | |||||||||||
Draws from senior debt | 10,000,000 | $ 15,000,000 | ||||||||||||
Fair value of warrants | 1,789,000 | |||||||||||||
Interest paid | 1,820,000 | 1,314,000 | ||||||||||||
Term Loan | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Maximum borrowing capacity per agreement | $ 10,000,000 | $ 10,000,000 | ||||||||||||
Debt term | 4 years | |||||||||||||
Interest rate (as a percent) | 9.50% | 9.50% | ||||||||||||
Fee payable at maturity | $ 250,000 | |||||||||||||
Repayment of outstanding amount | $ 10,000,000 | |||||||||||||
Interest paid | 697,000 | |||||||||||||
Gains (losses) on early prepayment | (445,000) | |||||||||||||
Prepayment penalty | 98,000 | |||||||||||||
Write-off of unamortized exit fee | 154,000 | |||||||||||||
Write-off of unamortized loan cost | 193,000 | |||||||||||||
Series C Warrants Issued with Senior Debt | Other income (expense) | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Fair value adjustment of warrants (reduction) increase | $ 38,000 | $ 157,000 | ||||||||||||
Series C preferred stock | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Current price (in dollars per share) | $ / shares | $ 5 | $ 5 | ||||||||||||
Senior debt | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Long-term debt and capital lease obligations, including current maturities | $ 24,745,000 | $ 24,745,000 | 14,320,000 | |||||||||||
Maximum borrowing capacity per agreement | 25,000,000 | $ 25,000,000 | ||||||||||||
Number of draws available per debt agreement | item | 4 | |||||||||||||
Term of interest and principal payments, which commence at a later date | 30 months | |||||||||||||
End of term charge | 1,100,000 | $ 1,100,000 | ||||||||||||
End of term charge amortization total | 79,000 | $ 22,000 | 230,000 | 53,000 | ||||||||||
Debt discount amortization | $ 67,000 | 36,000 | $ 196,000 | 64,000 | ||||||||||
Senior debt | Tranche 1 | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Draws from senior debt | 10,000,000 | |||||||||||||
Interest rate (as a percent) | 9.00% | 9.00% | ||||||||||||
Residual proceeds allocation | $ 9,876,000 | |||||||||||||
Senior debt | Tranche 1 | Series C Warrants Issued with Senior Debt | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Warrants issued (in shares) | shares | 60,000 | |||||||||||||
Fair value of warrants | $ 124,000 | |||||||||||||
Senior debt | Tranche 2 | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Draws from senior debt | $ 5,000,000 | |||||||||||||
Interest rate (as a percent) | 10.50% | 10.50% | ||||||||||||
Residual proceeds allocation | $ 4,752,000 | 4,752,000 | 4,752,000 | |||||||||||
Senior debt | Tranche 2 | Series C Warrants Issued with Senior Debt | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Warrants issued (in shares) | shares | 110,000 | |||||||||||||
Fair value of warrants | $ 248,000 | 248,000 | 248,000 | |||||||||||
Senior debt | Tranche 3 | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Draws from senior debt | $ 5,000,000 | |||||||||||||
Interest rate (as a percent) | 10.50% | 10.50% | ||||||||||||
Senior debt | Tranche 4 | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Draws from senior debt | $ 5,000,000 | |||||||||||||
Interest rate (as a percent) | 9.00% | 9.00% | ||||||||||||
10% subordinated note payable | Essex Capital Corporation, as Investor | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Long-term debt and capital lease obligations, including current maturities | $ 6,818,000 | $ 6,818,000 | 6,446,000 | |||||||||||
Interest rate (as a percent) | 10.00% | 10.00% | ||||||||||||
Aggregate principal amount | $ 5,935,000 | $ 5,935,000 | 5,935,000 | |||||||||||
Reduced interest rate per amendment to note (as a percent) | 6.00% | |||||||||||||
Payment for legal settlement | $ 128,000 | |||||||||||||
Interest accrued | 883,000 | 511,000 | ||||||||||||
Capital leases | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Long-term debt and capital lease obligations, including current maturities | 2,791,000 | $ 2,791,000 | $ 4,008,000 | |||||||||||
Existing assets under sale-leaseback transaction | $ 5,500,000 | |||||||||||||
Newly acquired assets under sale-leaseback transaction | $ 795,000 | |||||||||||||
Imputed interest rate on lease (as a percent) | 14.50% | |||||||||||||
Interest expense | $ 110,000 | $ 371,000 | $ 169,000 | $ 507,000 | ||||||||||
Conversion, initial public offering | Common Stock Warrant | ||||||||||||||
Long-term debt disclosures | ||||||||||||||
Warrants issued (in shares) | shares | 70,833 | |||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 12 |
Long-term debt (Details 2)
Long-term debt (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Future principal payments of long-term debt, including capital leases | ||
2,015 | $ 436 | |
2,016 | 7,973 | |
2,017 | 27,262 | |
Future principal payments, including capital leases | 35,671 | |
Less unamortized debt discount | (1,317) | $ (1,743) |
Less current portion | (5,775) | (1,653) |
Long-term debt, net of current portion | $ 28,579 | $ 23,121 |
Common stock and redeemable c50
Common stock and redeemable convertible preferred stock (Details) - $ / shares | Sep. 30, 2015 | Jul. 28, 2015 | Dec. 31, 2014 |
Par value disclosures | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Redeemable preferred stock, par value (in dollars per share) | $ 0.001 | ||
Authorized Shares | |||
Common stock, authorized shares | 100,000,000 | 100,000,000 | 35,000,000 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 | 0 |
Total Authorized Shares | 105,000,000 | 62,500,000 | |
Issued Shares | |||
Common stock, issued shares | 15,839,064 | 938,859 | |
Preferred Stock, issued shares | 0 | 0 | |
Total Issued Shares | 15,839,064 | 19,437,307 | |
Outstanding Shares | |||
Common stock, outstanding shares | 15,839,064 | 882,954 | |
Preferred stock, outstanding shares | 0 | 0 | |
Total Outstanding Shares | 15,839,064 | 19,381,402 | |
Series A preferred stock | |||
Authorized Shares | |||
Redeemable preferred stock, authorized shares | 0 | 1,170,000 | |
Issued Shares | |||
Redeemable preferred stock, issued shares | 0 | 1,170,000 | |
Outstanding Shares | |||
Redeemable preferred stock, outstanding shares | 0 | 1,170,000 | |
Series B preferred stock | |||
Authorized Shares | |||
Redeemable preferred stock, authorized shares | 0 | 4,000,000 | |
Issued Shares | |||
Redeemable preferred stock, issued shares | 0 | 3,113,099 | |
Outstanding Shares | |||
Redeemable preferred stock, outstanding shares | 0 | 3,113,099 | |
Series B-1 preferred stock | |||
Authorized Shares | |||
Redeemable preferred stock, authorized shares | 0 | 8,830,000 | |
Issued Shares | |||
Redeemable preferred stock, issued shares | 0 | 5,461,802 | |
Outstanding Shares | |||
Redeemable preferred stock, outstanding shares | 0 | 5,461,802 | |
Series C preferred stock | |||
Authorized Shares | |||
Redeemable preferred stock, authorized shares | 0 | 13,500,000 | |
Issued Shares | |||
Redeemable preferred stock, issued shares | 0 | 8,753,547 | |
Outstanding Shares | |||
Redeemable preferred stock, outstanding shares | 0 | 8,753,547 | |
Common Stock | |||
Issued Shares | |||
Treasury Stock | (55,905) |
Common stock and redeemable c51
Common stock and redeemable convertible preferred stock (Details 2) $ / shares in Units, $ in Millions | Jul. 28, 2015USD ($)$ / sharesshares | Jul. 22, 2015$ / shares | Jul. 10, 2015 | Sep. 30, 2015$ / sharesshares | Dec. 31, 2014$ / sharesshares |
Public offerings and related transactions | |||||
Preferred stock, authorized shares | 5,000,000 | 5,000,000 | 0 | ||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||
Common stock, authorized shares | 100,000,000 | 100,000,000 | 35,000,000 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||
Conversion of redeemable convertible preferred stock warrant into common stock warrant | Series C Warrants Issued with Senior Debt | |||||
Public offerings and related transactions | |||||
Warrants issued (in shares) | 170,000 | ||||
Conversion of redeemable convertible preferred stock warrant into common stock warrant | Common Stock Warrant | |||||
Public offerings and related transactions | |||||
Warrants issued (in shares) | 70,833 | ||||
Common Stock | |||||
Public offerings and related transactions | |||||
Reverse stock split ratio | 0.4167 | ||||
Common Stock | IPO | |||||
Public offerings and related transactions | |||||
Shares sold | 5,520,000 | 5,520,000 | |||
Public offering price (in dollars per share) | $ / shares | $ 15 | ||||
Net proceeds from issuance of stock | $ | $ 75 | ||||
Common Stock | Over-allotment option | |||||
Public offerings and related transactions | |||||
Shares sold | 720,000 | ||||
Common Stock | Conversion of redeemable convertible preferred stock into common stock | All series of redeemable convertible preferred stock | |||||
Public offerings and related transactions | |||||
Shares issued on conversion | 9,217,983 | ||||
Common Stock | Conversion of redeemable convertible preferred stock warrant into common stock warrant | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | |||||
Public offerings and related transactions | |||||
Reverse stock split ratio | 1 | ||||
Public offering price (in dollars per share) | $ / shares | $ 15 | ||||
Common Stock | Cashless exercise of redeemable convertible preferred stock warrant into common stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | |||||
Public offerings and related transactions | |||||
Shares converted | 947,185 | ||||
Shares issued on conversion | 78,926 |
Common stock and redeemable c52
Common stock and redeemable convertible preferred stock (Details 3) | Nov. 01, 2017USD ($)installment$ / shares | Jul. 28, 2015shares | Jun. 30, 2015USD ($)$ / sharesshares | Oct. 28, 2015$ / sharesshares | Jul. 27, 2015USD ($)$ / sharesshares | Jul. 27, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)shares | Mar. 31, 2014USD ($)shares | Sep. 30, 2015USD ($)$ / sharesshares | Mar. 31, 2015USD ($)shares | Feb. 28, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2012$ / sharesshares |
Preferred stock financings | ||||||||||||||||
Fair value of warrants | $ 1,789,000 | $ 1,789,000 | ||||||||||||||
Redeemable preferred stock value | 90,149,000 | 90,149,000 | ||||||||||||||
Common stock warrants issued with Series B-1 redeemable preferred stock financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Proceeds from exercises of warrants | 0 | |||||||||||||||
Warrants to purchase stock outstanding (in shares) | shares | 235,695 | 235,695 | ||||||||||||||
Common stock warrants issued with Series B-1 redeemable preferred stock financing | Common Stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Number of shares issued upon exercise of warrants | shares | 101,431 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0024 | $ 0.0024 | ||||||||||||||
Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Fair value adjustment of warrants (reduction) increase | $ 1,522,000 | $ 1,698,000 | ||||||||||||||
Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | Common Stock | Cashless exercise of redeemable convertible preferred stock warrant into common stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Conversion of Stock, Shares Issued | shares | 78,926 | |||||||||||||||
All series of redeemable convertible preferred stock | Common Stock | Conversion of redeemable convertible preferred stock into common stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Conversion of Stock, Shares Issued | shares | 9,217,983 | |||||||||||||||
Series C preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Accretion to redemption value | $ 37,000 | $ 21,000 | $ 607,000 | $ 66,000 | ||||||||||||
Redeemable preferred stock value | 42,131,000 | 42,131,000 | ||||||||||||||
Series C preferred stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 5 | $ 5 | $ 5 | |||||||||||||
Proceeds from exercises of warrants | $ 750,000 | $ 5,000,000 | $ 4,250,000 | |||||||||||||
Shares issued (in shares) | shares | 150,000 | 1,000,000 | 850,000 | |||||||||||||
Series B-1 preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Dividend accrual rate (as a percent) | 8.00% | |||||||||||||||
Original issue price (in dollars per share) | $ / shares | $ 5 | $ 5 | ||||||||||||||
Accretion to redemption value | $ 41,000 | 162,000 | $ 370,000 | 516,000 | ||||||||||||
Redeemable preferred stock value | 32,391,000 | 32,391,000 | ||||||||||||||
Series B preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Accretion to redemption value | $ 21,000 | $ 84,000 | 192,000 | $ 268,000 | ||||||||||||
Redeemable preferred stock value | $ 14,559,000 | 14,559,000 | ||||||||||||||
Redeemable convertible preferred stock financing | Series C preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Shares issued (in shares) | shares | 1,499,935 | 1,986,586 | 2,624,936 | |||||||||||||
Proceeds from share issuance | $ 7,500,000 | $ 9,900,000 | $ 20,600,000 | $ 13,100,000 | ||||||||||||
Redeemable preferred stock value | 6,108,000 | $ 10,916,000 | 6,108,000 | |||||||||||||
Stock issuance legal fees | $ 57,000 | $ 78,000 | 57,000 | |||||||||||||
Redeemable convertible preferred stock financing | Series C preferred stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Warrants issued (in shares) | shares | 749,967 | 1,197,218 | 1,197,218 | |||||||||||||
Fair value of warrants | $ 1,335,000 | $ 2,131,000 | $ 1,335,000 | |||||||||||||
Redeemable convertible preferred stock financing | Series B-1 preferred stock | Common stock warrants issued with Series B-1 redeemable preferred stock financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Warrants issued (in shares) | shares | 389,474 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0024 | |||||||||||||||
Upon investor purchase of pro-rata share of stock | Redeemable convertible preferred stock financing | Series C preferred stock | Series C Warrants Issued with Series C Redeemable Preferred Stock Financing | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 5 | |||||||||||||||
Number of shares that can be purchased with each warrant | shares | 1 | |||||||||||||||
Number of purchased shares that entitle holder to receive a warrant | shares | 2 | |||||||||||||||
Forecast | Series C, Series B-1, and Series B preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Original issue price (in dollars per share) | $ / shares | $ 5 | |||||||||||||||
Number of installments for redemption | installment | 3 | |||||||||||||||
Notice period for redemption | 60 days | |||||||||||||||
Redemption value (in dollars per share) | $ / shares | $ 5 | |||||||||||||||
Forecast | Series C preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Minimum redemption value upon initial redemption date | $ 57,642,000 | |||||||||||||||
Forecast | Series B-1 preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Minimum redemption value upon initial redemption date | 27,309,000 | |||||||||||||||
Forecast | Series B preferred stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Minimum redemption value upon initial redemption date | $ 15,565,000 | |||||||||||||||
Subsequent event | Common stock warrants issued with Series B-1 redeemable preferred stock financing | Common Stock | ||||||||||||||||
Preferred stock financings | ||||||||||||||||
Number of shares issued upon exercise of warrants | shares | 112,402 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.0024 |
Stock options, restricted sto53
Stock options, restricted stock and performance stock options (Details) | Aug. 20, 2016$ / sharesshares | Jul. 09, 2015$ / sharesshares | Sep. 30, 2015$ / shares | Sep. 30, 2015$ / sharesshares | Dec. 31, 2014shares | Jan. 01, 2016 | Jul. 21, 2015shares | Nov. 30, 2009shares |
Employee stock options | Performance based | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Vesting period | 3 years | |||||||
Stock options | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Granted (in shares) | 754,371 | |||||||
Exercise price (in dollars per share) | $ / shares | $ 19.431 | |||||||
Expiration period | 10 years | |||||||
Expiration period of unexercised vested award after termination of employment | 90 days | |||||||
Weighted average key assumptions used in determining the fair value of options granted | ||||||||
Expected dividend yield (as a percent) | 0.00% | 0.00% | ||||||
Expected stock price volatility (as a percent) | 60.00% | 60.00% | ||||||
Weighted-average option fair value at grant (in dollars per share) | $ / shares | $ 12.767 | $ 10.054 | ||||||
Expected life | 5 years | 5 years | ||||||
Stock options | Weighted average | ||||||||
Weighted average key assumptions used in determining the fair value of options granted | ||||||||
Risk-free interest rate (as a percent) | 1.57% | 1.60% | ||||||
Neos Therapeutics, Inc. 2009 Equity Plan | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Shares reserved for issuance under the plan | 1,375,037 | |||||||
Neos Therapeutics, Inc. 2015 Stock Option and Incentive Plan | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Shares reserved for issuance under the plan | 767,330 | |||||||
Increase to the number of shares reserved and available for issuance as a percentage of outstanding common stock (as a percent) | 5.00% | |||||||
Stock option exercise price, minimum expressed as percentage of fair market value on grant date | 100 | |||||||
Granted (in shares) | 445,210 | 37,500 | ||||||
Exercise price (in dollars per share) | $ / shares | $ 25.50 | $ 15 | ||||||
Shares related to forfeited prior plan options transferred into shares available under current plan | 2,083 | |||||||
Remaining shares available for grant | 284,620 |
Stock options, restricted sto54
Stock options, restricted stock and performance stock options (Details 2) - Stock options - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based compensation | ||||
Unrecognized compensation cost | $ 7,100,000 | $ 7,100,000 | ||
Weighted-average remaining contractual life | 9 years 1 month 6 days | |||
Shares issued upon the exercise of outstanding stock options | 37,753 | |||
Proceeds received upon the exercise of outstanding stock options | $ 72,000 | |||
Tax benefit from the exercise of stock options | 0 | |||
Selling, general and administrative expense | ||||
Share-based compensation | ||||
Total compensation cost | $ 291,000 | $ 36,000 | $ 480,000 | $ 68,000 |
Stock options, restricted sto55
Stock options, restricted stock and performance stock options (Details 3) - Stock options - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2014 |
Summary of number of outstanding and exercisable options and the activity | |||
Outstanding at beginning of year (in shares) | 511,775 | ||
Exercisable at beginning of year (in shares) | 150,109 | ||
Granted (in shares) | 754,371 | ||
Exercised (in shares) | (37,753) | ||
Expired, forfeited or cancelled (in shares) | (4,166) | ||
Outstanding at end of period (in shares) | 511,775 | 1,224,227 | 511,775 |
Exercisable at end of period (in shares) | 150,109 | 181,061 | 150,109 |
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | |||
Outstanding at beginning of year (in dollars per share) | $ 3.684 | ||
Exercisable at beginning of year (in dollars per share) | 1.467 | ||
Granted (in dollars per share) | 19.431 | ||
Exercised (in dollars per share) | 1.914 | ||
Expired, forfeited or cancelled (in dollars per share) | 2.498 | ||
Outstanding at end of period (in dollars per share) | $ 3.684 | 13.446 | $ 3.684 |
Exercisable at end of period (in dollars per share) | $ 1.467 | $ 2.912 | $ 1.467 |
Summary of intrinsic value of outstanding and exercisable options and other information | |||
Intrinsic value, outstanding options | $ 2,883 | $ 9,260 | $ 2,883 |
Intrinsic value, exercisable options | $ 1,179 | $ 3,277 | $ 1,179 |
Weighted average remaining contractual life of options outstanding | 8 years 8 months 12 days | 9 years 1 month 6 days | |
Weighted-average remaining contractual life of options exercisable | 7 years 3 months 18 days | 7 years 3 months 18 days | |
Minimum | |||
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | |||
Granted (in dollars per share) | $ 9.32 | $ 2.91 | |
Maximum | |||
Summary of weighted-average exercise price of outstanding and exercisable options and the activity | |||
Granted (in dollars per share) | $ 25.50 | $ 7.49 |
Stock options, restricted sto56
Stock options, restricted stock and performance stock options (Details 4) - USD ($) | Oct. 16, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 16, 2016 | Dec. 31, 2014 |
Stock options, restricted stock and performance stock options | ||||||||
Vested restricted stock awards settled (in shares) | 0 | |||||||
Restricted stock | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Shares issued | 149,244 | |||||||
Grant date fair value of shares issued (in dollars per share) | $ 2.55 | |||||||
Unrecognized compensation cost | $ 185,000 | $ 278,000 | $ 185,000 | $ 278,000 | ||||
Current price (in dollars per share) | $ 18.54 | |||||||
Unvested restricted stock outstanding (in shares) | 106,537 | 106,537 | 106,537 | |||||
Weighted average fair value of nonvested restricted stock (in dollars per share) | $ 2.55 | $ 2.55 | $ 2.55 | |||||
Shares granted | 0 | |||||||
Shares vested | 0 | |||||||
Shares forfeited | 0 | |||||||
Restricted stock | Subsequent event | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Value of restricted stock awards settled | $ 658,000 | |||||||
Tax benefit from settlement of vested restricted stock awards | $ 224,000 | |||||||
Shares surrendered by holder to cover taxes associated with vesting | 9,197 | |||||||
Restricted stock | Selling, general and administrative expense | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Stock compensation cost | $ 27,000 | $ 23,000 | $ 72,000 | $ 68,000 | ||||
Restricted stock | Minimum | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Vesting period | 1 month | |||||||
Restricted stock | Maximum | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Vesting period | 48 months | |||||||
Restricted stock | Immediate vesting | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Shares issued | 7,195 | |||||||
Restricted stock | Four equal tranches | ||||||||
Stock options, restricted stock and performance stock options | ||||||||
Vesting period | 48 months | |||||||
Shares issued | 142,049 |
Treasury stock (Details)
Treasury stock (Details) - $ / shares | Oct. 16, 2015 | Feb. 19, 2015 | Sep. 30, 2015 | Dec. 31, 2013 |
Subsequent event | Restricted stock | ||||
Treasury stock disclosures | ||||
Shares surrendered by holder to cover taxes associated with vesting | 9,197 | |||
Common Stock | ||||
Treasury stock disclosures | ||||
Cancellation of treasury stock | 55,905 | 55,905 | ||
Original purchase price of treasury stock (in dollars per share) | $ 0.002 |
Commitments and contingencies (
Commitments and contingencies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Operating lease: | |||||
Deferred rent balance | $ 1,163,000 | $ 1,163,000 | $ 1,189,000 | ||
Rent expense, share of operating expenses | 59,000 | $ 62,000 | 178,000 | $ 188,000 | |
Rent expense, excluding share of operating expenses | 218,000 | $ 223,000 | 654,000 | $ 678,000 | |
Bonus expenses | $ 295,000 | $ 673,000 |
License agreements (Details)
License agreements (Details) - Shire LLC - Maximum $ in Millions | Jul. 23, 2014USD ($) |
License agreements disclosure | |
Non refundable license fee | $ 1 |
Maximum period for payment of license fee after regulatory approval by FDA | 30 days |
Related party transactions (Det
Related party transactions (Details) | Jul. 21, 2014USD ($) | Jun. 28, 2015 | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2013USD ($)item | Dec. 31, 2012USD ($) |
10% subordinated note payable | Essex Capital Corporation, as Investor | |||||||
Related party transactions disclosures | |||||||
Aggregate principal amount | $ 5,935,000 | $ 5,935,000 | |||||
Payment for legal settlement | $ 128,000 | ||||||
Interest rate (as a percent) | 10.00% | ||||||
Debt Instrument, Reduced Interest Rate During Period Per Amendment | 6.00% | ||||||
Capital leases | |||||||
Related party transactions disclosures | |||||||
Maximum amount authorized under sale and leaseback transaction | $ 6,500,000 | ||||||
Number of transactions | item | 4 | ||||||
Sale and leaseback amount due | $ 5,500,000 | ||||||
Sale and leaseback additional amount raised | $ 795,000 | ||||||
Essex Capital Corporation | Third Party | |||||||
Related party transactions disclosures | |||||||
Payment for legal settlement made by related party to third party | $ 256,000 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) | Oct. 16, 2015 | Oct. 28, 2015 | Sep. 30, 2015 |
Subsequent event | Restricted stock | |||
Subsequent events disclosures | |||
Value of restricted stock awards settled | $ 658,000 | ||
Tax benefit from settlement of vested restricted stock awards | $ 224,000 | ||
Shares surrendered by holder to cover taxes associated with vesting | 9,197 | ||
Common Stock | Common stock warrants issued with Series B-1 redeemable preferred stock financing | |||
Subsequent events disclosures | |||
Number of shares issued upon exercise of warrants | 101,431 | ||
Exercise price of warrants (in dollars per share) | $ 0.0024 | ||
Common Stock | Subsequent event | Common stock warrants issued with Series B-1 redeemable preferred stock financing | |||
Subsequent events disclosures | |||
Number of shares issued upon exercise of warrants | 112,402 | ||
Exercise price of warrants (in dollars per share) | $ 0.0024 |