Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 27, 2019 | Jun. 29, 2018 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | OTIC | ||
Entity Registrant Name | Otonomy, Inc. | ||
Entity Central Index Key | 1,493,566 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Common Stock, Shares Outstanding | 30,685,412 | ||
Entity Public Float | $ 88.2 |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 33,633 | $ 18,456 |
Short-term investments | 63,651 | 101,548 |
Accounts receivable, net | 108 | 107 |
Prepaid and other current assets | 2,677 | 2,334 |
Total current assets | 100,069 | 122,445 |
Restricted cash | 696 | 1,158 |
Property and equipment, net | 3,996 | 4,679 |
Other long-term assets | 231 | 82 |
Total assets | 104,992 | 128,364 |
Current liabilities: | ||
Accounts payable | 1,029 | 961 |
Accrued expenses | 3,788 | 3,881 |
Accrued compensation | 2,635 | 3,307 |
Current portion of deferred rent | 38 | 42 |
Total current liabilities | 7,490 | 8,191 |
Long-term debt, net | 14,764 | |
Deferred rent, net of current portion | 3,001 | 2,894 |
Total liabilities | 25,255 | 11,085 |
Commitments and Contingencies | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value, 10,000,000 shares authorized at December 31, 2018 and 2017; no shares issued or outstanding at December 31, 2018 and 2017 | 0 | |
Common stock, $0.001 par value; 200,000,000 shares authorized at December 31, 2018 and 2017; 30,685,412 and 30,558,726 shares issued and outstanding at December 31, 2018 and 2017, respectively | 31 | 31 |
Additional paid-in capital | 494,947 | 482,198 |
Accumulated other comprehensive loss | (23) | (100) |
Accumulated deficit | (415,218) | (364,850) |
Total stockholders’ equity | 79,737 | 117,279 |
Total liabilities and stockholders’ equity | $ 104,992 | $ 128,364 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares Issued | 30,685,412 | 30,558,726 |
Common stock, Shares outstanding | 30,685,412 | 30,558,726 |
Statements of Operations
Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | |||
Product sales, net | $ 745 | $ 1,236 | $ 683 |
Type of Revenue [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Costs and operating expenses: | |||
Cost of product sales | $ 946 | $ 3,098 | $ 1,664 |
Type of Cost, Good or Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Research and development | $ 31,844 | $ 42,701 | $ 60,723 |
Selling, general and administrative | 20,008 | 46,838 | 49,777 |
Total costs and operating expenses | 52,798 | 92,637 | 112,164 |
Loss from operations | (52,053) | (91,401) | (111,481) |
Other income, net: | |||
Interest income | 1,689 | 1,271 | 899 |
Interest expense | (4) | 0 | 0 |
Other expense | 0 | 0 | (1) |
Total other income, net | 1,685 | 1,271 | 898 |
Net loss | $ (50,368) | $ (90,130) | $ (110,583) |
Net loss per share, basic and diluted | $ (1.65) | $ (2.97) | $ (3.69) |
Weighted-average shares used to compute net loss per share, basic and diluted | 30,610,244 | 30,304,158 | 29,962,781 |
Statements of Comprehensive Los
Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net loss | $ (50,368) | $ (90,130) | $ (110,583) |
Other comprehensive loss: | |||
Unrealized gain (loss) on available-for-sale securities | 77 | (59) | (41) |
Comprehensive loss | $ (50,291) | $ (90,189) | $ (110,624) |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] |
Beginning balance at Dec. 31, 2015 | $ 181,534 | $ 24 | $ 345,647 | $ (164,137) | |
Beginning balance, shares at Dec. 31, 2015 | 24,330,402 | ||||
Issuance of stock, net of issuance costs | 107,609 | $ 6 | 107,603 | ||
Issuance of stock, shares | 5,750,000 | ||||
Issuance of common stock upon exercise of stock options | 366 | 366 | |||
Issuance of common stock upon exercise of stock options, shares | 80,119 | ||||
Issuance of common stock under employee stock purchase plan | 1,241 | 1,241 | |||
Issuance of common stock under employee stock purchase plan, shares | 94,818 | ||||
Stock-based compensation expense | 12,611 | 12,611 | |||
Net loss | (110,583) | (110,583) | |||
Unrealized gain (loss) on available-for-sale securities | (41) | 0 | $ (41) | ||
Ending balance at Dec. 31, 2016 | 192,737 | $ 30 | 467,468 | (41) | (274,720) |
Ending balance, shares at Dec. 31, 2016 | 30,255,339 | ||||
Issuance of common stock upon exercise of stock options | 448 | $ 1 | 447 | ||
Issuance of common stock upon exercise of stock options, shares | 191,106 | ||||
Issuance of common stock under employee stock purchase plan | 622 | 622 | |||
Issuance of common stock under employee stock purchase plan, shares | 80,072 | ||||
Issuance of common stock upon exercise of warrants, shares | 32,209 | ||||
Stock-based compensation expense | 13,661 | 13,661 | |||
Net loss | (90,130) | (90,130) | |||
Unrealized gain (loss) on available-for-sale securities | (59) | (59) | |||
Ending balance at Dec. 31, 2017 | 117,279 | $ 31 | 482,198 | (100) | (364,850) |
Ending balance, shares at Dec. 31, 2017 | 30,558,726 | ||||
Issuance of common stock upon exercise of stock options | $ 32 | 32 | |||
Issuance of common stock upon exercise of stock options, shares | 19,000 | 18,800 | |||
Issuance of common stock under employee stock purchase plan | $ 303 | 303 | |||
Issuance of common stock under employee stock purchase plan, shares | 107,886 | ||||
Stock-based compensation expense | 12,414 | 12,414 | |||
Net loss | (50,368) | (50,368) | |||
Unrealized gain (loss) on available-for-sale securities | 77 | 77 | |||
Ending balance at Dec. 31, 2018 | $ 79,737 | $ 31 | $ 494,947 | $ (23) | $ (415,218) |
Ending balance, shares at Dec. 31, 2018 | 30,685,412 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net loss | $ (50,368,000) | $ (90,130,000) | $ (110,583,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 1,186,000 | 1,289,000 | 708,000 |
Stock-based compensation | 12,414,000 | 13,661,000 | 12,611,000 |
Reserve for excess and obsolete inventory | 0 | 1,546,000 | 304,000 |
(Accretion of discounts) amortization of premiums on short-term investments | (506,000) | 358,000 | 780,000 |
Impairment of property, plant and equipment | 0 | 400,000 | 602,000 |
Deferred rent | 103,000 | 2,272,000 | 358,000 |
Changes in operating assets and liabilities: | |||
Accounts receivable, net | (1,000) | (16,000) | (91,000) |
Inventory | 0 | 153,000 | (1,739,000) |
Prepaid and other assets | (492,000) | 2,608,000 | (613,000) |
Accounts payable | 68,000 | (398,000) | (2,158,000) |
Accrued expenses | (166,000) | (5,518,000) | 3,866,000 |
Accrued compensation | (672,000) | (1,532,000) | 1,650,000 |
Net cash used in operating activities | (38,434,000) | (75,307,000) | (94,305,000) |
Cash flows from investing activities: | |||
Purchases of short-term investments | (104,270,000) | (129,308,000) | (261,242,000) |
Maturities of short-term investments | 142,750,000 | 199,565,000 | 114,371,000 |
Purchases of property and equipment | (496,000) | (1,259,000) | (2,546,000) |
Net cash provided by (used in) investing activities | 37,984,000 | 68,998,000 | (149,417,000) |
Cash flows from financing activities: | |||
Proceeds from issuance of long-term debt, net of issuance costs | 14,830,000 | 0 | 0 |
Proceeds from issuance of common stock | 303,000 | 448,000 | 108,850,000 |
Proceeds from exercise of stock options | 32,000 | 622,000 | 366,000 |
Net cash provided by financing activities | 15,165,000 | 1,070,000 | 109,216,000 |
Net change in cash, cash equivalents and restricted cash | 14,715,000 | (5,239,000) | (134,506,000) |
Cash, cash equivalents and restricted cash at beginning of period | 19,614,000 | 24,853,000 | 159,359,000 |
Cash, cash equivalents and restricted cash at end of period | 34,329,000 | 19,614,000 | 24,853,000 |
Cash and cash equivalents at end of period | 33,633,000 | 18,456,000 | 24,156,000 |
Restricted cash at end of period | 696,000 | 1,158,000 | 697,000 |
Supplemental cash flow information: | |||
Cash paid for interest | 4,000 | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | |||
Purchase of property and equipment in accounts payable and accrued expenses | 7,000 | 132,000 | 647,000 |
Debt issuance costs in accounts payable and accrued expenses | 66,000 | 0 | 0 |
Debt issuance costs | $ 771,000 | $ 0 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Basis of Presentation | 1. Description of Business and Basis of Presentation Description of Business Otonomy, Inc. (Otonomy or the Company) was incorporated in the state of Delaware on May 6, 2008. Otonomy is a biopharmaceutical company dedicated to the development of innovative therapeutics for neurotology. The Company pioneered the application of drug delivery technology to the ear in order to develop products that achieve sustained drug exposure from a single local administration. This approach is covered by a broad patent estate and is being utilized to develop a pipeline of products addressing important unmet medical needs including Ménière’s disease, hearing loss and tinnitus. OTIVIDEX is a sustained-exposure formulation of the steroid dexamethasone that has completed two Phase 3 trials for the treatment of Ménière’s disease, with a third Phase 3 trial currently enrolling patients. OTO-313 is a sustained-exposure formulation of the potent and selective N-Methyl-D-Aspartate receptor antagonist gacyclidine that is in development for the treatment of tinnitus. Otonomy is also advancing three programs that address different pathologies of hearing loss: (i) OTO-413 is a sustained-exposure formulation of brain-derived neurotrophic factor in development for the repair of cochlear synaptopathy, an underlying pathology in age-related and noise-induced hearing loss that manifests as speech-in-noise hearing difficulty (ii) OTO-510 is a sustained-exposure formulation of an undisclosed small molecule otoprotectant in development for the prevention of cisplatin-induced hearing loss; and (iii) OTO-6XX induces hair cell regeneration in a nonclinical proof-of-concept model and is being developed for the treatment of severe hearing loss. In addition, the Company developed, received U.S. Food and Drug Administration (FDA) approval and commercially launched OTIPRIO (ciprofloxacin otic suspension) for use during tympanostomy tube placement (TTP) surgery in pediatric patients. OTIPRIO was also approved by the FDA for the treatment of acute otitis externa (AOE). The Company has entered into a partnership with privately held Mission Pharmacal Company (Mission) to support the promotion of OTIPRIO for the treatment of AOE in pediatrician and primary care physician offices as well as urgent care clinics in the United States. In January 2016, the Company completed a public offering of 5,750,000 shares of its common stock, which includes the exercise in full by the underwriters of their option to purchase 750,000 shares of common stock, at an offering price of $20.00 per share. Proceeds from the follow-on public offering were approximately $107.6 million, net of underwriting discounts, commissions and offering-related transaction costs. Basis of Presentation The financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses and negative cash flows from operating activities since inception. As of December 31, 2018, the Company had cash, cash equivalents and short-term investments of $97.3 million and an accumulated deficit of $415.2 million. The Company anticipates that it will continue to incur net losses into the foreseeable future as it: (i) develops and seeks regulatory approvals for OTIVIDEX and its other potential product candidates; and (ii) works to develop additional product candidates through research and development programs. When additional financing is required, the Company anticipates that it will seek additional funding through future debt and/or equity financings or other sources, such as potential collaboration agreements. If the Company is not able to secure adequate additional funding, if or when necessary, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations, and future prospects. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expense during the reporting period. Although these estimates are based on the Company’s knowledge of current events and anticipated actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held. Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash in readily available checking, savings and money market accounts, and highly liquid investments with original maturities of three months or less at the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company’s restricted cash consists of cash maintained in separate deposit accounts to secure a letter of credit issued by a bank to the landlord under a lease agreement for the Company’s corporate headquarters. Short-Term Investments The Company carries short-term investments classified as available-for-sale at fair value as determined by prices for identical or similar securities at the balance sheet date. Short-term investments consist of both Level 1 and Level 2 financial instruments in the fair value hierarchy (as more fully described in Note 8 – Fair Value Realized gains or losses of available-for-sale securities are determined using the specific identification method and net realized gains and losses are included in interest income. The Company periodically reviews available-for-sale securities for other-than temporary declines in fair value below the cost basis, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company records unrealized gains and losses on available-for-sale debt securities as a component of other comprehensive loss within the statements of comprehensive loss and as a separate component of stockholders’ equity on the balance sheets. The Company does not hold equity securities in its investment portfolio. Fair Value of Financial Instruments The Company’s financial instruments include cash, cash equivalents, short-term investments, prepaid expenses and other assets, accounts payable, accrued expenses, accrued compensation and long-term debt. The carrying value of the Company’s cash and cash equivalents, short-term investments, prepaid expenses and other current assets, other long-term assets, accounts payable, accrued expenses, and accrued compensation approximate fair value due to the short-term nature of these items. Based on Level 3 inputs and the borrowing rates currently available for loans with similar terms, the Company believes the fair value of long-term debt approximates its carrying value. Accounts Receivable, net Accounts receivable are recorded net of customer allowances for chargebacks, distributor fees and any allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts based on existing contractual payment terms, actual payment patterns of its customers and individual customer circumstances. To date, the Company has determined that an allowance for doubtful accounts is not required. Inventory Inventory, which is stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out method. Inventories consist of OTIPRIO finished goods and work in-process, as well as raw materials used in the manufacture of OTIPRIO. If inventory costs exceed expected market value due to obsolescence, expiry or quantities in excess of expected demand, write downs are recorded for the difference between cost and market value, less cost to sell. During the year ended December 31, 2017, the Company recorded an inventory write down of $1.5 million to cost of product sales. During 2018, no such write down was recorded. Property and Equipment Property and equipment generally consist of laboratory equipment, manufacturing equipment, computers and software, and office furniture and are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets (generally two to ten years). Leasehold improvements are stated at cost and are depreciated on a straight-line basis over the lesser of the remaining term of the related lease or the estimated useful lives of the assets. Repairs and maintenance costs are charged to expense as incurred. Impairment of Long-Lived Assets The Company assesses the value of its long-lived assets, which consist of property and equipment, for impairment on an annual basis and whenever events or changes in circumstances and the undiscounted cash flows generated by those assets indicate that the carrying amount of such assets may not be recoverable. While the Company’s current and historical operating losses and negative cash flows are indicators of impairment, management believes that future cash flows to be received support the carrying value of its long-lived assets. No impairment of long-lived assets were recorded during the year ended December 31, 2018. During the year ended December 31, 2017, the Company recorded an impairment of its long-lived assets of approximately $0.4 million in cost of product sales related to OTIPRIO manufacturing equipment. During the year ended December 31, 2016, the Company recorded an impairment to its long-lived assets of approximately $0.6 million, which is classified within research and development expense on the statements of operations. This impairment was a result of manufacturing equipment expected to be used in research and development which has no future use for the Company. Clinical Trial Expense Accruals As part of the process of preparing the Company’s financial statements, the Company is required to estimate expenses resulting from the Company’s obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate clinical trial expenses in its financial statements by recording those expenses in the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates through financial models taking into account discussion with applicable personnel and outside service providers as to the progress or state of its trials. During the course of a clinical trial, the Company adjusts its clinical expense if actual results differ from its estimates to date, there have not been any material changes to the estimates. Revenue Recognition Effective January 1, 2018, the Company adopted Accounting Standards Concepts (ASC) Revenue from Contracts with Customers (ASC 606), Revenue Recognition To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract with a customer under ASC 606 and when it is probable the Company will collect the consideration exchanged for the goods or services transferred to the customer. OTIPRIO is sold to a limited number of specialty wholesale distributors. The Company recognizes revenue when its customers obtain control of OTIPRIO, typically upon delivery by the Company to these distributors. The Company has determined the delivery of OTIPRIO to its customers constitutes a single performance obligation and no other performance obligations are present. Hospitals, ambulatory surgery centers and physician offices order OTIPRIO from the Company’s distributors and are the end users of OTIPRIO. The Company permits product returns from the distributors only if the product is damaged or is shipped or ordered in error. Product returns based on expiry are not permitted. To date, product returns have been immaterial. Sales commissions and other incremental costs of obtaining customer contracts are expensed as incurred as the amortization periods would be less than one year or the amount is immaterial. Transaction Price and Reserves for Variable Consideration Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, government chargebacks, discounts and rebates and other fee for service amounts that are detailed within customer contracts relating to the sale of OTIPRIO. These reserves, as detailed below, are based on the amounts earned or accrued on our sales. Variable consideration is estimated using the most likely method, which is the single most likely outcome under the Company’s contracts and takes into consideration contractual fees, historical chargeback activity and historical Medicaid rebates. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which the Company is entitled based on the terms of the respective underlying contracts. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Reserves are established for these discounts and allowances upon delivery of OTIPRIO by the distributor and are classified as: (i) an allowance against accounts receivable if the amount is payable to the distributor or (ii) an accrued liability if the amount is payable to a party other than the distributor. Allowances against accounts receivable relate to chargebacks and distributor fees and accruals relate primarily to government rebates. Trade Discounts and Allowances . The Company’s customers are specialty wholesale distributors with whom the Company has contracted to pay a fee based on a percentage of wholesale acquisition cost for sales order management, data, and distribution services . The Company determined such services received to date are not distinct from the sale of products to customers and, therefore, these payments have been recorded as a reduction of revenue within the statement of operations. This fee for service is recorded as an allowance against accounts receivable at the time of sale based on the contracted percentage. Chargebacks . The Company estimates allowances against accounts receivable for chargebacks related to agreements with group purchasing organizations and federal contracts. Under these agreements, the Company credits distributors a chargeback amount which represents the difference between the wholesale acquisition cost and the discounted price at which eligible purchasers purchased from the distributors. At the time of sale, estimated chargebacks are recorded based on historical chargeback activity, the projected payer mix, patient population industry data and the identification of entities purchasing OTIPRIO that are eligible for discounted pricing. Government . The Company estimates a rebate liability in connection with a Medicaid Drug Rebate Agreement with the Centers for Medicare & Medicaid Services, which provides a rebate to participating states based on covered purchases of OTIPRIO. At the time of sale, estimated Medicaid rebates are recorded based on historical government rebate activity, the projected payer mix and Medicaid patient population industry data. Concentration of Major Customers The Company sells OTIPRIO to specialty wholesale distributor customers. The following table summarizes the Company’s sales to its three largest three customers as a percent of revenue for the periods presented: 2018 2017 2016 1st largest customer 44 % 34 % 35 % 2nd largest customer 33 % 34 % 34 % 3rd largest customer 21 % 30 % 30 % Collaborative Arrangements The Company has entered into a co-promotion agreement with a partner that falls under the scope of ASC Topic 808, Collaborative Arrangements Research and Development Research and development expenses include the costs associated with the Company’s research and development activities, including salaries, benefits, stock-based compensation expense and occupancy costs. Also included in research and development expenses are third-party costs incurred in conjunction with contract manufacturing for the Company’s research and development programs and clinical trials, including the cost of clinical trial drug supply, costs incurred by contract research organizations and regulatory expenses. Research and development costs are expensed as incurred. Selling, General and Administrative Selling, general and administrative expenses include the costs associated with the Company’s executive, administrative, finance and human resource functions including salaries, benefits, stock-based compensation expense and occupancy costs. Other selling, general and administrative expenses include costs associated with prosecuting and maintaining the Company’s patent portfolio, corporate legal expenses, costs required for public company activities and infrastructure necessary for the general conduct of the Company’s business. The Company’s selling, general and administrative expenses also include OTIPRIO product support expenses, and profit-sharing fees payable to the Company’s partner, which are reduced by payments received from our partner under the Company’s co-promotion agreement. Stock-Based Compensation The Company accounts for stock-based compensation expense related to stock options and employee stock purchase plan (ESPP) rights by estimating the fair value on the date of grant using the Black-Scholes-Merton option pricing model. Forfeitures are recognized as incurred. For awards subject to time-based vesting conditions, stock-based compensation expense is recognized using the straight-line method. For performance-based awards to employees, (i) the fair value of the award is determined on the grant date, (ii) we assess the probability of the individual performance milestones under the award being achieved and (iii) the fair value of the shares subject to the milestone is expensed over the implicit service period commencing once management believes the performance criteria is probable of being met. Income Taxes The accounting guidance for uncertainty in income taxes prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities based on the technical merits of the position. The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made. Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and/or circumstances from non-owner sources. Net Loss Per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, potentially dilutive securities are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. Potentially dilutive securities excluded from the calculation of diluted net loss per share are as follows: Years Ended December 31, 2018 2017 2016 Warrants to purchase common stock — — 141,060 Options to purchase common stock 5,019,964 4,599,252 5,149,973 Total 5,019,964 4,599,252 5,291,033 Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (ASU 2016-02)”, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. ASU 2016-02 is effective for the Company beginning January 1, 2019 and will be adopted using a modified retrospective approach and the effective date will be as of the initial application. Consequently, financial information will not be updated, and the disclosures required under ASU 2016-02 will not be provided for dates and periods prior to January 1, 2019. ASU 2016-02 provides a number of optional practical expedients and accounting policy elections. The Company expects to elect the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or initial direct costs for any existing leases. The Company expects ASU 2016-02 will have a material effect on its balance sheets. However, the Company does not expect ASU 2016-02 will have a material effect on its statements of operations and comprehensive loss. While the Company continues to assess all of the effects of adoption, the most significant effects relate to (i) the recognition of a right-of-use asset in the range of $15.0 million to $17.0 million, (ii) the recognition of lease liabilities in the range of $18.0 million to $20.0 million, (iii) the derecognition $3.0 million in deferred rent for certain lease incentives received, and (iv) significant new disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07) . The amendments in ASU 2018-07 expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company . The Company does not expect the adoption of ASU 2018-07 to have a material impact on its financial statements or disclosures. |
Available-for-Sale Securities
Available-for-Sale Securities | 12 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Available-for-Sale Securities | 3. Available-for-Sale Securities The Company invests in available-for-sale securities consisting of money market funds, U.S. treasury securities and U.S. government sponsored enterprise securities. Available-for-sale securities are classified as part of either cash and cash equivalents or short-term investments in the balance sheets. Available-for-sale securities with maturities of three months or less from the date of purchase have been classified as cash equivalents and were $17.2 million and $10.5 million as of December 31, 2018 and 2017, respectively. Available-for-sale securities with maturities of more than three months from the date of purchase have been classified as short-term investments, and were as follows as of (in thousands): Amortized Cost Unrealized Gain Unrealized Loss Market Value December 31, 2018: U.S. treasury securities $ 63,674 $ 1 $ (24 ) $ 63,651 Total available-for-sale securities $ 63,674 $ 1 $ (24 ) $ 63,651 December 31, 2017: U.S. treasury securities $ 39,209 $ — $ (44 ) $ 39,165 U.S. government sponsored enterprise securities 62,439 — (56 ) 62,383 Total available-for-sale securities $ 101,648 $ — $ (100 ) $ 101,548 As of December 31, 2018, the Company had 27 securities in a gross unrealized loss position, all of which have been in such position for less than twelve months At each reporting date, the Company performs an evaluation of impairment to determine if the unrealized losses are other-than-temporary. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, and the Company’s intent and ability to hold the investment until recovery of its amortized cost basis. Management intends, and has the ability, to hold its investments in unrealized loss positions until their amortized cost basis has been recovered. The Company obtains the fair value of its available-for-sale securities from a professional pricing service. The fair values of available-for-sale securities are validated by comparing the fair values reported by the professional pricing service to quoted market prices or to fair values obtained from the custodian bank. |
Balance Sheet Details
Balance Sheet Details | 12 Months Ended |
Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Details | 4. Balance Sheet Details Prepaid and Other Current Assets Prepaid and other current assets are comprised of the following (in thousands): December 31, 2018 2017 Prepaid clinical trial costs $ 258 $ 729 Other 2,419 1,605 Total $ 2,677 $ 2,334 Property and Equipment, Net Property and equipment, net consists of the following (in thousands): December 31, 2018 2017 Laboratory equipment $ 3,772 $ 3,457 Manufacturing equipment 1,017 871 Computer equipment and software 770 731 Leasehold improvements 736 733 Office furniture 1,548 1,581 7,843 7,373 Less: accumulated depreciation and amortization (3,847 ) (2,694 ) Total $ 3,996 $ 4,679 Depreciation expense was $1.2 million, $1.3 million and $0.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Accrued Expenses Accrued expenses consist of the following (in thousands): December 31, 2018 2017 Accrued clinical trial costs $ 1,294 $ 1,112 Accrued other 2,494 2,769 Total $ 3,788 $ 3,881 |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring And Related Activities [Abstract] | |
Restructuring Charges | 5. Restructuring Charges In November 2017, the Company initiated a restructuring plan to focus resources on its development programs and eliminate the cash burn associated with OTIPRIO promotional support. OTIPRIO continues to be available for purchase by customers. The actions associated with the restructuring were substantially completed in December 2017 and, as a result the Company recorded a one-time restructuring charge of $3.8 million to selling, general and administrative expense. Restructuring costs primarily include severance costs, including severance payments and outplacement services, health insurance coverage and $1.0 million in stock-based compensation expense associated with accelerated vesting pursuant to the original terms of the Company’s employment agreement with its Chief Medical Officer. As of December 31, 2018 and 2017, accrued and unpaid severance costs totaled approximately $0 and $1.5 million. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Operating Leases In December 2016, the Company moved into its new headquarters location in San Diego, California. The lease commenced in December 2016 and has an initial term of 130 months, with an option by the Company to extend the lease term for an additional five years. The Company has the right to terminate the lease at the end of the 94th month of the lease term if it is acquired by a third party and pays an early termination fee. The Company is responsible for payment of taxes and operating expenses for the building, in addition to monthly base rent in the initial amount of approximately $232,000, with 3% annual increases, which monthly base rent is abated for the first ten months of the lease term. The total estimated base rent payments over the life of the lease are estimated to be approximately $32.7 million. Upon execution of the lease in May 2015, the Company provided a security deposit in the form of a letter of credit in the amount of approximately $695,000. Cash collateralizing the letter of credit is classified as noncurrent restricted cash on the balance sheets. The Company has determined that the lease is an operating lease for accounting purposes. Rent expense was $3.1 million, $3.2 million and $1.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. For financial reporting purposes, rent expense is recognized on a straight-line basis over the term of the lease. Accordingly, rent expense recognized in excess of rent paid is accounted for as deferred rent in the balance sheets. As of December 31, 2018, future minimum annual obligations under all non-cancellable operating lease commitments, including the facility leases described above are as follows (in thousands): 2019 $ 3,005 2020 3,085 2021 3,136 2022 3,229 2023 3,327 Thereafter 13,391 Total $ 29,173 Litigation From time to time, the Company may be involved in various lawsuits, legal proceedings, or claims that arise in the ordinary course of business. Management believes there are no claims or actions pending against the Company as of December 31, 2018 which will have, individually or in the aggregate, a material adverse effect on its business, liquidity, financial position, or results of operations. Litigation, however, is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. Intellectual Property Licenses The Company has acquired exclusive rights to develop patented rights, information rights and related know-how for OTIPRIO, certain of its product candidates and potential future product candidates under licensing agreements with third parties. The licensing rights obligate the Company to make payments to the licensors for license fees, milestones and royalties. The Company is also responsible for patent prosecution costs, in the event such costs are incurred. Under one of these agreements, the Company has achieved six development milestones and one regulatory milestone, totaling $2.8 million, related to its clinical trials for OTIPRIO, OTIVIDEX and OTO-311. The Company may be obligated to make additional milestone payments under the Company’s intellectual property license agreements as follows (in thousands): Development $ 1,600 Regulatory 10,275 Commercialization 1,000 Total $ 12,875 In addition, the Company is obligated to pay royalties of less than five percent on net sales of OTIPRIO and on sales of any other commercial products developed using these licensed technologies. Such royalty expense for OTIPRIO is recorded to cost of product sales. The Company may also be obligated to pay the licensors a percentage of fees received if and when the Company sublicenses the technology. As of December 31, 2018, the Company has not entered into any sublicense agreements for the licensed technologies. The following table summarizes costs recognized, in research and development, under the Company’s license agreements and other non-cancellable royalty and milestone obligations (in thousands): Years Ended December 31, 2018 2017 2016 License and other fees $ — $ — $ 71 Milestone fees — — — Total license and related fees $ — $ — $ 71 Other Royalty Arrangements The Company entered into an agreement related to OTIPRIO under which the Company was obligated to pay a one-time milestone payment of $0.5 million upon the first commercial sale of OTIPRIO and to pay royalties of less than one percent on net product sales of OTIPRIO. This milestone payment was paid during March 2016 and both this milestone payment and the royalties are recorded as selling, general and administrative expense. The royalties are payable until the later of: (i) the expiration of the last to expire patent owned by the Company in such country covering OTIPRIO; or (ii) 10 years after the first commercial sale of OTIPRIO after receipt of regulatory approval for OTIPRIO in such country. The Company entered an exclusive license agreement with Ipsen that enables the Company to use clinical and nonclinical gacyclidine data generated by Ipsen to support worldwide development and regulatory filings for OTO-313. Under this license agreement, the Company is obligated to pay Ipsen low single-digit royalties on annual net sales of OTO-313 by the Company or its affiliates or sublicensees, up to a maximum cumulative royalty totaling $10.0 million. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Long Term Debt [Abstract] | |
Long-term Debt | 7. Long-term Debt On December 31, 2018 (the Closing Date), the Company entered into a Loan and Security Agreement (the Loan Agreement), among the Company, Oxford Finance LLC, as collateral agent, and the lenders party thereto from time to time. The Loan Agreement provides for a $15.0 million secured term loan credit facility (the Term Loan). The proceeds of the Term Loan may be used for working capital and general corporate purposes. The Company has the right to prepay the Term Loan in whole or in part at any time, subject to a prepayment fee of 3.00% if prepaid on or prior to the first anniversary of the Closing Date, 2.00% if prepaid after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, and 1.00% thereafter. Amounts prepaid or repaid under the Term Loan may not be reborrowed. The Term Loan was fully funded on the Closing Date and matures on December 1, 2023 (the Maturity Date). The Company paid a facility fee of 0.75% and customary closing fees on the Closing Date. The Term Loan bears interest at a floating rate equal to the greater of 5.25% and the prime rate as reported in the Wall Street Journal from time to time, plus 3.75%, (9.0% as of December 31, 2018, which is the minimum interest rate). Interest on the Term Loan is payable monthly in arrears. The Company is permitted to make interest-only payments on the Term Loan for the twenty-four (24) months following the Closing Date followed by consecutive equal monthly payments of principal and interest in arrears through the Maturity Date. The interest-only period can be extended by an additional twelve (12) months subject to the achievement of a certain clinical trial milestone. The outstanding principal amount of the Term Loan, together with accrued and unpaid interest, is due on December 1, 2023. Upon repayment or acceleration of the Term Loan, a final payment fee equal to 4.00% of the aggregate original principal amount of the Term Loan is payable (the Final Payment). The Final Payment of $0.6 million, as well as the initial facility fee and all other direct fees and costs associated with the Loan Agreement, was recognized as a debt discount. The debt discount will be amortized to interest expense over the term of the Loan Agreement using the effective interest method. The Company’s obligations under the Loan Agreement are secured by substantially all its assets, excluding intellectual property and subject to certain other exceptions and limitations. The Loan Agreement contains customary affirmative covenants, including covenants regarding compliance with applicable laws and regulations, reporting requirements, payment of taxes and other obligations, and maintenance of insurance. Further, subject to certain exceptions, the Loan Agreement contains customary negative covenants limiting the ability of the Company to, among other things, sell assets, allow a change of control to occur (if the Term Loan is not repaid), make acquisitions, incur debt, grant liens, make investments, pay dividends or repurchase stock. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the Loan Agreement immediately due and payable, increase the applicable rate of interest by 5.00%, and exercise the other rights and remedies provided for under the Loan Agreement and related loan documents. The events of default under the Loan Agreement include payment defaults, breaches of covenants or representations and warranties, material adverse changes, certain bankruptcy events, cross defaults with certain other indebtedness, and judgment defaults. The estimated aggregate amounts and timing of payments on the Company’s long-term debt obligations as of December 31, 2018 for the next five fiscal years were as follows: 2019 $ — 2020 — 2021 4,714 2022 5,143 2023 5,743 Subtotal 15,600 Unamortized discount (836 ) Total long-term debt, net $ 14,764 |
Fair Value
Fair Value | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 8. Fair Value The accounting guidance defines fair value, establishes a consistency framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring basis or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance establishes a three-tier fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. These tiers are based on the source of the inputs and are as follows: Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices in active markets that are observable either directly or indirectly. Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. As of December 31, 2018 and 2017, the Company held no assets or liabilities measured at fair value on a nonrecurring basis and no liabilities measured at fair value on a recurring basis. The following fair value hierarchy table presents the Company’s assets measured at fair value on a recurring basis (in thousands): Fair Value Measurement at Reporting Date Using Total Level 1 Level 2 Level 3 December 31, 2018: Assets Money market funds $ 17,159 $ 17,159 $ — $ — U.S. treasury securities 63,651 63,651 — — Total $ 80,810 $ 80,810 $ — $ — December 31, 2017: Assets Money market funds $ 10,494 $ 10,494 $ — $ — U.S. treasury securities 39,165 39,165 — — U.S. government sponsored enterprise securities 62,383 — 62,383 — Total $ 112,042 $ 49,659 $ 62,383 $ — |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 9. Stockholders’ Equity Common Stock Reserved for Future Issuance Shares of common stock reserved for future issuance are as follows: December 31, 2018 2017 Common stock options issued and outstanding 5,019,964 4,599,252 Common stock options available for future grant 4,492,021 3,403,597 Common stock reserved for issuance under ESPP 1,642,821 1,292,327 Total common stock reserved for future issuance 11,154,806 9,295,176 During 2017, 141,060 warrants were net exercised for 32,209 shares of common stock. There are no remaining warrants outstanding at December 31, 2018 and 2017. |
Stock-Based Compensation and Eq
Stock-Based Compensation and Equity Plans | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation and Equity Plans | 10. Stock-Based Compensation and Equity Plans 2014 Equity Incentive Plan The Company granted awards under its 2010 Equity Incentive Plan (the 2010 Plan) until June 2014. In July 2014, the Company’s board of directors adopted and the Company’s stockholders approved its 2014 Equity Incentive Plan (the 2014 Plan), which became effective in August 2014. In connection with the adoption of the 2014 Plan, the Company terminated the 2010 Plan for future use and provided that no further equity awards were to be granted under the 2010 Plan. All outstanding awards under the 2010 Plan continue to be governed by their existing terms. The 2014 Plan permits the grant of incentive stock options to the Company’s employees and the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors and consultants. Options granted under the 2014 Plan generally vest over four years, subject to continued service, and subject to certain acceleration of vesting provisions, expire no later than 10 years from the date of grant. Options granted under the 2014 Plan must have a per share exercise price equal to at least 100% of the fair market value of a shares of the common stock as of the date of grant. Under the evergreen provision of the 2014 Plan, the number of shares available for issuance under the 2014 Plan includes an annual increase on the first day of each fiscal year equal to the lesser of (i) 2,500,000 shares; (ii) 5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company’s board of directors may determine. Effective January 1, 2019, the number of shares available for future issuance was increased by 1,534,270 shares so that the total available for future issuance as of January 1, 2019 will be 6,026,291 shares. As of December 31, 2018, 4,492,021 options were available for grant under the 2014 Plan. The following table summarizes stock option activity for the year ended December 31, 2018 (in thousands except per share amounts and years): Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Outstanding as of December 31, 2017 4,599 $ 14.28 Granted 3,671 $ 5.65 Exercised (19 ) $ 1.69 Forfeited (3,231 ) $ 18.00 Outstanding as of December 31, 2018 5,020 $ 5.62 7.2 $ 86 Options vested and expected to vest as of December 31, 2018 5,020 $ 5.62 7.2 $ 86 Options exercisable as of December 31, 2018 1,976 $ 5.55 5.5 $ 86 The following table summarizes certain information regarding stock options (in thousands, except per share data): Years Ended December 31, 2018 2017 2016 Weighted-average grant date fair value per share of options granted during the period $ 4.36 $ 9.14 $ 9.47 Cash received from options exercised during the period 32 448 355 Intrinsic value of options exercised during the period 76 623 985 Performance-based Awards In February 2018, the Company granted its chief executive officer a stock option for the purchase of 250,000 shares of the Company’s common stock which is subject to time-based vesting and certain performance-based conditions. Specifically, subject to continued service the option will vest upon achievement of a clinical development milestone. On the grant date, the Company determined the fair value of the award and determined achievement of the milestone was probable of occurrence. The Company is recognizing stock-based compensation expense, based upon the grant date fair value, over the implicit service period. The milestone was achieved and the option grant vested and was fully expensed as of December 31, 2018. Option Exchange On December 20, 2017, the Company commenced an option exchange program (Option Exchange) which allowed eligible employees to exchange certain outstanding stock options (Eligible Options), whether vested or unvested, with an exercise price greater than $12.00 per share, for new stock options. Non-employee members of our Board of Directors were not eligible to participate in the Option Exchange. The Option Exchange expired on January 19, 2018. The closing price of the Company’s common stock on that date was $5.675 per share. Pursuant to the terms and conditions of the Option Exchange, the Company accepted for exchange Eligible Options to purchase a total of 1,992,000 shares of the Company’s common stock, representing approximately 81.51% of the total shares of common stock underlying the Eligible Options. All surrendered options were canceled effective as of the expiration of the Option Exchange and in exchange on January 19, 2018, the Company granted new options to purchase an aggregate of 1,570,328 shares of the Company’s common stock with an exercise price equal to $5.675 per share pursuant to the terms of the Option Exchange and the Company’s 2014 Equity Incentive Plan. These new options vest over one to three years, and expire eight years from the date of grant. The Company determined this option exchange was an option modification. The exchange of these stock options was treated as a modification for accounting purposes. The difference in the fair value of the canceled options immediately prior to the cancellation and the fair value of the modified options resulted in incremental value, of approximately $0.6 million, which was calculated using the Black-Scholes-Merton option pricing model. T remaining unrecognized expense for the exchanged option, as of the exchange date, 2014 Employee Stock Purchase Plan In July 2014, the Company’s board of directors adopted and the stockholders approved the Company’s 2014 Employee Stock Purchase Plan (the ESPP), which became effective upon adoption by the Company’s board of directors. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The offering periods generally start on the first trading day on or after June 1 and December 1 of each year and ends on the first trading day on or before June 1 and December 1 approximately twenty-four months later, and include six-month purchase periods. The number of shares available for issuance under the ESPP includes an annual increase on the first day of each fiscal year, equal to the lesser of (i) 800,000 shares; (ii) 1.5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company’s board of directors may determine. Effective January 1, 2019, the number of shares available for future issuance was increased by 460,281 shares so that the total available for future issuance as of January 1, 2019 will be 2,103,102 shares. As of December 31, 2018, the Company had issued 331,944 Stock-Based Compensation Expense The following are the weighted-average underlying assumptions used to determine the fair value of stock options and ESPP rights using the Black-Scholes-Merton option pricing model: Years Ended December 31, 2018 2017 2016 Stock Options: Risk-free interest rate 2.6 % 2.1 % 1.5 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 100.6 % 69.8 % 67.8 % Expected term (in years) 5.4 6.1 6.1 Employee Stock Purchase Plan: Risk-free interest rate 2.6 % 1.4 % 0.8 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 116.0 % 106.6 % 70.8 % Expected term (in years) 1.3 1.2 1.3 Risk-Free Interest Rate. The Company bases the risk-free interest rate assumption on observed interest rates appropriate for the expected term of the option grants. Expected Dividend Yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends. Expected Volatility. The expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biopharmaceutical industry. Expected Term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period. Total non-cash stock-based compensation expense recognized in the statements of operations is as follows (in thousands): Years Ended December 31, 2018 2017 2016 Cost of product sales $ 12 $ 20 $ 41 Research and development 4,447 3,763 2,996 Selling, general and administrative 7,955 9,878 9,574 Total stock-based compensation $ 12,414 $ 13,661 $ 12,611 As of December 31, 2018, unrecognized compensation costs related to stock options was $9.3 million which is expected to be recognized over a remaining weighted-average vesting period of 2.6 years. As of December 31, 2018, unrecognized compensation cost related to ESPP rights was $0.3 million which is expected to be recognized over a remaining weighted-average vesting period of 1.4 years. |
Co-Promotion Agreement
Co-Promotion Agreement | 12 Months Ended |
Dec. 31, 2018 | |
Collaborative Arrangement Disclosure [Abstract] | |
Co-Promotion Agreement | 11. Co-Promotion Agreement On August 2, 2018, the Company entered into the Co-Promotion Agreement with Mission that provides Mission with an exclusive right to promote OTIPRIO for AOE in pediatrician and primary care physician offices as well as urgent care clinics in the United States. The initial term of the Co-Promotion Agreement is five years with provisions for extension and early termination. The Co-Promotion Agreement is within the scope of ASC 808, as the parties are active participants and exposed to the risks and rewards of the collaborative activity. Mission will make annual non-refundable, non-creditable payments to the Company during each of the first five years of the Co-Promotion Agreement as partial consideration of the OTIPRIO product support activities provided by the Company and as reimbursement for certain expenses incurred by the Company to obtain and maintain FDA approval for use of OTIPRIO in AOE. In addition, Mission will reimburse the Company for a proportion of product support expenses as agreed upon by both parties. All such payments are recognized proportionately with the performance of the underlying services and accounted for as reductions to selling, general and administrative expense. Mission has agreed to bear the costs incurred for its promotion of OTIPRIO. In exchange for its promotional services, Mission is entitled to receive a share of gross profits totaling more than 50% from the sale of OTIPRIO to Mission's accounts. The Company’s payments to Mission for its portion of the gross profit will be recognized as selling, general and administrative expense in the Company’s statement of operations. The Company is the principal in the product sale of OTIPRIO to customers and will continue to recognize all revenue and related cost of product sales. The Company does not consider performing product support services for its partner to be a part of its ongoing major or central operations and, thus, the associated payments are not considered revenue, nor do they fall under ASC 606. The Company considers these activities to be collaborative activities under the scope of ASC 808, and recognizes the shared profits and losses in the periods such profits and losses occur. For the year ended December 31, 2018, the Company recognized a $0.6 million reduction in selling, general and administrative expenses due to the Co-Promotion Agreement with Mission. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event that a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has completed an IRC Section 382/383 analysis, regarding the limitation of net operating loss and research and development credit carryforwards as of December 31, 2018. As a result of the analysis, three ownership changes were determined to have occurred. Based on these changes, the deferred tax assets for net operating losses and federal research and development credits of $2.2 million and $0.3 million, respectively, have been removed from the deferred tax asset schedule and the Company has recorded a corresponding decrease in the valuation allowance. The California research and development credits were not limited as these credits carry forward indefinitely. The Company will continue to consider changes in ownership that may cause losses of tax attributes in the future. Significant components of the Company’s deferred tax assets are as follows (in thousands): December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 67,574 $ 53,666 Research and development credits 7,963 6,603 Depreciation and amortization 15,376 15,916 Accrued expenses 623 394 Deferred rent 742 636 Stock compensation 6,349 5,610 Other, net 514 451 Total deferred tax assets 99,141 83,276 Less: valuation allowance (99,141 ) (83,276 ) Total $ — $ — Due to the Company’s history of losses and uncertainty regarding future earnings, a full valuation allowance has been recorded against the Company’s deferred tax assets, as it is more likely than not that such assets will not be realized. A valuation allowance of approximately $99.1 million and $83.3 million has been established as of December 31, 2018 and 2017, respectively. At December 31, 2018, the Company had federal and state net operating loss carryforwards of approximately $287.6 million and $122.1 million, respectively, net of IRC Section 382 limitations. The federal and state net operating loss carryforwards will begin to expire in 2030, unless previously utilized. At December 31, 2018, the Company also had federal and California research and development credit carryforwards of approximately $9.8 million net of IRC Section 383 limitations and $4.5 million, respectively. The federal research and development credit carryforwards will begin expiring in 2030 unless previously utilized. The California research credit will carry forward indefinitely. The following is a reconciliation of the expected recovery of income taxes between those that are based on enacted tax rates and laws, to those currently reported for the years ended December 31 (in thousands): 2018 2017 2016 Federal statutory rate $ (10,578 ) $ (30,645 ) $ (37,599 ) State tax (net of federal benefit) (4,383 ) (462 ) (2,079 ) Permanent items, other (2,092 ) 1,376 164 Stock compensation 2,570 1,720 609 Rate change — 45,421 (2,251 ) Research and development credits (2,308 ) (1,830 ) (3,210 ) Uncertain tax positions 907 732 2,124 Change in valuation allowance 15,884 (16,312 ) 42,243 Provision for income taxes $ 0 $ 0 $ 1 The Tax Cuts and Jobs Act (the Act) was enacted on December 22, 2017. The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective on January 1, 2018. The Company remeasured certain deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally 21%. As a result, the Company has reduced its deferred tax asset balance as of December 31, 2017 by $44.5 million. Due to the Company’s full valuation allowance position, the Company has also reduced the valuation allowance by the same amount. On December 22, 2017, Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance, with SAB 118, the Company has determined that there is no deferred tax benefit or expense with respect to the remeasurement of certain deferred tax assets and liabilities due to the full valuation allowance against net deferred tax assets. As of December 31, 2018, we have completed our analysis of the Act’s income tax effects. There were immaterial differences to the measurement of the deferred taxes from the provisional amounts that were fully offset by a valuation allowance. The following table summarizes the activity related to our gross unrecognized tax benefits (in thousands): December 31, 2018 2017 2016 Balance at the beginning of the year $ 9,098 $ 8,391 $ 5,709 Adjustments related to prior year tax positions 242 — 1,872 Increases related to current year tax positions 712 798 1,409 Decreases for tax positions from prior years — (91 ) (599 ) $ 10,052 $ 9,098 $ 8,391 The Company’s policy is to include interest and penalties related to unrecognized income tax benefits as a component of income tax expense. The Company has no accruals for interest or penalties in the balance sheets as of December 31, 2018 and 2017 and has not recognized interest or penalties in the statements of operations for the years ended December 31, 2018, 2017 and 2016. Due to the valuation allowance recorded against the Company’s deferred tax assets, future changes in unrecognized tax benefits will not impact the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly in the next 12 months. The Company is subject to taxation in the United States for federal and state purposes. Due to the net operating loss carryforwards, the U.S. federal and state returns are open to examination by the IRS and state tax authorities for all years since inception. The Company is not currently under examination by the federal or any state tax authority. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred operating losses and negative cash flows from operating activities since inception. As of December 31, 2018, the Company had cash, cash equivalents and short-term investments of $97.3 million and an accumulated deficit of $415.2 million. The Company anticipates that it will continue to incur net losses into the foreseeable future as it: (i) develops and seeks regulatory approvals for OTIVIDEX and its other potential product candidates; and (ii) works to develop additional product candidates through research and development programs. When additional financing is required, the Company anticipates that it will seek additional funding through future debt and/or equity financings or other sources, such as potential collaboration agreements. If the Company is not able to secure adequate additional funding, if or when necessary, the Company may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially harm the Company’s business, results of operations, and future prospects. |
Use of Estimates | Use of Estimates The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expense during the reporting period. Although these estimates are based on the Company’s knowledge of current events and anticipated actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held. Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash in readily available checking, savings and money market accounts, and highly liquid investments with original maturities of three months or less at the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments. The Company’s restricted cash consists of cash maintained in separate deposit accounts to secure a letter of credit issued by a bank to the landlord under a lease agreement for the Company’s corporate headquarters. |
Short-Term Investments | Short-Term Investments The Company carries short-term investments classified as available-for-sale at fair value as determined by prices for identical or similar securities at the balance sheet date. Short-term investments consist of both Level 1 and Level 2 financial instruments in the fair value hierarchy (as more fully described in Note 8 – Fair Value Realized gains or losses of available-for-sale securities are determined using the specific identification method and net realized gains and losses are included in interest income. The Company periodically reviews available-for-sale securities for other-than temporary declines in fair value below the cost basis, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company records unrealized gains and losses on available-for-sale debt securities as a component of other comprehensive loss within the statements of comprehensive loss and as a separate component of stockholders’ equity on the balance sheets. The Company does not hold equity securities in its investment portfolio. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments include cash, cash equivalents, short-term investments, prepaid expenses and other assets, accounts payable, accrued expenses, accrued compensation and long-term debt. The carrying value of the Company’s cash and cash equivalents, short-term investments, prepaid expenses and other current assets, other long-term assets, accounts payable, accrued expenses, and accrued compensation approximate fair value due to the short-term nature of these items. Based on Level 3 inputs and the borrowing rates currently available for loans with similar terms, the Company believes the fair value of long-term debt approximates its carrying value. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are recorded net of customer allowances for chargebacks, distributor fees and any allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts based on existing contractual payment terms, actual payment patterns of its customers and individual customer circumstances. To date, the Company has determined that an allowance for doubtful accounts is not required. |
Inventory | Inventory Inventory, which is stated at the lower of cost or net realizable value. Cost is determined on a first-in, first-out method. Inventories consist of OTIPRIO finished goods and work in-process, as well as raw materials used in the manufacture of OTIPRIO. If inventory costs exceed expected market value due to obsolescence, expiry or quantities in excess of expected demand, write downs are recorded for the difference between cost and market value, less cost to sell. During the year ended December 31, 2017, the Company recorded an inventory write down of $1.5 million to cost of product sales. During 2018, no such write down was recorded. |
Property and Equipment | Property and Equipment Property and equipment generally consist of laboratory equipment, manufacturing equipment, computers and software, and office furniture and are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets (generally two to ten years). Leasehold improvements are stated at cost and are depreciated on a straight-line basis over the lesser of the remaining term of the related lease or the estimated useful lives of the assets. Repairs and maintenance costs are charged to expense as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses the value of its long-lived assets, which consist of property and equipment, for impairment on an annual basis and whenever events or changes in circumstances and the undiscounted cash flows generated by those assets indicate that the carrying amount of such assets may not be recoverable. While the Company’s current and historical operating losses and negative cash flows are indicators of impairment, management believes that future cash flows to be received support the carrying value of its long-lived assets. No impairment of long-lived assets were recorded during the year ended December 31, 2018. During the year ended December 31, 2017, the Company recorded an impairment of its long-lived assets of approximately $0.4 million in cost of product sales related to OTIPRIO manufacturing equipment. During the year ended December 31, 2016, the Company recorded an impairment to its long-lived assets of approximately $0.6 million, which is classified within research and development expense on the statements of operations. This impairment was a result of manufacturing equipment expected to be used in research and development which has no future use for the Company. |
Clinical Trial Expense Accruals | Clinical Trial Expense Accruals As part of the process of preparing the Company’s financial statements, the Company is required to estimate expenses resulting from the Company’s obligations under contracts with vendors, clinical research organizations and consultants and under clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate clinical trial expenses in its financial statements by recording those expenses in the period in which services are performed and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates through financial models taking into account discussion with applicable personnel and outside service providers as to the progress or state of its trials. During the course of a clinical trial, the Company adjusts its clinical expense if actual results differ from its estimates to date, there have not been any material changes to the estimates. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted Accounting Standards Concepts (ASC) Revenue from Contracts with Customers (ASC 606), Revenue Recognition To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract with a customer under ASC 606 and when it is probable the Company will collect the consideration exchanged for the goods or services transferred to the customer. OTIPRIO is sold to a limited number of specialty wholesale distributors. The Company recognizes revenue when its customers obtain control of OTIPRIO, typically upon delivery by the Company to these distributors. The Company has determined the delivery of OTIPRIO to its customers constitutes a single performance obligation and no other performance obligations are present. Hospitals, ambulatory surgery centers and physician offices order OTIPRIO from the Company’s distributors and are the end users of OTIPRIO. The Company permits product returns from the distributors only if the product is damaged or is shipped or ordered in error. Product returns based on expiry are not permitted. To date, product returns have been immaterial. Sales commissions and other incremental costs of obtaining customer contracts are expensed as incurred as the amortization periods would be less than one year or the amount is immaterial. Transaction Price and Reserves for Variable Consideration Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of variable consideration include trade discounts and allowances, government chargebacks, discounts and rebates and other fee for service amounts that are detailed within customer contracts relating to the sale of OTIPRIO. These reserves, as detailed below, are based on the amounts earned or accrued on our sales. Variable consideration is estimated using the most likely method, which is the single most likely outcome under the Company’s contracts and takes into consideration contractual fees, historical chargeback activity and historical Medicaid rebates. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which the Company is entitled based on the terms of the respective underlying contracts. The amount of variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable a significant reversal in the amount of the cumulative revenue recognized under the contract will not occur in a future period. Reserves are established for these discounts and allowances upon delivery of OTIPRIO by the distributor and are classified as: (i) an allowance against accounts receivable if the amount is payable to the distributor or (ii) an accrued liability if the amount is payable to a party other than the distributor. Allowances against accounts receivable relate to chargebacks and distributor fees and accruals relate primarily to government rebates. Trade Discounts and Allowances . The Company’s customers are specialty wholesale distributors with whom the Company has contracted to pay a fee based on a percentage of wholesale acquisition cost for sales order management, data, and distribution services . The Company determined such services received to date are not distinct from the sale of products to customers and, therefore, these payments have been recorded as a reduction of revenue within the statement of operations. This fee for service is recorded as an allowance against accounts receivable at the time of sale based on the contracted percentage. Chargebacks . The Company estimates allowances against accounts receivable for chargebacks related to agreements with group purchasing organizations and federal contracts. Under these agreements, the Company credits distributors a chargeback amount which represents the difference between the wholesale acquisition cost and the discounted price at which eligible purchasers purchased from the distributors. At the time of sale, estimated chargebacks are recorded based on historical chargeback activity, the projected payer mix, patient population industry data and the identification of entities purchasing OTIPRIO that are eligible for discounted pricing. Government . The Company estimates a rebate liability in connection with a Medicaid Drug Rebate Agreement with the Centers for Medicare & Medicaid Services, which provides a rebate to participating states based on covered purchases of OTIPRIO. At the time of sale, estimated Medicaid rebates are recorded based on historical government rebate activity, the projected payer mix and Medicaid patient population industry data. |
Concentration of Major Customers | Concentration of Major Customers The Company sells OTIPRIO to specialty wholesale distributor customers. The following table summarizes the Company’s sales to its three largest three customers as a percent of revenue for the periods presented: 2018 2017 2016 1st largest customer 44 % 34 % 35 % 2nd largest customer 33 % 34 % 34 % 3rd largest customer 21 % 30 % 30 % |
Collaborative Arrangements | Collaborative Arrangements The Company has entered into a co-promotion agreement with a partner that falls under the scope of ASC Topic 808, Collaborative Arrangements |
Research and Development | Research and Development Research and development expenses include the costs associated with the Company’s research and development activities, including salaries, benefits, stock-based compensation expense and occupancy costs. Also included in research and development expenses are third-party costs incurred in conjunction with contract manufacturing for the Company’s research and development programs and clinical trials, including the cost of clinical trial drug supply, costs incurred by contract research organizations and regulatory expenses. Research and development costs are expensed as incurred. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative expenses include the costs associated with the Company’s executive, administrative, finance and human resource functions including salaries, benefits, stock-based compensation expense and occupancy costs. Other selling, general and administrative expenses include costs associated with prosecuting and maintaining the Company’s patent portfolio, corporate legal expenses, costs required for public company activities and infrastructure necessary for the general conduct of the Company’s business. The Company’s selling, general and administrative expenses also include OTIPRIO product support expenses, and profit-sharing fees payable to the Company’s partner, which are reduced by payments received from our partner under the Company’s co-promotion agreement. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation expense related to stock options and employee stock purchase plan (ESPP) rights by estimating the fair value on the date of grant using the Black-Scholes-Merton option pricing model. Forfeitures are recognized as incurred. For awards subject to time-based vesting conditions, stock-based compensation expense is recognized using the straight-line method. For performance-based awards to employees, (i) the fair value of the award is determined on the grant date, (ii) we assess the probability of the individual performance milestones under the award being achieved and (iii) the fair value of the shares subject to the milestone is expensed over the implicit service period commencing once management believes the performance criteria is probable of being met. |
Income Taxes | Income Taxes The accounting guidance for uncertainty in income taxes prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities based on the technical merits of the position. The Company uses the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and/or circumstances from non-owner sources. |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, potentially dilutive securities are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented. Potentially dilutive securities excluded from the calculation of diluted net loss per share are as follows: Years Ended December 31, 2018 2017 2016 Warrants to purchase common stock — — 141,060 Options to purchase common stock 5,019,964 4,599,252 5,149,973 Total 5,019,964 4,599,252 5,291,033 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases (ASU 2016-02)”, which requires lessees to recognize leases on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 establishes a right-of-use (ROU) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. ASU 2016-02 is effective for the Company beginning January 1, 2019 and will be adopted using a modified retrospective approach and the effective date will be as of the initial application. Consequently, financial information will not be updated, and the disclosures required under ASU 2016-02 will not be provided for dates and periods prior to January 1, 2019. ASU 2016-02 provides a number of optional practical expedients and accounting policy elections. The Company expects to elect the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or initial direct costs for any existing leases. The Company expects ASU 2016-02 will have a material effect on its balance sheets. However, the Company does not expect ASU 2016-02 will have a material effect on its statements of operations and comprehensive loss. While the Company continues to assess all of the effects of adoption, the most significant effects relate to (i) the recognition of a right-of-use asset in the range of $15.0 million to $17.0 million, (ii) the recognition of lease liabilities in the range of $18.0 million to $20.0 million, (iii) the derecognition $3.0 million in deferred rent for certain lease incentives received, and (iv) significant new disclosures. In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07) . The amendments in ASU 2018-07 expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company . The Company does not expect the adoption of ASU 2018-07 to have a material impact on its financial statements or disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Sales to Largest Customers | The following table summarizes the Company’s sales to its three largest three customers as a percent of revenue for the periods presented: 2018 2017 2016 1st largest customer 44 % 34 % 35 % 2nd largest customer 33 % 34 % 34 % 3rd largest customer 21 % 30 % 30 % |
Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss Per Share | Potentially dilutive securities excluded from the calculation of diluted net loss per share are as follows: Years Ended December 31, 2018 2017 2016 Warrants to purchase common stock — — 141,060 Options to purchase common stock 5,019,964 4,599,252 5,149,973 Total 5,019,964 4,599,252 5,291,033 |
Available-for-Sale Securities (
Available-for-Sale Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments Debt And Equity Securities [Abstract] | |
Schedule of Available-for-Sale-Securities | Available-for-sale securities with maturities of more than three months from the date of purchase have been classified as short-term investments, and were as follows as of (in thousands): Amortized Cost Unrealized Gain Unrealized Loss Market Value December 31, 2018: U.S. treasury securities $ 63,674 $ 1 $ (24 ) $ 63,651 Total available-for-sale securities $ 63,674 $ 1 $ (24 ) $ 63,651 December 31, 2017: U.S. treasury securities $ 39,209 $ — $ (44 ) $ 39,165 U.S. government sponsored enterprise securities 62,439 — (56 ) 62,383 Total available-for-sale securities $ 101,648 $ — $ (100 ) $ 101,548 |
Balance Sheet Details (Tables)
Balance Sheet Details (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Prepaid and Other Current Assets | Prepaid and other current assets are comprised of the following (in thousands): December 31, 2018 2017 Prepaid clinical trial costs $ 258 $ 729 Other 2,419 1,605 Total $ 2,677 $ 2,334 |
Property and Equipment, Net | Property and equipment, net consists of the following (in thousands): December 31, 2018 2017 Laboratory equipment $ 3,772 $ 3,457 Manufacturing equipment 1,017 871 Computer equipment and software 770 731 Leasehold improvements 736 733 Office furniture 1,548 1,581 7,843 7,373 Less: accumulated depreciation and amortization (3,847 ) (2,694 ) Total $ 3,996 $ 4,679 |
Accrued Expenses | Accrued expenses consist of the following (in thousands): December 31, 2018 2017 Accrued clinical trial costs $ 1,294 $ 1,112 Accrued other 2,494 2,769 Total $ 3,788 $ 3,881 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Future Minimum Annual Obligations Under Operating Lease Commitments | As of December 31, 2018, future minimum annual obligations under all non-cancellable operating lease commitments, including the facility leases described above are as follows (in thousands): 2019 $ 3,005 2020 3,085 2021 3,136 2022 3,229 2023 3,327 Thereafter 13,391 Total $ 29,173 |
Schedule of Additional Milestone Payments under Intellectual Property License Agreements | The Company may be obligated to make additional milestone payments under the Company’s intellectual property license agreements as follows (in thousands): Development $ 1,600 Regulatory 10,275 Commercialization 1,000 Total $ 12,875 |
Summary of Costs Recognized Under License Agreements and Other Non-Cancellable Royalty and Milestone Obligations | The following table summarizes costs recognized, in research and development, under the Company’s license agreements and other non-cancellable royalty and milestone obligations (in thousands): Years Ended December 31, 2018 2017 2016 License and other fees $ — $ — $ 71 Milestone fees — — — Total license and related fees $ — $ — $ 71 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Long Term Debt [Abstract] | |
Summary of Estimated Aggregate Amounts and Timing of Payments on Long-term Debt Obligations | The estimated aggregate amounts and timing of payments on the Company’s long-term debt obligations as of December 31, 2018 for the next five fiscal years were as follows: 2019 $ — 2020 — 2021 4,714 2022 5,143 2023 5,743 Subtotal 15,600 Unamortized discount (836 ) Total long-term debt, net $ 14,764 |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Assets Measured on a Recurring Basis | The following fair value hierarchy table presents the Company’s assets measured at fair value on a recurring basis (in thousands): Fair Value Measurement at Reporting Date Using Total Level 1 Level 2 Level 3 December 31, 2018: Assets Money market funds $ 17,159 $ 17,159 $ — $ — U.S. treasury securities 63,651 63,651 — — Total $ 80,810 $ 80,810 $ — $ — December 31, 2017: Assets Money market funds $ 10,494 $ 10,494 $ — $ — U.S. treasury securities 39,165 39,165 — — U.S. government sponsored enterprise securities 62,383 — 62,383 — Total $ 112,042 $ 49,659 $ 62,383 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Schedule of Shares of Common Stock Reserved for Future Issuance | Shares of common stock reserved for future issuance are as follows: December 31, 2018 2017 Common stock options issued and outstanding 5,019,964 4,599,252 Common stock options available for future grant 4,492,021 3,403,597 Common stock reserved for issuance under ESPP 1,642,821 1,292,327 Total common stock reserved for future issuance 11,154,806 9,295,176 |
Stock-Based Compensation and _2
Stock-Based Compensation and Equity Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Option Activity | The following table summarizes stock option activity for the year ended December 31, 2018 (in thousands except per share amounts and years): Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Outstanding as of December 31, 2017 4,599 $ 14.28 Granted 3,671 $ 5.65 Exercised (19 ) $ 1.69 Forfeited (3,231 ) $ 18.00 Outstanding as of December 31, 2018 5,020 $ 5.62 7.2 $ 86 Options vested and expected to vest as of December 31, 2018 5,020 $ 5.62 7.2 $ 86 Options exercisable as of December 31, 2018 1,976 $ 5.55 5.5 $ 86 |
Summary of Certain Information Regarding Stock Options | The following table summarizes certain information regarding stock options (in thousands, except per share data): Years Ended December 31, 2018 2017 2016 Weighted-average grant date fair value per share of options granted during the period $ 4.36 $ 9.14 $ 9.47 Cash received from options exercised during the period 32 448 355 Intrinsic value of options exercised during the period 76 623 985 |
Weighted-Average Underlying Assumptions Used to Determine Fair Value of Stock Options and ESPP Rights | The following are the weighted-average underlying assumptions used to determine the fair value of stock options and ESPP rights using the Black-Scholes-Merton option pricing model: Years Ended December 31, 2018 2017 2016 Stock Options: Risk-free interest rate 2.6 % 2.1 % 1.5 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 100.6 % 69.8 % 67.8 % Expected term (in years) 5.4 6.1 6.1 Employee Stock Purchase Plan: Risk-free interest rate 2.6 % 1.4 % 0.8 % Expected dividend yield 0.0 % 0.0 % 0.0 % Expected volatility 116.0 % 106.6 % 70.8 % Expected term (in years) 1.3 1.2 1.3 |
Summary of Non-cash Stock Based Compensation Expense | Total non-cash stock-based compensation expense recognized in the statements of operations is as follows (in thousands): Years Ended December 31, 2018 2017 2016 Cost of product sales $ 12 $ 20 $ 41 Research and development 4,447 3,763 2,996 Selling, general and administrative 7,955 9,878 9,574 Total stock-based compensation $ 12,414 $ 13,661 $ 12,611 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Components of Deferred Tax Assets | Significant components of the Company’s deferred tax assets are as follows (in thousands): December 31, 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 67,574 $ 53,666 Research and development credits 7,963 6,603 Depreciation and amortization 15,376 15,916 Accrued expenses 623 394 Deferred rent 742 636 Stock compensation 6,349 5,610 Other, net 514 451 Total deferred tax assets 99,141 83,276 Less: valuation allowance (99,141 ) (83,276 ) Total $ — $ — |
Reconciliation of Expected Recovery of Income Taxes | The following is a reconciliation of the expected recovery of income taxes between those that are based on enacted tax rates and laws, to those currently reported for the years ended December 31 (in thousands): 2018 2017 2016 Federal statutory rate $ (10,578 ) $ (30,645 ) $ (37,599 ) State tax (net of federal benefit) (4,383 ) (462 ) (2,079 ) Permanent items, other (2,092 ) 1,376 164 Stock compensation 2,570 1,720 609 Rate change — 45,421 (2,251 ) Research and development credits (2,308 ) (1,830 ) (3,210 ) Uncertain tax positions 907 732 2,124 Change in valuation allowance 15,884 (16,312 ) 42,243 Provision for income taxes $ 0 $ 0 $ 1 |
Unrecognized Tax Benefit | The following table summarizes the activity related to our gross unrecognized tax benefits (in thousands): December 31, 2018 2017 2016 Balance at the beginning of the year $ 9,098 $ 8,391 $ 5,709 Adjustments related to prior year tax positions 242 — 1,872 Increases related to current year tax positions 712 798 1,409 Decreases for tax positions from prior years — (91 ) (599 ) $ 10,052 $ 9,098 $ 8,391 |
Description of Business and B_3
Description of Business and Basis of Presentation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Description Of Business And Basis Of Presentation [Line Items] | ||||
Cash, cash equivalents and short-term investments | $ 97,300 | |||
Accumulated deficit | $ (415,218) | $ (364,850) | ||
Common Stock [Member] | ||||
Description Of Business And Basis Of Presentation [Line Items] | ||||
Number of shares issued | 5,750,000 | |||
Common Stock [Member] | Follow On Public Offering [Member] | ||||
Description Of Business And Basis Of Presentation [Line Items] | ||||
Number of shares issued | 5,750,000 | |||
Price per share | $ 20 | |||
Proceeds from public offering | $ 107,600 | |||
Common Stock [Member] | Over-Allotment Option [Member] | ||||
Description Of Business And Basis Of Presentation [Line Items] | ||||
Number of shares issued | 750,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2018USD ($)SegmentCustomer | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||
Number of operating segments | Segment | 1 | ||
Inventory write-down | $ 0 | $ 1,500,000 | |
Impairment loss of long lived assets | $ 0 | $ 400,000 | $ 602,000 |
Number of largest customers | Customer | 3 | ||
ASU 2016-02 [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Derecognition of deferred rent | $ 3,000,000 | ||
Minimum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property and equipment useful lives | 2 years | ||
Minimum [Member] | ASU 2016-02 [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Operating lease asset | $ 15,000,000 | ||
Operating lease liability | $ 18,000,000 | ||
Maximum [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Property and equipment useful lives | 10 years | ||
Maximum [Member] | ASU 2016-02 [Member] | |||
Summary Of Significant Accounting Policies [Line Items] | |||
Operating lease asset | $ 17,000,000 | ||
Operating lease liability | $ 20,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of Sales to Largest Customers (Detail) - Customer Concentration Risk [Member] - Sales Revenue, Net [Member] | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Customer One [Member] | |||
Entity Wide Revenue Major Customer [Line Items] | |||
Concentration risk percentage | 44.00% | 34.00% | 35.00% |
Customer Two [Member] | |||
Entity Wide Revenue Major Customer [Line Items] | |||
Concentration risk percentage | 33.00% | 34.00% | 34.00% |
Customer Three [Member] | |||
Entity Wide Revenue Major Customer [Line Items] | |||
Concentration risk percentage | 21.00% | 30.00% | 30.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss Per Share (Detail) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities excluded from the calculation of diluted net loss per share | 5,019,964 | 4,599,252 | 5,291,033 |
Warrants to Purchase Common Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities excluded from the calculation of diluted net loss per share | 0 | 0 | 141,060 |
Options to Purchase Common Stock [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potentially dilutive securities excluded from the calculation of diluted net loss per share | 5,019,964 | 4,599,252 | 5,149,973 |
Available-for-Sale Securities -
Available-for-Sale Securities - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2018USD ($)Security | Dec. 31, 2017USD ($) | |
Schedule of Available-for-sale Securities [Line Items] | ||
Number of available-for-sale securities in unrealized loss positions for less than twelve months | Security | 27 | |
Other-than-temporary declines in the value of any available-for-sale securities | $ 0 | |
Maximum maturity of available-for-sale investment securities | 1 year | |
Available-for-sale Securities [Member] | Money Market Funds [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cash equivalents | $ 17,200,000 | $ 10,500,000 |
Available-for-Sale Securities_2
Available-for-Sale Securities - Schedule of Available-for-Sale-Securities (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | $ 63,674 | $ 101,648 |
Unrealized Gain | 1 | 0 |
Unrealized Loss | (24) | (100) |
Market Value | 63,651 | 101,548 |
U.S. Treasury Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 63,674 | 39,209 |
Unrealized Gain | 1 | 0 |
Unrealized Loss | (24) | (44) |
Market Value | $ 63,651 | 39,165 |
U.S. Government Sponsored Enterprise Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized Cost | 62,439 | |
Unrealized Gain | 0 | |
Unrealized Loss | (56) | |
Market Value | $ 62,383 |
Balance Sheet Details - Prepaid
Balance Sheet Details - Prepaid and Other Current Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
Prepaid clinical trial costs | $ 258 | $ 729 |
Other | 2,419 | 1,605 |
Total | $ 2,677 | $ 2,334 |
Balance Sheet Details - Propert
Balance Sheet Details - Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 7,843 | $ 7,373 |
Less: accumulated depreciation and amortization | (3,847) | (2,694) |
Total | 3,996 | 4,679 |
Laboratory Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,772 | 3,457 |
Manufacturing Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,017 | 871 |
Computer Equipment and Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 770 | 731 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 736 | 733 |
Office Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,548 | $ 1,581 |
Balance Sheet Details - Additio
Balance Sheet Details - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property Plant And Equipment [Abstract] | |||
Depreciation expense | $ 1,186 | $ 1,289 | $ 708 |
Balance Sheet Details - Accrued
Balance Sheet Details - Accrued Expenses (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Accrued clinical trial costs | $ 1,294 | $ 1,112 |
Accrued other | 2,494 | 2,769 |
Total | $ 3,788 | $ 3,881 |
Restructuring Charges - Additio
Restructuring Charges - Additional Information (Detail) - USD ($) $ in Millions | 2 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Restructuring Cost And Reserve [Line Items] | ||
Accrued and unpaid severance costs | $ 1.5 | $ 0 |
Stock-Based Compensation Expense [Member] | Chief Medical Officer [Member] | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring costs | 1 | |
Selling, General and Administrative Expense [Member] | ||
Restructuring Cost And Reserve [Line Items] | ||
Restructuring charge | $ 3.8 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($)Milestone | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | May 31, 2015USD ($) | |
Other Commitments [Line Items] | |||||
Operating lease term | 130 months | 130 months | |||
Additional operating lease term | 5 years | 5 years | |||
Period after which company has the right to terminate lease if it is acquired by a third party and pays early termination fee | 94 months | ||||
Monthly base rent for first year | $ 232,000 | ||||
Lease rate increase, percentage | 3.00% | ||||
Abatement period of monthly base rent | 10 months | ||||
Estimated base rent payments over the life of lease | $ 32,700,000 | ||||
Rent expense | $ 3,100,000 | $ 3,200,000 | $ 1,100,000 | ||
Milestone fees | 0 | $ 0 | $ 0 | ||
Intellectual Property [Member] | |||||
Other Commitments [Line Items] | |||||
Milestone fees | $ 2,800,000 | ||||
Maximum percentage of royalties on sales | 5.00% | ||||
Intellectual Property [Member] | Regulatory [Member] | |||||
Other Commitments [Line Items] | |||||
Number of milestones achieved | Milestone | 1 | ||||
Intellectual Property [Member] | Development [Member] | |||||
Other Commitments [Line Items] | |||||
Number of milestones achieved | Milestone | 6 | ||||
Royalty Agreements [Member] | |||||
Other Commitments [Line Items] | |||||
Milestone fees | $ 500,000 | ||||
Maximum percentage of royalties on sales | 1.00% | ||||
Royalty period | 10 years | ||||
Data License Agreement [Member] | |||||
Other Commitments [Line Items] | |||||
Description of royalties payable | The Company is obligated to pay Ipsen low single-digit royalties on annual net sales of OTO-313 by the Company or its affiliates or sublicensees | ||||
Maximum cumulative royalties paid under license agreement | $ 10,000,000 | ||||
Building [Member] | |||||
Other Commitments [Line Items] | |||||
Construction commencement period | 2016-12 | ||||
Restricted Cash [Member] | |||||
Other Commitments [Line Items] | |||||
Security deposit in the form of letter of credit | $ 695,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Future Minimum Annual Obligations under Operating Lease Commitments (Detail) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2,019 | $ 3,005 |
2,020 | 3,085 |
2,021 | 3,136 |
2,022 | 3,229 |
2,023 | 3,327 |
Thereafter | 13,391 |
Total | $ 29,173 |
Commitments and Contingencies_3
Commitments and Contingencies - Schedule of Additional Milestone Payments under Intellectual Property License Agreements (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Other Commitments [Line Items] | |
Cash Payments | $ 12,875 |
Development [Member] | |
Other Commitments [Line Items] | |
Cash Payments | 1,600 |
Regulatory [Member] | |
Other Commitments [Line Items] | |
Cash Payments | 10,275 |
Commercialization [Member] | |
Other Commitments [Line Items] | |
Cash Payments | $ 1,000 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Costs Recognized Under License Agreements and Other Non-Cancellable Royalty and Milestone Obligations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |||
License and other fees | $ 0 | $ 0 | $ 71 |
Milestone fees | 0 | 0 | 0 |
Total license and related fees | $ 0 | $ 0 | $ 71 |
Long-term Debt - Additional Inf
Long-term Debt - Additional Information (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |
Debt discount, amount | $ 836 |
Secured Term Loan Credit Facility [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 15,000 |
Facility fee percentage | 0.75% |
Debt instrument, maturity date | Dec. 1, 2023 |
Interest rate description | The Term Loan bears interest at a floating rate equal to the greater of 5.25% and the prime rate as reported in the Wall Street Journal from time to time, plus 3.75%, (9.0% as of December 31, 2018, which is the minimum interest rate). |
Interest only payment term | twenty-four (24) months |
Repayment fee percentage | 4.00% |
Debt discount, amount | $ 600 |
Debt instrument, covenant description | The Loan Agreement contains customary affirmative covenants, including covenants regarding compliance with applicable laws and regulations, reporting requirements, payment of taxes and other obligations, and maintenance of insurance. Further, subject to certain exceptions, the Loan Agreement contains customary negative covenants limiting the ability of the Company to, among other things, sell assets, allow a change of control to occur (if the Term Loan is not repaid), make acquisitions, incur debt, grant liens, make investments, pay dividends or repurchase stock. |
Secured Term Loan Credit Facility [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Debt instrument, interest rate | 5.25% |
Debt instrument, basis spread on variable rate | 3.75% |
Debt instrument, interest rate at period end | 9.00% |
Secured Term Loan Credit Facility [Member] | On or Prior to First Anniversary of Closing Date [Member] | |
Debt Instrument [Line Items] | |
Percentage of debt prepayment fee | 3.00% |
Secured Term Loan Credit Facility [Member] | After First Anniversary of Closing Date and On or Prior to Second Anniversary of Closing Date [Member] | |
Debt Instrument [Line Items] | |
Percentage of debt prepayment fee | 2.00% |
Secured Term Loan Credit Facility [Member] | Thereafter Second Anniversary of Closing Date [Member] | |
Debt Instrument [Line Items] | |
Percentage of debt prepayment fee | 1.00% |
Secured Term Loan Credit Facility [Member] | Extended Interest Only Payment Term [Member] | |
Debt Instrument [Line Items] | |
Interest only payment term | twelve (12) months |
Secured Term Loan Credit Facility [Member] | Occurrence and During Continuance of Event of Default [Member] | |
Debt Instrument [Line Items] | |
Increase in applicable rate of interest | 5.00% |
Long-term Debt - Summary of Est
Long-term Debt - Summary of Estimated Aggregate Amounts and Timing of Payments on Long-term Debt Obligations (Detail) $ in Thousands | Dec. 31, 2018USD ($) |
Long Term Debt [Abstract] | |
2,019 | $ 0 |
2,020 | 0 |
2,021 | 4,714 |
2,022 | 5,143 |
2,023 | 5,743 |
Subtotal | 15,600 |
Unamortized discount | (836) |
Total long-term debt, net | $ 14,764 |
Fair Value - Additional informa
Fair Value - Additional information (Detail) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value Measurements Nonrecurring [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 0 | $ 0 |
Liabilities measured at fair value | 0 | 0 |
Fair Value Measurements, Recurring [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 80,810,000 | 112,042,000 |
Liabilities measured at fair value | $ 0 | $ 0 |
Fair Value - Fair Value Assets
Fair Value - Fair Value Assets Measured on a Recurring Basis (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Short-term investments | $ 63,651 | $ 101,548 |
U.S. Treasury Securities [Member] | ||
Assets | ||
Short-term investments | 63,651 | 39,165 |
U.S. Government Sponsored Enterprise Securities [Member] | ||
Assets | ||
Short-term investments | 62,383 | |
Fair Value Measurements, Recurring [Member] | ||
Assets | ||
Total assets | 80,810 | 112,042 |
Fair Value Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Assets | ||
Money market funds | 17,159 | 10,494 |
Fair Value Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||
Assets | ||
Short-term investments | 63,651 | 39,165 |
Fair Value Measurements, Recurring [Member] | U.S. Government Sponsored Enterprise Securities [Member] | ||
Assets | ||
Short-term investments | 62,383 | |
Level 1 [Member] | Fair Value Measurements, Recurring [Member] | ||
Assets | ||
Total assets | 80,810 | 49,659 |
Level 1 [Member] | Fair Value Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Assets | ||
Money market funds | 17,159 | 10,494 |
Level 1 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||
Assets | ||
Short-term investments | 63,651 | 39,165 |
Level 1 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Government Sponsored Enterprise Securities [Member] | ||
Assets | ||
Short-term investments | 0 | |
Level 2 [Member] | Fair Value Measurements, Recurring [Member] | ||
Assets | ||
Total assets | 0 | 62,383 |
Level 2 [Member] | Fair Value Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Assets | ||
Money market funds | 0 | 0 |
Level 2 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||
Assets | ||
Short-term investments | 0 | 0 |
Level 2 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Government Sponsored Enterprise Securities [Member] | ||
Assets | ||
Short-term investments | 62,383 | |
Level 3 [Member] | Fair Value Measurements, Recurring [Member] | ||
Assets | ||
Total assets | 0 | 0 |
Level 3 [Member] | Fair Value Measurements, Recurring [Member] | Money Market Funds [Member] | ||
Assets | ||
Money market funds | 0 | 0 |
Level 3 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Treasury Securities [Member] | ||
Assets | ||
Short-term investments | $ 0 | 0 |
Level 3 [Member] | Fair Value Measurements, Recurring [Member] | U.S. Government Sponsored Enterprise Securities [Member] | ||
Assets | ||
Short-term investments | $ 0 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Shares of Common Stock Reserved for Future Issuance (Detail) - shares | Dec. 31, 2018 | Dec. 31, 2017 |
Class of Stock [Line Items] | ||
Total common stock reserved for future issuance | 11,154,806 | 9,295,176 |
Options to Purchase Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Total common stock reserved for future issuance | 5,019,964 | 4,599,252 |
Available Future Grant Year [Member] | Options to Purchase Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Total common stock reserved for future issuance | 4,492,021 | 3,403,597 |
2014 Employee Stock Purchase Plan [Member] | ||
Class of Stock [Line Items] | ||
Total common stock reserved for future issuance | 1,642,821 | 1,292,327 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Detail) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Warrants net exercised during period | 141,060 | |
Issuance of common stock upon exercise of warrants, shares | 32,209 | |
Remaining warrants outstanding | 0 | 0 |
Stock-Based Compensation and _3
Stock-Based Compensation and Equity Plans - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Jan. 01, 2019 | Dec. 20, 2017 | Feb. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common shares reserved for issuance | 11,154,806 | 9,295,176 | |||
Stock option granted | 3,671,000 | ||||
Exchange of outstanding stock options, exercise price | $ 5.62 | $ 14.28 | |||
Common stock exercise price | $ 5.65 | ||||
Number of common stock issued pursuant to ESPP purchases | 331,944 | ||||
Unrecognized compensation costs related to stock options | $ 9.3 | ||||
Remaining weighted-average vesting period | 2 years 7 months 6 days | ||||
Unrecognized compensation cost related to stock options | $ 0.3 | ||||
Remaining weighted-average vesting period | 1 year 4 months 24 days | ||||
Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Contractual term of options | 8 years | ||||
Incremental fair value options | $ 0.6 | ||||
Performance-based Awards [Member] | Common Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option granted | 250,000 | ||||
Options to Purchase Common Stock [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common shares reserved for issuance | 5,019,964 | 4,599,252 | |||
Options to Purchase Common Stock [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Option exchange program, expiration date | Jan. 19, 2018 | ||||
Exchange of outstanding stock options under option exchange program, closing price per share | $ 5.675 | ||||
Options to Purchase Common Stock [Member] | Common Stock [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares purchased | 1,992,000 | ||||
Percentage of number of common stock purchased | 81.51% | ||||
Minimum [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation vesting period | 1 year | ||||
Minimum [Member] | Options to Purchase Common Stock [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Exchange of outstanding stock options, exercise price | $ 12 | ||||
Maximum [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation vesting period | 3 years | ||||
Equity Incentive Plan 2014 [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation vesting period | 4 years | ||||
Contractual term of options | 10 years | ||||
Annual increase in common shares reserved for issuance, percentage of total shares of common stock | 5.00% | ||||
Changes in share issuance, description | Under the evergreen provision of the 2014 Plan, the number of shares available for issuance under the 2014 Plan includes an annual increase on the first day of each fiscal year equal to the lesser of (i) 2,500,000 shares; (ii) 5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company’s board of directors may determine. | ||||
Options available for grant | 4,492,021 | ||||
Equity Incentive Plan 2014 [Member] | Options to Purchase Common Stock [Member] | Common Stock [Member] | Option Exchange [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock option granted | 1,570,328 | ||||
Common stock exercise price | $ 5.675 | ||||
Equity Incentive Plan 2014 [Member] | Subsequent Event [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual increase in common shares reserved for issuance | 1,534,270 | ||||
Common shares reserved for issuance | 6,026,291 | ||||
Equity Incentive Plan 2014 [Member] | Minimum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Exercise price, percentage of fair market value | 100.00% | ||||
Equity Incentive Plan 2014 [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual increase in common shares reserved for issuance | 2,500,000 | ||||
2014 Employee Stock Purchase Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual increase in common shares reserved for issuance, percentage of total shares of common stock | 1.50% | ||||
Changes in share issuance, description | issuance under the ESPP includes an annual increase on the first day of each fiscal year, equal to the lesser of (i) 800,000 shares; (ii) 1.5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company’s board of directors may determine. | ||||
Common shares reserved for issuance | 1,642,821 | 1,292,327 | |||
Eligible compensation contribution | 15.00% | ||||
Offering periods under plan | 24 months | ||||
Offering period description | The offering periods generally start on the first trading day on or after June 1 and December 1 of each year and ends on the first trading day on or before June 1 and December 1 approximately twenty-four months later, and include six-month purchase periods. | ||||
2014 Employee Stock Purchase Plan [Member] | Subsequent Event [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common shares reserved for issuance | 2,103,102 | ||||
2014 Employee Stock Purchase Plan [Member] | Minimum [Member] | Subsequent Event [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual increase in common shares reserved for issuance | 460,281 | ||||
2014 Employee Stock Purchase Plan [Member] | Maximum [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Annual increase in common shares reserved for issuance | 800,000 |
Stock-Based Compensation and _4
Stock-Based Compensation and Equity Plans - Stock Option Activity (Detail) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Options | |
Outstanding as of beginning of period | shares | 4,599 |
Granted | shares | 3,671 |
Exercised | shares | (19) |
Forfeited | shares | (3,231) |
Outstanding as of end of period | shares | 5,020 |
Options vested and expected to vest | shares | 5,020 |
Options exercisable | shares | 1,976 |
Weighted- Average Exercise Price | |
Outstanding as of beginning of period | $ / shares | $ 14.28 |
Granted | $ / shares | 5.65 |
Exercised | $ / shares | 1.69 |
Forfeited | $ / shares | 18 |
Outstanding as of end of period | $ / shares | 5.62 |
Options vested and expected to vest | $ / shares | 5.62 |
Options exercisable | $ / shares | $ 5.55 |
Weighted-Average Remaining Contractual Term (In Years) | |
Outstanding | 7 years 2 months 12 days |
Options vested and expected to vest | 7 years 2 months 12 days |
Options exercisable | 5 years 6 months |
Aggregate Intrinsic Value | |
Outstanding | $ | $ 86 |
Options vested and expected to vest | $ | 86 |
Options exercisable | $ | $ 86 |
Stock-Based Compensation and _5
Stock-Based Compensation and Equity Plans - Summary of Certain Information Regarding Stock Options (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||
Weighted-average grant date fair value per share of options granted during the period | $ 4.36 | $ 9.14 | $ 9.47 |
Cash received from options exercised during the period | $ 32 | $ 448 | $ 355 |
Intrinsic value of options exercised during the period | $ 76 | $ 623 | $ 985 |
Stock-Based Compensation and _6
Stock-Based Compensation and Equity Plans - Weighted-Average Underlying Assumptions Used to Determine Fair Value of Stock Options and ESPP Rights (Detail) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.60% | 2.10% | 1.50% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 100.60% | 69.80% | 67.80% |
Expected term (in years) | 5 years 4 months 24 days | 6 years 1 month 6 days | 6 years 1 month 6 days |
Employee Stock Purchase Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 2.60% | 1.40% | 0.80% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected volatility | 116.00% | 106.60% | 70.80% |
Expected term (in years) | 1 year 3 months 18 days | 1 year 2 months 12 days | 1 year 3 months 18 days |
Stock-Based Compensation and _7
Stock-Based Compensation and Equity Plans - Summary of Non-cash Stock Based Compensation Expense (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 12,414 | $ 13,661 | $ 12,611 |
Cost of Product Sales [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 12 | 20 | 41 |
Research and Development [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 4,447 | 3,763 | 2,996 |
Selling, General and Administrative [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 7,955 | $ 9,878 | $ 9,574 |
Co-Promotion Agreement - Additi
Co-Promotion Agreement - Additional information (Detail) - Mission Pharmacal Company [Member] - USD ($) $ in Millions | Aug. 02, 2018 | Dec. 31, 2018 |
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items] | ||
Co-Promotion agreement term | 5 years | |
Decrease in selling general and administrative expenses | $ 0.6 | |
Minimum [Member] | ||
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items] | ||
Share of gross profits, percentage | 50.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Line Items] | |||
Valuation allowance | $ 99,141,000 | $ 83,276,000 | |
Corporate tax rate | 21.00% | 35.00% | |
Reduction of deferred tax asset | $ 44,500,000 | ||
Remeasurement of certain deferred tax asset and liabilities | $ 0 | ||
Unrecognized tax benefit, income tax penalties and interest accrued | 0 | 0 | |
Unrecognized tax benefits, income tax penalties and interest expense | 0 | $ 0 | $ 0 |
Internal Revenue Service (IRS) [Member] | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | $ 287,600,000 | ||
Net operating loss carryforwards, expiration | will begin to expire in 2030 | ||
Tax credit carryforwards | $ 9,800,000 | ||
Tax credit carryforwards, expiration | will begin expiring in 2030 | ||
California Franchise Tax Board [Member] | |||
Income Taxes [Line Items] | |||
Tax credit carryforwards | $ 4,500,000 | ||
Tax credit carryforwards, expiration | indefinitely | ||
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax assets, operating loss carryforwards | $ 2,200,000 | ||
State and Local Jurisdiction [Member] | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | $ 122,100,000 | ||
Net operating loss carryforwards, expiration | will begin to expire in 2030 | ||
Research Tax Credit Carryforward [Member] | Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member] | |||
Income Taxes [Line Items] | |||
Deferred tax assets, research and development | $ 300,000 |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 67,574 | $ 53,666 |
Research and development credits | 7,963 | 6,603 |
Depreciation and amortization | 15,376 | 15,916 |
Accrued expenses | 623 | 394 |
Deferred rent | 742 | 636 |
Stock compensation | 6,349 | 5,610 |
Other, net | 514 | 451 |
Total deferred tax assets | 99,141 | 83,276 |
Less: valuation allowance | (99,141) | (83,276) |
Total | $ 0 | $ 0 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Expected Recovery of Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | $ (10,578) | $ (30,645) | $ (37,599) |
State tax (net of federal benefit) | (4,383) | (462) | (2,079) |
Permanent items, other | (2,092) | 1,376 | 164 |
Stock compensation | 2,570 | 1,720 | 609 |
Rate change | 0 | 45,421 | (2,251) |
Research and development credits | (2,308) | (1,830) | (3,210) |
Uncertain tax positions | 907 | 732 | 2,124 |
Change in valuation allowance | 15,884 | (16,312) | 42,243 |
Provision for income taxes | $ 0 | $ 0 | $ 1 |
Income Taxes - Activity Related
Income Taxes - Activity Related to Gross Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Balance at the beginning of the year | $ 9,098 | $ 8,391 | $ 5,709 |
Adjustments related to prior year tax positions | 242 | 0 | 1,872 |
Increases related to current year tax positions | 712 | 798 | 1,409 |
Decreases for tax positions from prior years | 0 | (91) | (599) |
Unrecognized Tax Benefits | $ 10,052 | $ 9,098 | $ 8,391 |