Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | VSAR | |
Entity Registrant Name | Versartis, Inc. | |
Entity Central Index Key | 1,513,818 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 34,795,987 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 160,434 | $ 182,069 |
Prepaid expenses | 3,414 | 2,542 |
Other current assets | 49 | |
Total current assets | 163,897 | 184,611 |
Other assets | 992 | 327 |
Property and equipment, net | 319 | 389 |
Total assets | 165,208 | 185,327 |
Current liabilities | ||
Accounts payable | 1,700 | 1,671 |
Accrued liabilities | 12,507 | 7,156 |
Upfront payment from collaboration partner (Note 6) | 40,000 | |
Total liabilities | 54,207 | 8,827 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity | ||
Common stock, $0.0001 par value, 50,000,000 shares authorized at September 30, 2016 and December 31, 2015; 29,609,442 and 29,420,247 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively | 3 | 3 |
Additional paid-in capital | 378,420 | 369,933 |
Accumulated other comprehensive loss | (302) | |
Accumulated deficit | (267,120) | (193,436) |
Total stockholders' equity | 111,001 | 176,500 |
Total liabilities and stockholders’ equity | $ 165,208 | $ 185,327 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 29,609,442 | 29,420,247 |
Common stock, shares outstanding | 29,609,442 | 29,420,247 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Operating expenses | ||||
Research and development | $ 20,664 | $ 15,400 | $ 55,253 | $ 44,440 |
General and administrative | 6,752 | 5,124 | 18,575 | 17,861 |
Total operating expenses | 27,416 | 20,524 | 73,828 | 62,301 |
Loss from operations | (27,416) | (20,524) | (73,828) | (62,301) |
Interest income | 120 | 54 | 354 | 168 |
Other income (expense), net | (39) | 91 | (210) | 81 |
Net loss | $ (27,335) | $ (20,379) | $ (73,684) | $ (62,052) |
Net loss per share - basic and diluted | $ (0.92) | $ (0.69) | $ (2.50) | $ (2.15) |
Weighted-average common shares used to compute basic and diluted net loss per share | 29,574 | 29,354 | 29,495 | 28,825 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (27,335) | $ (20,379) | $ (73,684) | $ (62,052) |
Other comprehensive loss: | ||||
Cumulative foreign currency translation adjustment | (1) | |||
Unrealized loss on cash flow hedge | (96) | (301) | ||
Comprehensive loss | $ (27,431) | $ (20,379) | $ (73,986) | $ (62,052) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (73,684) | $ (62,052) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 161 | 174 |
Stock-based compensation expense | 8,028 | 8,491 |
Changes in assets and liabilities | ||
Prepaid expenses and other assets | (1,539) | 7 |
Accounts payable | 29 | (119) |
Accrued and other liabilities | 5,007 | 582 |
Upfront payment from collaboration partner | 40,000 | |
Net cash used in operating activities | (21,998) | (52,917) |
Cash flows from investing activities | ||
Purchase of property and equipment | (90) | (4) |
Net cash used in investing activities | (90) | (4) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock in follow-on offering, net of issuance costs | 80,208 | |
Proceeds from issuance of common stock in connection with employee benefit plans | 453 | 161 |
Net cash provided by financing activities | 453 | 80,369 |
Net increase (decrease) in cash and cash equivalents | (21,635) | 27,448 |
Cash and cash equivalents at beginning of period | 182,069 | 170,566 |
Cash and cash equivalents at end of period | 160,434 | $ 198,014 |
Supplemental disclosure of noncash items | ||
Public offering issuance costs | $ 346 |
Formation and Business of the C
Formation and Business of the Company | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Formation and Business of the Company | 1. Formation and Business of the Company Versartis, Inc. (the “Company”) was incorporated on December 10, 2008 in the State of Delaware. The Company is an endocrine-focused biopharmaceutical company initially developing long-acting recombinant human growth hormone for the treatment of growth hormone deficiency. The Company is developing drug candidates that it has licensed from Amunix Operating Inc. (“Amunix”). The Company’s headquarters and operations are in Menlo Park, California. Since incorporation, the Company has been primarily performing research and development activities, including clinical trials, filing patent applications, obtaining regulatory approvals, hiring personnel, and raising capital to support and expand these activities. Unaudited Interim Financial Information In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of September 30, 2016, its results of operations for the three- and nine-month periods ended September 30, 2016, and 2015, comprehensive loss for the three- and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine months ended September 30, 2016, and 2015. The December 31, 2015 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America, or GAAP. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2015 included in the Company’s annual report on Form 10-K filed on March 8, 2016 with the U.S. Securities and Exchange Commission (“SEC”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the accompanying condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The accompanying condensed consolidated financial position as of September 30, 2016 and as of December 31, 2015, results of operations and statements of comprehensive loss for the three- and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine months ended September 30, 2016 and 2015 include the accounts of Versartis, Inc. and its wholly-owned subsidiaries, Versartis Cayman Holdings Company and Versartis GmbH. All intercompany accounts and transactions have been eliminated. The U.S. dollar is the functional currency for all of the Company's consolidated operations, with the exception of Versartis GmbH, which utilizes the euro. As of September 30, 2016, the Company had cash and cash equivalents balance of $160.4 million consisting of cash and investments in highly liquid U.S. money market funds. The Company believes that its existing cash and cash equivalents will be sufficient to sustain operations for at least the next 12 months based on its existing business plan. While the Company expects additional proceeds if certain clinical and regulatory milestones are met under the Teijin Agreement (see Note 6), if the Company's potential Phase 3 clinical trials are successful, the Company will need to raise additional capital in order to further advance its product candidates towards regulatory approval and potential commercialization. Since inception, the Company has incurred net losses and negative cash flows from operations. At September 30, 2016, the Company had an accumulated deficit of $267.1 million and working capital of $109.7 million. The Company expects to continue to incur losses from costs related to the continuation of research and development and administrative activities for the foreseeable future. Although management has been successful in raising capital in the past, most recently $59.2 million in October and November 2016, there can be no assurance that the Company will be successful or that any needed financing will be available in the future at terms acceptable to the Company. Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. All long-lived assets are maintained in the United States of America. Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. All of the Company’s cash and cash equivalents are held at multiple financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company enters into forward foreign currency contracts that expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties. Derivative Financial Instruments The Company engages in transactions denominated in foreign currencies and, as a result, is exposed to changes in foreign currency exchange rates. To manage the volatility resulting from fluctuating foreign currency exchange rates, the Company enters into option and forward foreign currency exchange contracts. The Company accounts for its derivative instruments as either assets or liabilities on the balance sheet and measures them at fair value. The Company assesses, both at inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in cash flows of the hedged items. If the Company determines that a forecasted transaction is no longer probable of occurring, it discontinues hedge accounting for the affected portion of the hedge instrument, and any related unrealized gain or loss on the contract is recognized in other comprehensive income (expense). Risk and Uncertainties The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates, uncertainty of market acceptance of the Company’s products, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. Products developed by the Company require clearances from the U.S. Food and Drug Administration (“FDA”), the Pharmaceuticals Medicines and Devices Agency (“PMDA”), or other international regulatory agencies prior to commercial sales. There can be no assurance that the products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed or the Company was unable to maintain clearance, it could have a materially adverse impact on the Company. The Company expects to incur substantial operating losses for the next several years and will need to obtain additional financing in order to launch and commercialize any product candidates for which it receives regulatory approval. Even though the Company expects additional proceeds if certain clinical and regulatory milestones are met under the Teijin Agreement, there can be no assurance that such additional financing will be available at all, or at terms acceptable to the Company. Cash and c e The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At September 30, 2016 and December 31, 2015 the Company’s cash and cash equivalents were held in multiple institutions in the United States and Europe and included deposits in money market funds which were unrestricted as to withdrawal or use. Property and e Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. Impairment of Long-Lived Assets The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by the comparison of the carrying amount to the undiscounted future net cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value (i.e. determined through estimating projected discounted future net cash flows or other acceptable methods of determining fair value) arising from the asset. There have been no such impairments of long-lived assets as of September 30, 2016 or December 31, 2015. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level I Unadjusted quoted prices in active markets for identical assets or liabilities; Level II Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level III Unobservable inputs that are supported by little or no market activity for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s financial instruments consist of Level I and Level II assets. Level I securities are comprised of highly liquid money market funds. Level II assets consist of its foreign currency derivative contracts. The Company’s foreign currency derivative contracts have maturities over a 12-month time horizon and is with a counterparty that has a minimum credit rating of A- or equivalent by Standard & Poor's, Moody's Investors Service, Inc. or Fitch, Inc. Preclinical and Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates preclinical and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. Research and d Research and development costs are charged to operations as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, consulting costs, external research and development expenses and allocated overhead, including rent, equipment depreciation, and utilities. Costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use are expensed to research and development costs when incurred. Income t The Company accounts for income taxes under the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Stock-Based c For stock options granted to employees, the Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair value. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service period. The fair value of stock options is determined using the Black-Scholes option pricing model. The determination of fair value for stock-based awards on the date of grant using an option pricing model requires management to make certain assumptions regarding a number of complex and subjective variables. Stock-based compensation expense related to stock options granted to nonemployees is recognized based on the fair value of the stock options, determined using the Black-Scholes option pricing model, as they are earned. The awards generally vest over the time period the Company expects to receive services from the nonemployee. Stock-based compensation expense, net of estimated forfeitures, is reflected in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Operating Expenses Research and development $ 1,005 $ 779 $ 2,608 $ 2,016 General and administrative 1,646 1,487 5,420 6,475 Total $ 2,651 $ 2,266 $ 8,028 $ 8,491 Comprehensive Loss Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from non-owner sources. Specifically, the Company includes cumulative foreign currency translation adjustments and net unrealized gains and losses on effective cash flow hedges. Net Loss per Share of Common Stock 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. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and shares issued under our Employee Stock Purchase Plan are considered to be potentially dilutive securities. Because the Company has reported a net loss for all of the periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective is not expected to have a material impact on the Company’s financial position or results of operations upon adoption. In August 2016, the FASB issued guidance to simplify elements of cash flow classification. The guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance requires cash payments for debt prepayment or debt extinguishment costs to be classified as cash outflows for financing activities. It also requires cash payments made soon after an acquisition's consummation date (approximately three months or less) to be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. The guidance is required to be applied by the Company in the first quarter of 2018, but early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In November 2015, the FASB issued ASU 2015-17, , The Company is currently evaluating the impact of adoption and will apply the guidance and disclosure provisions of the new standard upon adoption. In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, ending after December 15, 2016. The Company will apply the guidance and disclosure provisions of the new standard upon adoption in its 2016 annual consolidated financial statements. In May 2014, the FASB issued a new accounting standard that amends the guidance for the recognition of revenue from contracts with customers to transfer goods and services. The FASB has subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue recognition standard. The new revenue recognition standard and clarifying standards are effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier, but not before January 1, 2017. The revenue standards are required to be adopted by taking either a full retrospective approach or a modified retrospective approach. We are currently evaluating the impact that the revenue standards will have on our consolidated financial statements and determining the transition method that we will apply. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | 3. Balance Sheet Components Prepaid expenses (in thousands) September 30, December 31, 2016 2015 Preclinical and clinical (1) $ 2,866 $ 1,770 Other 548 772 Total $ 3,414 $ 2,542 (1) These prepayments consist primarily of advances to the Company’s contract manufacturers and contract research organizations Accrued Liabilities (in thousands) September 30, December 31, 2016 2015 Payroll and related $ 3,107 $ 2,296 Preclinical and clinical 8,298 4,376 Professional services 732 69 Other 370 415 Total $ 12,507 $ 7,156 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements The Company’s financial instruments consist principally of cash and cash equivalents, prepaid expenses, foreign currency exchange contracts, accounts payable and accrued liabilities. The remaining financial instruments are reported on the Company’s Condensed Consolidated Balance Sheets at amounts that approximate current fair value. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): Fair Value Measurements at September 30, 2016 (unaudited) Total Level 1 Level 2 Level 3 Assets Money market funds $ 85,838 $ 85,838 $ — $ — Foreign currency derivative contracts 49 — 49 — $ 85,887 $ 85,838 $ 49 $ — Fair Value Measurements at December 31, 2015 Total Level 1 Level 2 Level 3 Assets Money market funds $ 132,647 $ 132,647 $ — $ — Foreign currency derivative contracts — — — — $ 132,647 $ 132,647 $ — $ — |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | 5. Derivative Financial Instruments The Company’s operations in foreign countries expose it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. In order to manage this risk, the Company hedges a portion of its foreign currency exposures related to certain forecasted operating expenses using foreign currency exchange forward or option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. By working only with major financial institutions and closely monitoring current market conditions, the Company seeks to limit its counterparty risk to these contracts. Therefore, the Company’s overall risk of loss in the event of a counterparty default is exposed to the currency risk. The Company does not enter into derivative contracts for trading or speculative purposes. The Company hedges its exposure to foreign currency exchange rate fluctuations for forecasted operating expenses that are denominated in a non-functional currency. The derivative instruments the Company uses to hedge this exposure are designated as cash flow hedges and have maturity dates of 12 months or less. Upon executing a hedging contract and quarterly thereafter, the Company assesses both retrospective and prospective hedge effectiveness using regression analysis to assert the hedge is highly effective at offsetting changes in cash flow. The Company includes time value in its effectiveness assessment and recognizes any ineffectiveness in other income (expense). The effective component of the Company’s hedge is recorded in accumulated other comprehensive income (OCI) within stockholders' equity and subsequently reclassified into earnings when the hedged exposure affects earnings. Derivatives not designated as hedges are not speculative and are used to manage the Company’s economic exposure to foreign exchange rate movements but do not meet the strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. Substantially all of the gains and losses related to the hedged forecasted transaction reported in accumulated other comprehensive income at September 30, 2016 are expected to be reclassified to research and development expenses within the next 12 months. The cash flow effects of the Company’s derivative contracts for the nine months ended September 30, 2016 are included within net cash provided by operating activities in the condensed consolidated statements of cash flows. The Company had notional amounts outstanding on foreign currency exchange contracts of 9.1 million euros (a purchased call option on the Euro) at September 30, 2016 and none outstanding at December 31, 2015. While all of the Company’s derivative contracts allow it the right to offset assets or liabilities, the Company has presented amounts on a gross basis. Under the International Swap Dealers Association, Inc. master agreements with the respective counterparties of the foreign currency exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The Company does not have any credit contingent features associated with its derivatives. The following table summarizes the classification and fair values of derivative instruments on the Company’s condensed consolidated balance sheets included within other current assets at September 30, 2016 (none outstanding at December 31, 2015) (in thousands): September 30, 2016 Asset Derivatives Liability Derivatives Classification Fair Value Classification Fair Value Derivatives designated as hedges: Foreign currency exchange contracts Other current assets $ 49 Other accrued liabilities $ — Total derivatives $ 49 $ — The following table summarizes the effect of our foreign currency exchange contracts on the Company’s condensed consolidated financial statements (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Derivatives designated as hedges: — Gains (losses) recognized in accumulated OCI (effective portion) $ (87 ) $ — $ (237 ) $ — Gains (losses) reclassified from accumulated OCI into operating expenses (effective portion) $ 10 $ — $ 64 $ — Gains (losses) recognized in other income (expense), net (ineffective portion and amounts excluded from effectiveness testing) $ — $ — $ — $ — Derivatives not designated as hedges: Gains (losses) recognized in other income (expense), net $ (32 ) $ — $ (80 ) $ — From time to time, the Company may discontinue cash flow hedges and as a result, record related amounts in other income (expense), net on its condensed consolidated statements of operations. The Company did not record any amounts in other income (expense), net for the three and nine- months ended September 30, 2016 as a result of the discontinuance of cash flow hedges. As of September 30, 2016, the Company held one derivative contract related to a foreign currency exchange contract (a purchased call option on the Euro) and the derivative was in an asset position at the end of the period. |
Teijin Agreement
Teijin Agreement | 9 Months Ended |
Sep. 30, 2016 | |
License And Supply Agreement [Abstract] | |
Teijin Agreement | 6. Teijin Agreement In August 2016, the Company, entered into an Exclusive License and Supply Agreement (the “Agreement”) with Teijin Limited, or Teijin, a pharmaceutical company based in Japan, pursuant to which the Company granted to Teijin an exclusive license to develop, use, sell, offer for sale, import, and otherwise commercialize, in Japan, any pharmaceutical product incorporating somavaratan (VRS-317) , while Versartis retains exclusive rights to somavaratan in the rest of the world. Under the Agreement, the development and commercialization of somavaratan products in Japan will be overseen by a joint steering committee composed of representatives of Teijin and the Company. Versartis will be responsible for completing (at the Company’s expense) all ongoing clinical studies, including the current pediatric Growth Hormone Deficiency (GHD) Phase 2/3 trial, and its related long-term safety study, and the Company will also be responsible for a portion of the costs associated with any additional trials, if they are required by the Japanese authorities for approval of the Marketing Authorization Application, or MAA, in Japan in the pediatric indication, up to a cap on our share of such costs of $5.0 million. Following the MAA submission in Japan, Teijin will be responsible for conducting any additional Japanese studies for the pediatric or any other indications, at its own expense. The Company is required, under the Agreement, to supply Teijin with its clinical and commercial requirements for product for Japan. In exchange for delivering finished product for commercial use, the Company will receive a combination of a running royalty and transfer pricing based upon net sales of the product in Japan, in a percentage ranging from the high-20s to mid-30s. The Agreement continues until the earlier of (i) twelve years after the first commercial sale of a licensed product in Japan, or (ii) the expiration of certain Versartis patents, unless terminated earlier by mutual agreement of the parties. The initial term of the Agreement is subject to automatic extension for three three-year terms, unless otherwise mutually agreed. The Agreement may be earlier terminated by either party for the other party’s uncured material breach or insolvency. In addition, Teijin may terminate the Agreement without cause upon six months’ advance notice prior to the sale of a licensed product, and upon twelve months’ notice thereafter. The Company has recorded the $40 million upfront payment received from Teijin as a component of other current liabilities under the caption “Upfront payment from collaboration partner.” The Company concluded that the evidence of arrangement criteria pursuant to SEC Staff Accounting Bulletin No. 104 Revenue Recognition and applicable authoritative guidance has not been met as of September 30, 2016. The Company's analysis of the revenue recognition criteria will be completed upon the establishment and completion of the terms of a Commercial Supply Agreement with Teijin governing the supply of finished product to Teijin, as contemplated in the Agreement. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies Facility Leases In March 2014, the Company entered into an operating facility lease agreement to lease 12,943 square feet in Menlo Park, California for its new headquarters building for a period of thirty-nine months. The total obligation for the Company under this lease is approximately $0.7 million as of September 30, 2016. In December 2015, the Company entered into an operating sublease agreement to lease 10,891 square feet of additional office space in Menlo Park for a period of twenty-four months. The sublease date began January 1, 2016 and the total obligation under this sublease for the Company is approximately $0.7 million as of September 30, 2016. Owen Mumford Manufacture and Supply Agreement In May 2016, the Company entered into a Manufacture and Supply Agreement with Owen Mumford Limited, a leading medical device manufacturer, pursuant to which the Company engaged Owen Mumford to: (1) manufacture a proprietary disposable autoinjector device and (2) assemble and supply a final combination product including the device and somavaratan (VRS-317), its proprietary long-acting form of human growth hormone. The Company will supply somavaratan in prefilled syringes to Owen Mumford for incorporation into the final combination product. Under the agreement, Owen Mumford agrees to manufacture the autoinjector device used in the product exclusively for the Company in the field of human growth hormone deficiency treatment, subject to a minimum purchase obligation. The Company is required to purchase its entire requirement of the final combination product from Owen Mumford, except that after a specified time period after regulatory approval in the European Union (“EU”), the Company may purchase from third parties a portion of its requirement for the European Economic Area. In addition, after a specified time period after regulatory approval in any major jurisdiction, the Company is required to purchase from Owen Mumford a minimum quantity of the product in each year. If the Company does not purchase such minimum quantity, it may pay a shortfall payment to Owen Mumford to maintain the scope of its exclusivity. If the Company fails to purchase the minimum and decline to pay the shortfall payment, the exclusivity will be limited to long-acting human growth hormone products. The agreement also includes customary terms and conditions relating to forecast, ordering, delivery, inspection and acceptance, among other matters. The initial term of the agreement continues until ten (10) years after the Company’s acceptance of the first shipment of the final combination product, and may be renewed for an additional time period by mutual agreement of the parties. The agreement may be earlier terminated by either party for the other party’s uncured material breach or insolvency. In addition, either party may terminate the agreement without cause upon twelve (12) months advance notice. If terminated by Owen Mumford without cause, Owen Mumford must continue to supply the autoinjector device and assemble the final combination product until the Company is able to identify, appoint, and qualify through all necessary regulatory approvals an alternate manufacturer. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity Equity Incentive Plans The Company’s Board of Directors, or Board, and stockholders previously approved the 2014 Equity Incentive Plan, or the 2014 Plan, which became effective on March 21, 2014. As of September 30, 2016, the total number of shares of common stock available for issuance under the 2014 Plan was approximately 1,118,000. Unless the Board provides otherwise, beginning on January 1, 2015, and continuing until the expiration of the 2014 Plan, the total number of shares of common stock available for issuance under the 2014 Plan will automatically increase annually on January 1 by 4.5% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year. As of September 30, 2016, approximately 4,911,000 shares of common stock were subject to outstanding awards under the 2014 Plan. In March 2014, the Board and stockholders approved the 2014 Employee Stock Purchase Plan, or the ESPP, which became effective as of March 5, 2014. The Company initially reserved a total of 150,000 shares of common stock for issuance under the ESPP. Unless the Board provides otherwise, beginning on January 1, 2015, and continuing until the expiration of the ESPP, the total number of shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 300,000 shares of common stock. As of September 30, 2016, the Company has issued approximately 109,000 shares of common stock under the ESPP. Accumulated Other Comprehensive Loss The following table summarizes the changes in accumulated other comprehensive loss by component (in thousands): Foreign Currency Items Unrealized Gains and Losses on Cash Flow Hedges Total Balance at December 31, 2015 $ — $ — $ — Other comprehensive loss before reclassifications (1 ) (237 ) (238 ) Amounts reclassified from accumulated other comprehensive loss — (64 ) (64 ) Net current period other comprehensive loss (1 ) (301 ) (302 ) Balance at September 30, 2016 $ (1 ) $ (301 ) $ (302 ) Amounts reclassified for gains (losses) on cash flow hedges are recorded as part of net loss on our condensed consolidated statements of operations. |
Net Loss per Share of Common St
Net Loss per Share of Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss per Share of Common Stock | 9. Net loss per share of Common Stock The following table summarizes the computation of basic and diluted net loss per share of the Company (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net loss $ (27,335 ) $ (20,379 ) $ (73,684 ) $ (62,052 ) Weighted-average shares used to compute basic and diluted net loss per share 29,574 29,354 29,495 28,825 Basic and diluted net loss per common share $ (0.92 ) $ (0.69 ) $ (2.50 ) $ (2.15 ) Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss per common share by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period, determined using the treasury-stock method and the as-if converted method, for convertible securities, if inclusion of these is dilutive. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per common share for those periods. The following potentially dilutive securities outstanding at the end of the periods presented have been excluded from the computation of diluted shares outstanding as the effect would be anti-dilutive: September 30, 2016 2015 Options to purchase common stock 4,430,010 3,225,616 Restricted stock units 481,385 277,630 |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | 10. Subsequent Event In October and November 2016, the Company completed a public offering of shares of its common stock, pursuant to which the Company issued 5,176,545 shares of common stock, which includes shares issued pursuant to the underwriters’ partial exercise of their over-allotment option, and received net proceeds of approximately $59.2 million, after underwriting discounts, commissions and estimated offering expenses. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the accompanying condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The accompanying condensed consolidated financial position as of September 30, 2016 and as of December 31, 2015, results of operations and statements of comprehensive loss for the three- and nine-month periods ended September 30, 2016 and 2015, and cash flows for the nine months ended September 30, 2016 and 2015 include the accounts of Versartis, Inc. and its wholly-owned subsidiaries, Versartis Cayman Holdings Company and Versartis GmbH. All intercompany accounts and transactions have been eliminated. The U.S. dollar is the functional currency for all of the Company's consolidated operations, with the exception of Versartis GmbH, which utilizes the euro. As of September 30, 2016, the Company had cash and cash equivalents balance of $160.4 million consisting of cash and investments in highly liquid U.S. money market funds. The Company believes that its existing cash and cash equivalents will be sufficient to sustain operations for at least the next 12 months based on its existing business plan. While the Company expects additional proceeds if certain clinical and regulatory milestones are met under the Teijin Agreement (see Note 6), if the Company's potential Phase 3 clinical trials are successful, the Company will need to raise additional capital in order to further advance its product candidates towards regulatory approval and potential commercialization. Since inception, the Company has incurred net losses and negative cash flows from operations. At September 30, 2016, the Company had an accumulated deficit of $267.1 million and working capital of $109.7 million. The Company expects to continue to incur losses from costs related to the continuation of research and development and administrative activities for the foreseeable future. Although management has been successful in raising capital in the past, most recently $59.2 million in October and November 2016, there can be no assurance that the Company will be successful or that any needed financing will be available in the future at terms acceptable to the Company. |
Segments | Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. All long-lived assets are maintained in the United States of America. |
Concentration of Credit Risk | Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. All of the Company’s cash and cash equivalents are held at multiple financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. The Company enters into forward foreign currency contracts that expose it to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. The Company does, however, seek to mitigate such risks by limiting its counterparties to major financial institutions. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored. Management does not expect material losses as a result of defaults by counterparties. |
Derivative Financial Instruments | Derivative Financial Instruments The Company engages in transactions denominated in foreign currencies and, as a result, is exposed to changes in foreign currency exchange rates. To manage the volatility resulting from fluctuating foreign currency exchange rates, the Company enters into option and forward foreign currency exchange contracts. The Company accounts for its derivative instruments as either assets or liabilities on the balance sheet and measures them at fair value. The Company assesses, both at inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting the changes in cash flows of the hedged items. If the Company determines that a forecasted transaction is no longer probable of occurring, it discontinues hedge accounting for the affected portion of the hedge instrument, and any related unrealized gain or loss on the contract is recognized in other comprehensive income (expense). |
Risk and Uncertainties | Risk and Uncertainties The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates, uncertainty of market acceptance of the Company’s products, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals and sole source suppliers. Products developed by the Company require clearances from the U.S. Food and Drug Administration (“FDA”), the Pharmaceuticals Medicines and Devices Agency (“PMDA”), or other international regulatory agencies prior to commercial sales. There can be no assurance that the products will receive the necessary clearances. If the Company was denied clearance, clearance was delayed or the Company was unable to maintain clearance, it could have a materially adverse impact on the Company. The Company expects to incur substantial operating losses for the next several years and will need to obtain additional financing in order to launch and commercialize any product candidates for which it receives regulatory approval. Even though the Company expects additional proceeds if certain clinical and regulatory milestones are met under the Teijin Agreement, there can be no assurance that such additional financing will be available at all, or at terms acceptable to the Company. |
Cash and Cash Equivalents | Cash and c e The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At September 30, 2016 and December 31, 2015 the Company’s cash and cash equivalents were held in multiple institutions in the United States and Europe and included deposits in money market funds which were unrestricted as to withdrawal or use. |
Property and Equipment, Net | Property and e Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, generally between three and five years. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations in the period realized. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by the comparison of the carrying amount to the undiscounted future net cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value (i.e. determined through estimating projected discounted future net cash flows or other acceptable methods of determining fair value) arising from the asset. There have been no such impairments of long-lived assets as of September 30, 2016 or December 31, 2015. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows: Level I Unadjusted quoted prices in active markets for identical assets or liabilities; Level II Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level III Unobservable inputs that are supported by little or no market activity for the related assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s financial instruments consist of Level I and Level II assets. Level I securities are comprised of highly liquid money market funds. Level II assets consist of its foreign currency derivative contracts. The Company’s foreign currency derivative contracts have maturities over a 12-month time horizon and is with a counterparty that has a minimum credit rating of A- or equivalent by Standard & Poor's, Moody's Investors Service, Inc. or Fitch, Inc. |
Preclinical and Clinical Trial Accruals | Preclinical and Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and clinical research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates preclinical and clinical trial expenses based on the services performed, pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. |
Research and Development | Research and d Research and development costs are charged to operations as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, consulting costs, external research and development expenses and allocated overhead, including rent, equipment depreciation, and utilities. Costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use are expensed to research and development costs when incurred. |
Income Taxes | Income t The Company accounts for income taxes under the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. |
Stock-Based Compensation | Stock-Based c For stock options granted to employees, the Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair value. The value of the portion of the award that is ultimately expected to vest is recognized as expense ratably over the requisite service period. The fair value of stock options is determined using the Black-Scholes option pricing model. The determination of fair value for stock-based awards on the date of grant using an option pricing model requires management to make certain assumptions regarding a number of complex and subjective variables. Stock-based compensation expense related to stock options granted to nonemployees is recognized based on the fair value of the stock options, determined using the Black-Scholes option pricing model, as they are earned. The awards generally vest over the time period the Company expects to receive services from the nonemployee. Stock-based compensation expense, net of estimated forfeitures, is reflected in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Operating Expenses Research and development $ 1,005 $ 779 $ 2,608 $ 2,016 General and administrative 1,646 1,487 5,420 6,475 Total $ 2,651 $ 2,266 $ 8,028 $ 8,491 |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from non-owner sources. Specifically, the Company includes cumulative foreign currency translation adjustments and net unrealized gains and losses on effective cash flow hedges. |
Net Loss per Share of Common Stock | Net Loss per Share of Common Stock 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. For purposes of the diluted net loss per share calculation, stock options, restricted stock units and shares issued under our Employee Stock Purchase Plan are considered to be potentially dilutive securities. Because the Company has reported a net loss for all of the periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies and adopted by us as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective is not expected to have a material impact on the Company’s financial position or results of operations upon adoption. In August 2016, the FASB issued guidance to simplify elements of cash flow classification. The guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The new guidance requires cash payments for debt prepayment or debt extinguishment costs to be classified as cash outflows for financing activities. It also requires cash payments made soon after an acquisition's consummation date (approximately three months or less) to be classified as cash outflows for investing activities. Payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability. Payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities. The guidance is required to be applied by the Company in the first quarter of 2018, but early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and earlier adoption is permitted. In the financial statements in which the ASU is first applied, leases shall be measured and recognized at the beginning of the earliest comparative period presented with an adjustment to equity. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows. In November 2015, the FASB issued ASU 2015-17, , The Company is currently evaluating the impact of adoption and will apply the guidance and disclosure provisions of the new standard upon adoption. In August 2014, the FASB issued new guidance related to the disclosures around going concern. The new standard provides guidance around management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, ending after December 15, 2016. The Company will apply the guidance and disclosure provisions of the new standard upon adoption in its 2016 annual consolidated financial statements. In May 2014, the FASB issued a new accounting standard that amends the guidance for the recognition of revenue from contracts with customers to transfer goods and services. The FASB has subsequently issued additional, clarifying standards to address issues arising from implementation of the new revenue recognition standard. The new revenue recognition standard and clarifying standards are effective for interim and annual periods beginning on January 1, 2018, and may be adopted earlier, but not before January 1, 2017. The revenue standards are required to be adopted by taking either a full retrospective approach or a modified retrospective approach. We are currently evaluating the impact that the revenue standards will have on our consolidated financial statements and determining the transition method that we will apply. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Stock-Based Compensation Expense | Stock-based compensation expense, net of estimated forfeitures, is reflected in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Operating Expenses Research and development $ 1,005 $ 779 $ 2,608 $ 2,016 General and administrative 1,646 1,487 5,420 6,475 Total $ 2,651 $ 2,266 $ 8,028 $ 8,491 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses (in thousands) September 30, December 31, 2016 2015 Preclinical and clinical (1) $ 2,866 $ 1,770 Other 548 772 Total $ 3,414 $ 2,542 (1) These prepayments consist primarily of advances to the Company’s contract manufacturers and contract research organizations |
Accrued Liabilities | Accrued Liabilities (in thousands) September 30, December 31, 2016 2015 Payroll and related $ 3,107 $ 2,296 Preclinical and clinical 8,298 4,376 Professional services 732 69 Other 370 415 Total $ 12,507 $ 7,156 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments Measured at Fair Value on Recurring Basis | The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): Fair Value Measurements at September 30, 2016 (unaudited) Total Level 1 Level 2 Level 3 Assets Money market funds $ 85,838 $ 85,838 $ — $ — Foreign currency derivative contracts 49 — 49 — $ 85,887 $ 85,838 $ 49 $ — Fair Value Measurements at December 31, 2015 Total Level 1 Level 2 Level 3 Assets Money market funds $ 132,647 $ 132,647 $ — $ — Foreign currency derivative contracts — — — — $ 132,647 $ 132,647 $ — $ — |
Derivative Financial Instrume21
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of Derivative Instruments on Condensed Consolidated Balance Sheets | The following table summarizes the classification and fair values of derivative instruments on the Company’s condensed consolidated balance sheets included within other current assets at September 30, 2016 (none outstanding at December 31, 2015) (in thousands): September 30, 2016 Asset Derivatives Liability Derivatives Classification Fair Value Classification Fair Value Derivatives designated as hedges: Foreign currency exchange contracts Other current assets $ 49 Other accrued liabilities $ — Total derivatives $ 49 $ — |
Summary of Effect of Foreign Currency Exchange Contracts on Condensed Consolidated Financial Statements | The following table summarizes the effect of our foreign currency exchange contracts on the Company’s condensed consolidated financial statements (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Derivatives designated as hedges: — Gains (losses) recognized in accumulated OCI (effective portion) $ (87 ) $ — $ (237 ) $ — Gains (losses) reclassified from accumulated OCI into operating expenses (effective portion) $ 10 $ — $ 64 $ — Gains (losses) recognized in other income (expense), net (ineffective portion and amounts excluded from effectiveness testing) $ — $ — $ — $ — Derivatives not designated as hedges: Gains (losses) recognized in other income (expense), net $ (32 ) $ — $ (80 ) $ — |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss | The following table summarizes the changes in accumulated other comprehensive loss by component (in thousands): Foreign Currency Items Unrealized Gains and Losses on Cash Flow Hedges Total Balance at December 31, 2015 $ — $ — $ — Other comprehensive loss before reclassifications (1 ) (237 ) (238 ) Amounts reclassified from accumulated other comprehensive loss — (64 ) (64 ) Net current period other comprehensive loss (1 ) (301 ) (302 ) Balance at September 30, 2016 $ (1 ) $ (301 ) $ (302 ) |
Net Loss per Share of Common 23
Net Loss per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Summary of Computation of Basic and Diluted Net Loss Per Share | The following table summarizes the computation of basic and diluted net loss per share of the Company (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Net loss $ (27,335 ) $ (20,379 ) $ (73,684 ) $ (62,052 ) Weighted-average shares used to compute basic and diluted net loss per share 29,574 29,354 29,495 28,825 Basic and diluted net loss per common share $ (0.92 ) $ (0.69 ) $ (2.50 ) $ (2.15 ) |
Summary of Potentially Anti-dilutive Securities Excluded from Computation of Diluted Shares Outstanding | The following potentially dilutive securities outstanding at the end of the periods presented have been excluded from the computation of diluted shares outstanding as the effect would be anti-dilutive: September 30, 2016 2015 Options to purchase common stock 4,430,010 3,225,616 Restricted stock units 481,385 277,630 |
Formation and Business of the24
Formation and Business of the Company - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business incorporated date | Dec. 10, 2008 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Additional Information (Detail) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 04, 2016USD ($) | Sep. 30, 2016USD ($)Segment | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Significant Accounting Policies [Line Items] | |||||
Cash and cash equivalents | $ 160,434,000 | $ 198,014,000 | $ 182,069,000 | $ 170,566,000 | |
Accumulated deficit | (267,120,000) | (193,436,000) | |||
Working capital | $ 109,700,000 | ||||
Proceeds from issuance of common stock in follow-on offering, net of issuance costs | $ 80,208,000 | ||||
Number of operating segment | Segment | 1 | ||||
Cash and cash equivalents maturity period | Three months or less | ||||
Impairments of long-lived assets | $ 0 | $ 0 | |||
Minimum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Property and equipment estimated useful lives | 3 years | ||||
Maximum [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Property and equipment estimated useful lives | 5 years | ||||
Percentage for the amount of benefit realized upon ultimate settlement | 50.00% | ||||
Subsequent Event [Member] | |||||
Significant Accounting Policies [Line Items] | |||||
Proceeds from issuance of common stock in follow-on offering, net of issuance costs | $ 59,200,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Schedule of Estimated Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 2,651 | $ 2,266 | $ 8,028 | $ 8,491 |
Research and development [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 1,005 | 779 | 2,608 | 2,016 |
General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 1,646 | $ 1,487 | $ 5,420 | $ 6,475 |
Balance Sheet Components - Prep
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Prepaid Expense And Other Assets [Abstract] | ||
Preclinical and clinical | $ 2,866 | $ 1,770 |
Other | 548 | 772 |
Total | $ 3,414 | $ 2,542 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Payables And Accruals [Abstract] | ||
Payroll and related | $ 3,107 | $ 2,296 |
Preclinical and clinical | 8,298 | 4,376 |
Professional services | 732 | 69 |
Other | 370 | 415 |
Total | $ 12,507 | $ 7,156 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Measured at Fair Value on Recurring Basis (Detail) - Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 85,887 | $ 132,647 |
Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 85,838 | 132,647 |
Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 49 | |
Money market funds [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 85,838 | 132,647 |
Money market funds [Member] | Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 85,838 | $ 132,647 |
Foreign currency derivative contracts [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 49 | |
Foreign currency derivative contracts [Member] | Level 2 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 49 |
Derivative Financial Instrume30
Derivative Financial Instruments - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2016EUR (€) | Dec. 31, 2015EUR (€) | |
Foreign Currency Exchange Contracts [Member] | ||||
Derivatives Fair Value [Line Items] | ||||
Notional amounts on outstanding foreign currency exchange contracts | € | € 9,100,000 | € 0 | ||
Research and development [Member] | ||||
Derivatives Fair Value [Line Items] | ||||
Gain (loss) reclassification from accumulated other comprehensive income | 12 months | |||
Other Income (Expense) [Member] | ||||
Derivatives Fair Value [Line Items] | ||||
Gain (loss) on discontinuance of cash flow hedges | $ | $ 0 | $ 0 | ||
Maximum [Member] | ||||
Derivatives Fair Value [Line Items] | ||||
Derivative instruments maturity term | 12 months |
Derivative Financial Instrume31
Derivative Financial Instruments - Schedule of Fair Values of Derivative Instruments on Condensed Consolidated Balance Sheets (Details) - Derivatives Designated as Hedges [Member] $ in Thousands | Sep. 30, 2016USD ($) |
Derivatives designated as hedges: | |
Derivative assets | $ 49 |
Foreign Currency Exchange Contracts [Member] | Other Current Assets [Member] | |
Derivatives designated as hedges: | |
Derivative assets | $ 49 |
Derivative Financial Instrume32
Derivative Financial Instruments - Summary of Effect of Foreign Currency Exchange Contracts on Condensed Consolidated Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Derivatives designated as hedges: | ||
Gains (losses) recognized in accumulated OCI (effective portion) | $ (87) | $ (237) |
Gains (losses) reclassified from accumulated OCI into operating expenses (effective portion) | 10 | 64 |
Derivatives not designated as hedges: | ||
Gains (losses) recognized in other income (expense), net | $ (32) | $ (80) |
Teijin Agreement - Additional I
Teijin Agreement - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended |
Aug. 31, 2016 | Sep. 30, 2016 | |
Revenue Recognition Milestone Method [Line Items] | ||
Upfront payment from collaboration partner | $ 40,000,000 | |
Teijin Limited [Member] | License and Supply Agreement [Member] | ||
Revenue Recognition Milestone Method [Line Items] | ||
Potential to receive development milestone | $ 35,000,000 | |
Percentage of running royalty and transfer pricing receivable range, high | 20.00% | |
Percentage of running royalty and transfer pricing receivable range, mid | 30.00% | |
Agreement expiration terms | The Agreement continues until the earlier of (i) twelve years after the first commercial sale of a licensed product in Japan, or (ii) the expiration of certain Versartis patents, unless terminated earlier by mutual agreement of the parties. The initial term of the Agreement is subject to automatic extension for three three-year terms, unless otherwise mutually agreed. The Agreement may be earlier terminated by either party for the other party’s uncured material breach or insolvency. In addition, Teijin may terminate the Agreement without cause upon six months’ advance notice prior to the sale of a licensed product, and upon twelve months’ notice thereafter. | |
Agreement expiration period after commercialization | 12 years | |
Agreement automatic extension term | 3 years | |
Upfront payment from collaboration partner | $ 40,000,000 | |
Teijin Limited [Member] | License and Supply Agreement [Member] | Upfront Payment Arrangement [Member] | ||
Revenue Recognition Milestone Method [Line Items] | ||
Payments received under license and supply agreement | $ 40,000,000 | |
Maximum [Member] | License and Supply Agreement [Member] | ||
Revenue Recognition Milestone Method [Line Items] | ||
Costs associated with additional trials | 5,000,000 | |
Maximum [Member] | Teijin Limited [Member] | License and Supply Agreement [Member] | ||
Revenue Recognition Milestone Method [Line Items] | ||
Potential to receive regulatory milestone | 55,000,000 | |
Potential to receive sales milestone | $ 35,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - Menlo Park, California [Member] $ in Millions | 1 Months Ended | 9 Months Ended | |
Dec. 31, 2015ft² | Mar. 31, 2014ft² | Sep. 30, 2016USD ($) | |
Loss Contingencies [Line Items] | |||
Operating facility lease area | ft² | 12,943 | ||
Operating facility lease term | 39 months | ||
Total obligation under lease | $ | $ 0.7 | ||
Sublease Agreement [Member] | |||
Loss Contingencies [Line Items] | |||
Operating facility lease area | ft² | 10,891 | ||
Operating facility lease term | 24 months | ||
Total obligation under lease | $ | $ 0.7 | ||
Lease commencement date | Jan. 1, 2016 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - shares | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Common stock, shares issued | 29,609,442 | 29,420,247 |
2014 Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Common stock reserved for future issuance | 1,118,000 | |
Percentage of common stock issued and outstanding increase annually | 4.50% | |
Number of common stock shares subject to outstanding awards | 4,911,000 | |
Employee Stock Purchase Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Percentage of common stock issued and outstanding increase annually | 1.00% | |
Number of shares reserved | 150,000 | |
Additional shares issued | 300,000 | |
Common stock, shares issued | 109,000 |
Stockholder's Equity - Changes
Stockholder's Equity - Changes in Accumulated Other Comprehensive Loss (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance at December 31, 2015 | $ 176,500 |
Other comprehensive loss before reclassifications | (238) |
Amounts reclassified from accumulated other comprehensive loss | (64) |
Net current period other comprehensive loss | (302) |
Balance at September 30, 2016 | 111,001 |
Foreign Currency Items [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Other comprehensive loss before reclassifications | (1) |
Net current period other comprehensive loss | (1) |
Balance at September 30, 2016 | (1) |
Unrealized Gains and Losses on Cash Flow Hedges [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Other comprehensive loss before reclassifications | (237) |
Amounts reclassified from accumulated other comprehensive loss | (64) |
Net current period other comprehensive loss | (301) |
Balance at September 30, 2016 | (301) |
Accumulated Other Comprehensive Income [Member] | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance at September 30, 2016 | $ (302) |
Net Loss per Share of Common 37
Net Loss per Share of Common Stock - Summary of Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (27,335) | $ (20,379) | $ (73,684) | $ (62,052) |
Weighted-average shares used to compute basic and diluted net loss per share | 29,574 | 29,354 | 29,495 | 28,825 |
Basic and diluted net loss per common share | $ (0.92) | $ (0.69) | $ (2.50) | $ (2.15) |
Net Loss per Share of Common 38
Net Loss per Share of Common Stock - Summary of Potentially Anti-dilutive Securities Excluded from Computation of Diluted Shares Outstanding (Detail) - shares | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Options to purchase common stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially Anti-dilutive securities excluded from computation of diluted shares outstanding | 4,430,010 | 3,225,616 |
Restricted stock units [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Potentially Anti-dilutive securities excluded from computation of diluted shares outstanding | 481,385 | 277,630 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
Nov. 04, 2016 | Sep. 30, 2015 | |
Subsequent Event [Line Items] | ||
Proceeds from issuance of common stock in public offering, net of issuance costs | $ 80,208 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Proceeds from issuance of common stock in public offering, net of issuance costs | $ 59,200 | |
Subsequent Event [Member] | Secondary Offering [Member] | ||
Subsequent Event [Line Items] | ||
Public offering shares of common stock issued | 5,176,545 | |
Proceeds from issuance of common stock in public offering, net of issuance costs | $ 59,200 |