Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
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 | 35,809,311 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 118,783 | $ 201,153 |
Prepaid expenses | 4,267 | 4,152 |
Other current assets | 326 | |
Total current assets | 123,376 | 205,305 |
Restricted cash | 2,382 | |
Property and equipment, net | 861 | 265 |
Build-to-suit lease asset | 8,952 | |
Total assets | 135,571 | 205,570 |
Current liabilities | ||
Accounts payable | 4,233 | 1,357 |
Accrued liabilities | 36,670 | 12,899 |
Income taxes payable | 247 | |
Upfront payment from collaboration partner (Note 5) | 40,000 | 40,000 |
Total current liabilities | 80,903 | 54,503 |
Build-to-suit lease obligation | 5,428 | |
Total liabilities | 86,331 | 54,503 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity | ||
Common stock, $0.0001 par value, 100,000,000 and 50,000,000 shares authorized at September 30, 2017 and December 31, 2016, respectively; 35,809,311 and 34,843,885 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 4 | 3 |
Additional paid-in capital | 454,596 | 440,667 |
Accumulated other comprehensive loss | (350) | |
Accumulated deficit | (405,360) | (289,253) |
Total stockholders' equity | 49,240 | 151,067 |
Total liabilities and stockholders’ equity | $ 135,571 | $ 205,570 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 50,000,000 |
Common stock, shares issued | 35,809,311 | 34,843,885 |
Common stock, shares outstanding | 35,809,311 | 34,843,885 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating expenses | ||||
Research and development | $ 42,673 | $ 20,664 | $ 93,295 | $ 55,253 |
General and administrative | 7,073 | 6,752 | 22,301 | 18,575 |
Total operating expenses | 49,746 | 27,416 | 115,596 | 73,828 |
Loss from operations | (49,746) | (27,416) | (115,596) | (73,828) |
Interest income | 220 | 120 | 661 | 354 |
Other income (expense), net | (262) | (39) | (1,044) | (210) |
Net loss before provision for income taxes | (49,788) | (27,335) | (115,979) | (73,684) |
Provision for income taxes | 128 | |||
Net Loss | $ (49,788) | $ (27,335) | $ (116,107) | $ (73,684) |
Net loss per share - basic and diluted | $ (1.40) | $ (0.92) | $ (3.29) | $ (2.50) |
Weighted-average common shares used to compute basic and diluted net loss per share | 35,680 | 29,574 | 35,336 | 29,495 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (49,788) | $ (27,335) | $ (116,107) | $ (73,684) |
Other comprehensive loss: | ||||
Cumulative foreign currency translation adjustment | (1) | |||
Unrealized loss on cash flow hedge | (96) | (301) | ||
Comprehensive loss | $ (49,788) | $ (27,431) | $ (116,107) | $ (73,986) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (116,107) | $ (73,684) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 190 | 161 |
Stock-based compensation expense | 11,101 | 8,028 |
Changes in assets and liabilities | ||
Prepaid expenses and other assets | (93) | (1,539) |
Accounts payable | 2,876 | 29 |
Accrued and other liabilities | 22,995 | 5,007 |
Income taxes payable | (247) | |
Upfront payment from collaboration partner | 40,000 | |
Net cash used in operating activities | (79,285) | (21,998) |
Cash flows from investing activities | ||
Purchase of property and equipment | (3,532) | (90) |
Change in restricted cash | (2,382) | |
Net cash used in investing activities | (5,914) | (90) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock in connection with employee benefit plans | 2,829 | 453 |
Net cash provided by financing activities | 2,829 | 453 |
Net increase (decrease) in cash and cash equivalents | (82,370) | (21,635) |
Cash and cash equivalents at beginning of period | 201,153 | 182,069 |
Cash and cash equivalents at end of period | 118,783 | 160,434 |
Supplemental disclosure | ||
Income taxes paid | 375 | |
Supplemental disclosure of noncash items | ||
Build-to-suit lease transaction | $ 5,428 | |
Public offering issuance costs | $ 346 |
Formation and Business of the C
Formation and Business of the Company | 9 Months Ended |
Sep. 30, 2017 | |
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’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. In September 2017, the Company announced that the VELOCITY Phase 3 clinical trial of somavaratan in pediatric growth hormone deficiency (GHD) did not meet its primary endpoint of non-inferiority. All ongoing clinical trials of somavaratan will conclude by the end of 2017. Analysis of the trial results continues in order to assess the viability of further development of somavaratan. 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, 2017, its results of operations for the three and nine months period ended September 30, 2017 and 2016, comprehensive loss for the three and nine months period ended September 30, 2017 and 2016, and cash flows for the nine months ended September 30, 2017, and 2016. The December 31, 2016 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, 2016 included in the Company’s annual report on Form 10-K filed on March 9, 2017 with the U.S. Securities and Exchange Commission (“SEC”). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and as of December 31, 2016, results of operations and statements of comprehensive loss for the three and nine months period ended September 30, 2017 and 2016, and cash flows for the nine months ended September 30, 2017 and 2016 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 the Company's consolidated operations. As of September 30, 2017, the Company had a cash and cash equivalents balance of $118.8 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 from the issuance of these financial statements, based on its current business plan. As a result of the failure of the VELOCITY trial to meet its primary endpoint, the Company has implemented a number of cost-cutting measures, including a reduction in workforce of approximately two-thirds. As part of its current business plan, the Company continues its assessment of the viability of somavaratan and is also evaluating possible strategic transactions to diversify its pipeline. The Company’s expected cash needs for the foreseeable future have been significantly reduced with the current initiatives and expected termination of a number of supplier contracts, including commercial contracts with our contract manufacturers. Since inception, the Company has incurred net losses and negative cash flows from operations. At September 30, 2017, the Company had an accumulated deficit of $405.4 million and working capital of $42.5 million. The Company expects to continue to incur losses from costs related to its assessment of the viability of somavaratan, the evaluation of possible strategic transactions and related administrative activities for the foreseeable future. Although management has been successful in raising capital in the past, most recently $59.1 million in October and November 2016, given the failure of the VELOCITY trial to meet its primary endpoint, 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, 2017 and December 31, 2016, 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. Build-to-Suit Lease In the Company’s recent lease arrangement (as described in Note 6), the Company is involved in the construction of the building. To the extent the Company is involved with the structural improvements of the construction project or takes construction risk prior to the commencement of a lease, accounting guidance requires the Company to be considered the owner for accounting purposes of these types of projects during the construction period. Therefore, the Company records an asset in property and equipment on the consolidated balance sheet for the replacement cost of the Company’s leased portion of the pre-existing building. The Company records a corresponding build-to-suit lease obligation on its consolidated balance sheets representing the amounts paid by the lessor. Upon completion of construction, the Company considered the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have been transferred back to the landlord, as evidenced by a lack of continuing involvement in the leased property. The Company’s assessment of the arrangement did not qualify for sale-leaseback accounting treatment; therefore the building asset remains on the Company’s consolidated balance sheets at its historical cost, and such asset is depreciated over its estimated useful life. The initial recording of these assets and liabilities is classified as non-cash investing and financing items, respectively, for purposes of the consolidated statements of cash flows. 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, 2017 or December 31, 2016. 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. 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, 2017 2016 2017 2016 Operating Expenses Research and development $ 1,419 $ 1,005 $ 4,400 $ 2,608 General and administrative 2,160 1,646 6,701 5,420 Total $ 3,579 $ 2,651 $ 11,101 $ 8,028 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 May 2017, the FASB issued, ASU-2017-09, Compensation—Stock Compensation (Topic 718). This guidance clarifies when changes to the terms and conditions of share-based awards must be accounted for as modifications. The guidance does not change the accounting treatment for modifications. The guidance, which will become effective on a prospective basis on January 1, 2018, is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued, ASU-2017-01, Business Combinations (Topic 805)- Definition of a Business. This guidance clarifies changes to the definition of a business for accounting purposes. Under the new guidance, an entity first determines whether substantially all of the fair value of a set of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of assets is not deemed to be a business. If the threshold is not met, the entity then evaluates whether the set of assets meets the requirement to be deemed a business, which at a minimum, requires there to be an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance will become effective on a prospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued, ASU-2016-18, guidance requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued, ASU 2016-15, Statement of Cash Flows (Topic 230). This ASU simplifies 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 Company has adopted ASU 2016-15 as of January 1, 2017 and there is no material impact to the 2017 condensed consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update ASU-2016-09, Compensation – Stock Compensation (Topic 718). This guidance 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 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company will adopt ASU 2016-09 in the first quarter of 2017. The Company has adopted ASU 2016-09 as of January 1, 2017 and there is no material impact to the 2017 condensed consolidated financial statements. 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, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, 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. The Company is currently evaluating the impact that the revenue standards will have on the Company’s consolidated financial statements and determining the transition method that it will apply. 1 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Balance Sheet Components | 3. Balance Sheet Components Prepaid expenses (in thousands) September 30, December 31, 2017 2016 Preclinical and clinical (1) $ 3,500 $ 3,474 Other 767 678 Total $ 4,267 $ 4,152 (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, 2017 2016 Payroll and related $ 1,957 $ 3,818 Preclinical and clinical 33,307 8,803 Professional services 1,191 114 Other 215 164 Total $ 36,670 $ 12,899 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
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 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, 2017 (unaudited) Total Level 1 Level 2 Level 3 Assets Money market funds $ 80,610 $ 80,610 $ — $ — $ 80,610 $ 80,610 $ — $ — Fair Value Measurements at December 31, 2016 Total Level 1 Level 2 Level 3 Assets Money market funds $ 85,911 $ 85,911 $ — $ — $ 85,911 $ 85,911 $ — $ — |
Teijin Agreement
Teijin Agreement | 9 Months Ended |
Sep. 30, 2017 | |
License And Supply Agreement [Abstract] | |
Teijin Agreement | 5. 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 is overseen by a joint steering committee composed of representatives of Teijin and the Company. Versartis is responsible for completing (at the Company’s expense) all ongoing clinical studies, including the pediatric Growth Hormone Deficiency (GHD) Phase 2/3 trial, and its related long-term safety study, and the Company is also 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 the Company’s share of such costs of $5.0 million. Following the MAA submission in Japan, Teijin would be responsible for conducting any additional Japanese studies for the pediatric or any other indications, at its own expense. In September 2017, the Phase 3 VELOCITY trial of somavaratan failed to reach its primary endpoint. As a result, because Japanese approval relied upon a positive Phase 3 Velocity trial result, the Japan pediatric GHD Phase 3 trial and its related long-term safety study have been discontinued. The Company is If somavaratan is approved in Japan, 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 $40.0 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 and fixed or determinable price pursuant to SEC Staff Accounting Bulletin No. 104 Revenue Recognition and applicable authoritative guidance has not been met as of September 30, 2017. The Company's analysis of the revenue recognition criteria is ongoing and subject to dialogue with Teijin, including whether or not the Agreement will continue as currently constructed, amended or otherwise be terminated as described above. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 6. Commitments and Contingencies Facility Leases In March 2014, the Company entered into an operating facility lease agreement to lease approximately 12,900 square feet in Menlo Park, California for its new headquarters building for a period of thirty-nine months. The term of this lease ended in August 2017. In December 2015, the Company entered into an operating sublease agreement to lease approximately 10,900 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 $0.3 million as of September 30, 2017. In March 2017, the Company entered into an operating facility lease agreement for approximately 34,500 rentable square feet located in the building located at 1020 Marsh Road, Menlo Park, California and for approximately 17,400 rentable square feet located on the second floor of the building located at 1060 Marsh Road. In September 2017, the Company terminated it’s lease specific to the 1060 Space. The 1020 space serves as the Company’s corporate headquarters. The delivery of the 1020 Space was April 2017. The 1020 lease commenced on August 8, 2017 for a period of 86 months, with one renewal option for a five-year term. The total obligation under this lease for the Company is approximately $20.0 million as of September 30, 2017. As an inducement to enter into the lease, Landlord will provide the Company with approximately a $1.9 million tenant improvement allowance for the 1020 Space. The Company has provided the Landlord with a letter of credit to secure its obligations under the lease in the initial amount of approximately $2.4 million, reported as restricted cash on the balance sheet, which is subject to reductions in future years if certain financial hurdles are met. Future minimum lease payments under all of the Company’s noncancelable operating and facility leases, as of September 30, 2017, were as follows (in thousands): Year Ended December 31, 2017 $ 903 2018 2,660 2019 2,732 2020 2,806 2021 2,882 Thereafter 8,329 Total $ 20,312 Build-to-Suit In March 2017, the Company entered into an operating facility lease agreement, as described above, to lease office space located in Menlo Park, California in a building to be constructed by the landlord. The company began occupying the 1020 Space in August 2017. The lease has a term of 86 months from the commencement date as defined in the lease agreement with the Company’s option to extend the term of the lease for an additional five years. The Company is obligated to make lease payments totaling approximately $20.0 million over the initial term of the lease. In connection with this lease, the landlord is providing a tenant improvement allowance of approximately $1.9 million for the 1020 Space, for Under the terms of the lease agreement, the Company has indemnified the landlord during the construction period. Accordingly, for accounting purposes, the Company has concluded that they are deemed the owner of the building during the construction period and the Company capitalized approximately $8.9 million within property and equipment and recognized an $5.4 million corresponding build-to-suit obligation in non-current liabilities in the condensed consolidated balance sheet as of September 30, 2017. Of the $8.9 million, approximately $3.5 million has been recorded as a build-to-suit asset related to construction costs incurred as of September 30, 2017. Contingencies In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. As of September 30, 2017 the Company is contingently committed to make development and sales-related milestone payments of up to $30.0 million under certain circumstances, and other payments of $10.0 million, as well as royalties relating to potential future product sales under the License Agreement with Amunix. The amount, timing and likelihood of these payments are unknown as they are dependent on the occurrence of future events that may or may not occur, including approval by the FDA of potential drug candidates. |
Stockholder's Equity
Stockholder's Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 7. 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, 2017, the total number of shares of common stock available for issuance under the 2014 Plan was approximately 988,400. 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, 2017, approximately 5,587,000 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, 2017, the Company has issued approximately 200,000 shares of common stock under the ESPP. |
Net Loss per Share of Common St
Net Loss per Share of Common Stock | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss per Share of Common Stock | 8. 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, 2017 2016 2017 2016 Net loss $ (49,788 ) $ (27,335 ) $ (116,107 ) $ (73,684 ) Weighted-average shares used to compute basic and diluted net loss per share 35,680 29,574 35,336 29,495 Basic and diluted net loss per common share $ (1.40 ) $ (0.92 ) $ (3.29 ) $ (2.50 ) 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, 2017 2016 Options to purchase common stock 4,650,559 4,430,010 Restricted stock units 936,135 481,385 |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | 9. Subsequent Event In October 2017, the Board of Directors of the Company approved a plan of termination to eliminate a number of positions effective October 20, 2017 (the “ Restructuring Plan Pursuant to the Restructuring Plan, affected employees received certain severance benefits. As a result of the Restructuring Plan, the Company incurred a one-time severance-related charge totaling approximately $3.4 million which will be recorded in the fourth quarter of 2017. The Company may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Restructuring Plan. Simultaneously with the Restructuring Plan the Company established a Severance Benefit Plan (the “ Plan ”) |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and as of December 31, 2016, results of operations and statements of comprehensive loss for the three and nine months period ended September 30, 2017 and 2016, and cash flows for the nine months ended September 30, 2017 and 2016 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 the Company's consolidated operations. As of September 30, 2017, the Company had a cash and cash equivalents balance of $118.8 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 from the issuance of these financial statements, based on its current business plan. As a result of the failure of the VELOCITY trial to meet its primary endpoint, the Company has implemented a number of cost-cutting measures, including a reduction in workforce of approximately two-thirds. As part of its current business plan, the Company continues its assessment of the viability of somavaratan and is also evaluating possible strategic transactions to diversify its pipeline. The Company’s expected cash needs for the foreseeable future have been significantly reduced with the current initiatives and expected termination of a number of supplier contracts, including commercial contracts with our contract manufacturers. Since inception, the Company has incurred net losses and negative cash flows from operations. At September 30, 2017, the Company had an accumulated deficit of $405.4 million and working capital of $42.5 million. The Company expects to continue to incur losses from costs related to its assessment of the viability of somavaratan, the evaluation of possible strategic transactions and related administrative activities for the foreseeable future. Although management has been successful in raising capital in the past, most recently $59.1 million in October and November 2016, given the failure of the VELOCITY trial to meet its primary endpoint, 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, 2017 and December 31, 2016, 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. |
Build-to-Suit Lease | Build-to-Suit Lease In the Company’s recent lease arrangement (as described in Note 6), the Company is involved in the construction of the building. To the extent the Company is involved with the structural improvements of the construction project or takes construction risk prior to the commencement of a lease, accounting guidance requires the Company to be considered the owner for accounting purposes of these types of projects during the construction period. Therefore, the Company records an asset in property and equipment on the consolidated balance sheet for the replacement cost of the Company’s leased portion of the pre-existing building. The Company records a corresponding build-to-suit lease obligation on its consolidated balance sheets representing the amounts paid by the lessor. Upon completion of construction, the Company considered the requirements for sale-leaseback accounting treatment, including evaluating whether all risks of ownership have been transferred back to the landlord, as evidenced by a lack of continuing involvement in the leased property. The Company’s assessment of the arrangement did not qualify for sale-leaseback accounting treatment; therefore the building asset remains on the Company’s consolidated balance sheets at its historical cost, and such asset is depreciated over its estimated useful life. The initial recording of these assets and liabilities is classified as non-cash investing and financing items, respectively, for purposes of the consolidated statements of cash flows. |
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, 2017 or December 31, 2016. |
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. 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, 2017 2016 2017 2016 Operating Expenses Research and development $ 1,419 $ 1,005 $ 4,400 $ 2,608 General and administrative 2,160 1,646 6,701 5,420 Total $ 3,579 $ 2,651 $ 11,101 $ 8,028 |
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 May 2017, the FASB issued, ASU-2017-09, Compensation—Stock Compensation (Topic 718). This guidance clarifies when changes to the terms and conditions of share-based awards must be accounted for as modifications. The guidance does not change the accounting treatment for modifications. The guidance, which will become effective on a prospective basis on January 1, 2018, is not expected to have a material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued, ASU-2017-01, Business Combinations (Topic 805)- Definition of a Business. This guidance clarifies changes to the definition of a business for accounting purposes. Under the new guidance, an entity first determines whether substantially all of the fair value of a set of assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set of assets is not deemed to be a business. If the threshold is not met, the entity then evaluates whether the set of assets meets the requirement to be deemed a business, which at a minimum, requires there to be an input and a substantive process that together significantly contribute to the ability to create outputs. The guidance will become effective on a prospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued, ASU-2016-18, guidance requires that a statement of cash flows present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The guidance will become effective on a retrospective basis for the Company on January 1, 2018 and is not expected to have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued, ASU 2016-15, Statement of Cash Flows (Topic 230). This ASU simplifies 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 Company has adopted ASU 2016-15 as of January 1, 2017 and there is no material impact to the 2017 condensed consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update ASU-2016-09, Compensation – Stock Compensation (Topic 718). This guidance 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 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company will adopt ASU 2016-09 in the first quarter of 2017. The Company has adopted ASU 2016-09 as of January 1, 2017 and there is no material impact to the 2017 condensed consolidated financial statements. 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, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, 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. The Company is currently evaluating the impact that the revenue standards will have on the Company’s consolidated financial statements and determining the transition method that it will apply. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 2016 2017 2016 Operating Expenses Research and development $ 1,419 $ 1,005 $ 4,400 $ 2,608 General and administrative 2,160 1,646 6,701 5,420 Total $ 3,579 $ 2,651 $ 11,101 $ 8,028 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Prepaid Expenses and Other Current Assets | Prepaid expenses (in thousands) September 30, December 31, 2017 2016 Preclinical and clinical (1) $ 3,500 $ 3,474 Other 767 678 Total $ 4,267 $ 4,152 (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, 2017 2016 Payroll and related $ 1,957 $ 3,818 Preclinical and clinical 33,307 8,803 Professional services 1,191 114 Other 215 164 Total $ 36,670 $ 12,899 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 (unaudited) Total Level 1 Level 2 Level 3 Assets Money market funds $ 80,610 $ 80,610 $ — $ — $ 80,610 $ 80,610 $ — $ — Fair Value Measurements at December 31, 2016 Total Level 1 Level 2 Level 3 Assets Money market funds $ 85,911 $ 85,911 $ — $ — $ 85,911 $ 85,911 $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Future Minimum Lease Payments Under All of our Non-Cancellable Operating and Facility Leases | Future minimum lease payments under all of the Company’s noncancelable operating and facility leases, as of September 30, 2017, were as follows (in thousands): Year Ended December 31, 2017 $ 903 2018 2,660 2019 2,732 2020 2,806 2021 2,882 Thereafter 8,329 Total $ 20,312 |
Net Loss per Share of Common 21
Net Loss per Share of Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 2016 2017 2016 Net loss $ (49,788 ) $ (27,335 ) $ (116,107 ) $ (73,684 ) Weighted-average shares used to compute basic and diluted net loss per share 35,680 29,574 35,336 29,495 Basic and diluted net loss per common share $ (1.40 ) $ (0.92 ) $ (3.29 ) $ (2.50 ) |
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, 2017 2016 Options to purchase common stock 4,650,559 4,430,010 Restricted stock units 936,135 481,385 |
Formation and Business of the22
Formation and Business of the Company - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business incorporated date | Dec. 10, 2008 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies - Additional Information (Detail) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 04, 2016USD ($) | Sep. 30, 2017USD ($)Segment | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | |
Significant Accounting Policies [Line Items] | |||||
Cash and cash equivalents | $ 118,783,000 | $ 201,153,000 | $ 160,434,000 | $ 182,069,000 | |
Accumulated deficit | (405,360,000) | (289,253,000) | |||
Working capital | $ 42,500,000 | ||||
Proceeds from issuance of common stock in follow-on offering, net of issuance costs | $ 59,100,000 | ||||
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% |
Summary of Significant Accoun24
Summary of Significant Accounting Policies - Schedule of Estimated Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 3,579 | $ 2,651 | $ 11,101 | $ 8,028 |
Research and development [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 1,419 | 1,005 | 4,400 | 2,608 |
General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 2,160 | $ 1,646 | $ 6,701 | $ 5,420 |
Balance Sheet Components - Prep
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid Expense And Other Assets [Abstract] | ||
Preclinical and clinical | $ 3,500 | $ 3,474 |
Other | 767 | 678 |
Total | $ 4,267 | $ 4,152 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables And Accruals [Abstract] | ||
Payroll and related | $ 1,957 | $ 3,818 |
Preclinical and clinical | 33,307 | 8,803 |
Professional services | 1,191 | 114 |
Other | 215 | 164 |
Total | $ 36,670 | $ 12,899 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Measured at Fair Value on Recurring Basis (Detail) - Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 80,610 | $ 85,911 |
Money market funds [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 80,610 | 85,911 |
Level 1 [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | 80,610 | 85,911 |
Level 1 [Member] | Money market funds [Member] | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 80,610 | $ 85,911 |
Teijin Agreement - Additional I
Teijin Agreement - Additional Information (Detail) - USD ($) | 1 Months Ended | 9 Months Ended | |
Aug. 31, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | |
Revenue Recognition Milestone Method [Line Items] | |||
Upfront payment from collaboration partner | $ 40,000,000 | $ 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] | |||
Nonrefundable 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) $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Mar. 31, 2017USD ($)ft²Lease | Dec. 31, 2015ft² | Mar. 31, 2014ft² | Sep. 30, 2017USD ($) | Dec. 31, 2016USD ($) | |
Loss Contingencies [Line Items] | |||||
Number of lease renewal option | Lease | 1 | ||||
Operating lease payments | $ 20,312 | ||||
Build-to-suit obligation | 5,428 | ||||
Property and equipment, net | 861 | $ 265 | |||
Build-to-suit related to construction costs incurred | 3,500 | ||||
Other potential commitments | 10,000 | ||||
Maximum [Member] | |||||
Loss Contingencies [Line Items] | |||||
Commitment to make development and sales-related milestone payments | 30,000 | ||||
Assets Held under Operating Leases [Member] | |||||
Loss Contingencies [Line Items] | |||||
Property and equipment, net | $ 8,900 | ||||
Menlo Park, California [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating facility lease area | ft² | 12,900 | ||||
Operating facility lease term | 39 months | ||||
Lease expiration end date | 2017-08 | ||||
Operating lease payments | $ 20,000 | ||||
Menlo Park, California [Member] | Sublease Agreement [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating facility lease area | ft² | 10,900 | ||||
Operating facility lease term | 24 months | ||||
Lease commencement date | Jan. 1, 2016 | ||||
Total obligation under lease | $ 300 | ||||
1020 Marsh Road, Menlo Park, California [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating facility lease area | ft² | 34,500 | ||||
Operating facility lease term | 86 months | ||||
Lease facility delivery date | 2017-04 | ||||
Lease commencement date | August 8, 2017 | ||||
Lease agreement, one renewal option term | 5 years | ||||
Operating lease payments | $ 20,000 | ||||
Tenant improvement allowance | $ 1,900 | ||||
Letter of credit to secure lease obligations | $ 2,400 | ||||
Lease facility began occupying date | 2017-08 | ||||
Lease agreement, additional extended lease term | 5 years | ||||
1060 Marsh Road [Member] | |||||
Loss Contingencies [Line Items] | |||||
Operating facility lease area | ft² | 17,400 |
Commitments and Contingencies30
Commitments and Contingencies - Summary of Future Minimum Lease Payments Under All of our Non-Cancellable Operating and Facility Leases (Detail) $ in Thousands | Sep. 30, 2017USD ($) |
Leases [Abstract] | |
2,017 | $ 903 |
2,018 | 2,660 |
2,019 | 2,732 |
2,020 | 2,806 |
2,021 | 2,882 |
Thereafter | 8,329 |
Total | $ 20,312 |
Stockholder's Equity - Addition
Stockholder's Equity - Additional Information (Detail) - shares | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Common stock, shares issued | 35,809,311 | 34,843,885 |
2014 Plan [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Common stock reserved for future issuance | 988,400 | |
Percentage of common stock issued and outstanding increase annually | 4.50% | |
Number of common stock shares subject to outstanding awards | 5,587,000 | |
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 | 200,000 |
Net Loss per Share of Common 32
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, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (49,788) | $ (27,335) | $ (116,107) | $ (73,684) |
Weighted-average shares used to compute basic and diluted net loss per share | 35,680 | 29,574 | 35,336 | 29,495 |
Basic and diluted net loss per common share | $ (1.40) | $ (0.92) | $ (3.29) | $ (2.50) |
Net Loss per Share of Common 33
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, 2017 | Sep. 30, 2016 | |
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 | 4,650,559 | 4,430,010 |
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 | 936,135 | 481,385 |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Detail) - Subsequent Event [Member] $ in Millions | Oct. 06, 2017Employee | Oct. 31, 2017shares | Dec. 31, 2017USD ($) |
Restructuring Plan [Member] | |||
Subsequent Event [Line Items] | |||
Restructuring plan effective date | Oct. 20, 2017 | ||
Number of employees to be reduced | Employee | 45 | ||
Approximate reduction as a percent of workforce | 62.00% | ||
Restructuring plan notification date to affected employees | Oct. 6, 2017 | ||
Restructuring Plan [Member] | Scenario, Forecast [Member] | |||
Subsequent Event [Line Items] | |||
One-time severance-related charge | $ | $ 3.4 | ||
Severance Benefit Plan [Member] | |||
Subsequent Event [Line Items] | |||
Vesting period of shares granted to retained employees | 2 years | ||
Cash retention bonus percentage of each retained employees then current base salary | 50.00% | ||
Required additional continuing employment period for retained employees | 12 months | ||
Severance Benefit Plan [Member] | Restricted stock units [Member] | |||
Subsequent Event [Line Items] | |||
Approximate number of shares granted to retained employees | shares | 907,000 |