Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Jan. 31, 2021 | Jun. 30, 2020 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity File Number | 001-37581 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 640 Lee Road, Suite 200 | ||
Entity Tax Identification Number | 46-0571712 | ||
Entity Address, City or Town | Wayne | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19087 | ||
City Area Code | 484 | ||
Local Phone Number | 324-7933 | ||
Title of 12(b) Security | Common Stock, $0.00001 par value | ||
Trading Symbol | ACRS | ||
Security Exchange Name | NASDAQ | ||
Entity Registrant Name | Aclaris Therapeutics, Inc. | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 65.5 | ||
Entity Common Stock, Shares Outstanding | 51,804,258 | ||
Entity Central Index Key | 0001557746 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
ICFR Auditor Attestation Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 22,063 | $ 34,187 |
Restricted cash | 1,750 | |
Marketable securities | 32,068 | 39,078 |
Accounts receivable, net | 772 | 704 |
Prepaid expenses and other current assets | 2,590 | 3,118 |
Discontinued operations - current assets | 4,966 | |
Total current assets | 57,493 | 83,803 |
Property and equipment, net | 1,654 | 2,470 |
Intangible assets | 7,123 | 7,199 |
Other assets | 4,514 | 4,825 |
Total assets | 70,784 | 98,297 |
Current liabilities: | ||
Accounts payable | 5,254 | 9,917 |
Accrued expenses | 5,906 | 7,721 |
Current portion of lease liabilities | 603 | 637 |
Discontinued operations - current liabilities | 3,111 | 4,157 |
Total current liabilities | 14,874 | 22,432 |
Other liabilities | 3,179 | 3,736 |
Long-term debt, net | 10,653 | |
Contingent consideration | 4,061 | 1,668 |
Deferred tax liability | 367 | 549 |
Total liabilities | 33,134 | 28,385 |
Commitments and contingencies (Note 20) | ||
Stockholders' Equity: | ||
Preferred stock, $0.00001 par value; 10,000,000 shares authorized and no shares issued or outstanding at December 31, 2020 and December 31, 2019 | ||
Common stock, $0.00001 par value; 100,000,000 shares authorized at December 31, 2020 and December 31, 2019; 45,109,314 and 41,485,638 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | ||
Additional paid-in capital | 542,286 | 523,505 |
Accumulated other comprehensive loss | (94) | (66) |
Accumulated deficit | (504,542) | (453,527) |
Total stockholders' equity | 37,650 | 69,912 |
Total liabilities and stockholders' equity | $ 70,784 | $ 98,297 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 45,109,314 | 41,485,638 |
Common stock, shares outstanding | 45,109,314 | 41,485,638 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Total revenue | $ 6,482 | $ 4,227 | $ 6,151 |
Costs and expenses: | |||
Cost of revenue | 5,133 | 4,055 | 4,329 |
Research and development | 31,731 | 64,899 | 60,841 |
General and administrative | 20,530 | 27,827 | 25,761 |
Goodwill impairment | 18,504 | ||
Total costs and expenses | 57,394 | 115,285 | 90,931 |
Loss from operations | (50,912) | (111,058) | (84,780) |
Other income (expense), net | (424) | (2,484) | 2,676 |
Loss from continuing operations before income taxes | (51,336) | (113,542) | (82,104) |
Income tax benefit | (182) | ||
Loss from continuing operations | (51,154) | (113,542) | (82,104) |
Income (loss) from discontinued operations, net of tax | 139 | (47,812) | (50,634) |
Net loss | $ (51,015) | $ (161,354) | $ (132,738) |
Net loss per share, basic and diluted | $ (1.20) | $ (3.90) | $ (4.03) |
Weighted average common shares outstanding, basic and diluted | 42,539,293 | 41,323,921 | 32,909,762 |
Other comprehensive income (loss): | |||
Unrealized gain (loss) on marketable securities, net of tax of $0 | $ (2) | $ 28 | $ 145 |
Foreign currency translation adjustment | (26) | (25) | 32 |
Total other comprehensive income (loss) | (28) | 3 | 177 |
Comprehensive loss | (51,043) | (161,351) | (132,561) |
Contract research | |||
Total revenue | 5,786 | $ 4,227 | 4,651 |
Other revenue | |||
Total revenue | $ 696 | $ 1,500 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||
Unrealized gain (loss) on marketable securities, tax | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common StockEquity Purchase Agreement | Common StockPublic Offering | Common Stock | Additional Paid-in CapitalEquity Purchase Agreement | Additional Paid-in CapitalPublic Offering | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Equity Purchase Agreement | Public Offering | Total |
Balance at beginning of period at Dec. 31, 2017 | $ 384,943 | $ (246) | $ (159,435) | $ 225,262 | |||||||
Balance at beginning of period (in shares) at Dec. 31, 2017 | 30,856,505 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options and vesting of restricted stock units | (52) | (52) | |||||||||
Exercise of stock options and vesting of restricted stock units, shares | 159,289 | ||||||||||
Issuance of common stock | $ 100,205 | $ 100,205 | |||||||||
Issuance of common stock, shares | 9,941,750 | ||||||||||
Issuance of common stock in connection with the Confluence development milestone | 2,215 | 2,215 | |||||||||
Issuance of common stock in connection with the Confluence development milestone, shares | 253,181 | ||||||||||
Unrealized gain (loss) on marketable securities | 145 | 145 | |||||||||
Foreign currency translation adjustment | 32 | 32 | |||||||||
Stock-based compensation expense | 20,055 | 20,055 | |||||||||
Net loss | (132,738) | (132,738) | |||||||||
Balance at end of period at Dec. 31, 2018 | 507,366 | (69) | (292,173) | 215,124 | |||||||
Balance at end of period (in shares) at Dec. 31, 2018 | 41,210,725 | ||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options and vesting of restricted stock units | (38) | (38) | |||||||||
Exercise of stock options and vesting of restricted stock units, shares | 274,913 | ||||||||||
Unrealized gain (loss) on marketable securities | 28 | 28 | |||||||||
Foreign currency translation adjustment | (25) | (25) | |||||||||
Stock-based compensation expense | 16,177 | 16,177 | |||||||||
Net loss | (161,354) | (161,354) | |||||||||
Balance at end of period at Dec. 31, 2019 | 523,505 | (66) | (453,527) | $ 69,912 | |||||||
Balance at end of period (in shares) at Dec. 31, 2019 | 41,485,638 | 41,485,638 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Exercise of stock options and vesting of restricted stock units | (669) | $ (669) | |||||||||
Exercise of stock options and vesting of restricted stock units, shares | 1,390,922 | ||||||||||
Issuance of common stock | $ 7,865 | $ 7,865 | |||||||||
Issuance of common stock, shares | 2,232,754 | ||||||||||
Fair value of warrants issued in connection with debt financing | 378 | 378 | |||||||||
Unrealized gain (loss) on marketable securities | (2) | (2) | |||||||||
Foreign currency translation adjustment | (26) | (26) | |||||||||
Stock-based compensation expense | 11,207 | 11,207 | |||||||||
Net loss | (51,015) | (51,015) | |||||||||
Balance at end of period at Dec. 31, 2020 | $ 542,286 | $ (94) | $ (504,542) | $ 37,650 | |||||||
Balance at end of period (in shares) at Dec. 31, 2020 | 45,109,314 | 45,109,314 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2018 | |
Equity Purchase Agreement | ||
Offering costs netted against proceeds | $ 168 | |
Public Offering | ||
Offering costs netted against proceeds | $ 6,669 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net loss | $ (51,015) | $ (161,354) | $ (132,738) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 1,324 | 6,409 | 1,879 |
Stock-based compensation expense | 11,207 | 16,177 | 20,055 |
Change in fair value of contingent consideration | 2,393 | 734 | 1,272 |
Goodwill impairment charge | 18,504 | ||
Intangible asset impairment charge | 27,638 | ||
Payment of Confluence development milestone | (717) | ||
Gain on sale of RHOFADE | (1,850) | ||
Deferred taxes | (182) | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | 4,898 | (809) | (4,380) |
Prepaid expenses and other assets | 1,689 | 3,233 | 62 |
Accounts payable | (5,219) | (3,160) | 6,964 |
Accrued expenses | (3,728) | (1,967) | 6,792 |
Net cash used in operating activities | (38,633) | (96,445) | (100,811) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (453) | (1,613) | (1,356) |
Acquisition of RHOFADE | (67,122) | ||
Disposition of RHOFADE | 34,186 | ||
Purchases of marketable securities | (47,714) | (137,385) | (161,598) |
Proceeds from sales and maturities of marketable securities | 54,554 | 210,491 | 239,443 |
Net cash provided by investing activities | 6,387 | 105,679 | 9,367 |
Cash flows from financing activities: | |||
Proceeds from debt financing (including warrants), net of issuance costs | 10,913 | 29,910 | |
Repayment of debt | (30,000) | ||
Payment of Confluence development milestone | (1,783) | ||
Finance lease payments | (137) | (523) | (648) |
Deferred issuance costs | (211) | ||
Proceeds from exercise of employee stock options and the issuance of stock | 70 | 207 | 577 |
Net cash provided by (used in) financing activities | 18,372 | (30,316) | 128,261 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (13,874) | (21,082) | 36,817 |
Cash, cash equivalents and restricted cash at beginning of period | 35,937 | 57,019 | 20,202 |
Cash, cash equivalents and restricted cash at end of period | 22,063 | 35,937 | 57,019 |
Supplemental disclosure of non-cash investing and financing activities: | |||
Additions to property and equipment included in accounts payable | 124 | 161 | |
Fair value of warrants issued in connection with debt financing | 378 | ||
Property and equipment obtained pursuant to finance lease financing arrangements | 2,131 | ||
Fair value of stock issued in connection with Confluence development milestone | 2,215 | ||
Offering costs included in accounts payable | 210 | ||
Operating lease asset recorded as a result of new accounting standard | $ 2,132 | ||
Fair value of common stock issued in connection with an equity purchase agreement | 263 | ||
Public Offering | |||
Cash flows from financing activities: | |||
Proceeds from issuance of common stock, net of issuance costs | $ 100,205 | ||
Equity Purchase Agreement | |||
Cash flows from financing activities: | |||
Proceeds from issuance of common stock, net of issuance costs | $ 7,737 |
Organization and Nature of Busi
Organization and Nature of Business | 12 Months Ended |
Dec. 31, 2020 | |
Organization and Nature of Business | |
Organization and Nature of Business | 1. Organization and Nature of Business Overview Aclaris Therapeutics, Inc. was incorporated under the laws of the State of Delaware in 2012. In July 2015, Aclaris Therapeutics International Limited (“ATIL”) was established under the laws of the United Kingdom as a wholly-owned subsidiary of Aclaris Therapeutics, Inc. In March 2016, Vixen Pharmaceuticals, Inc. (“Vixen”) became a wholly-owned subsidiary of Aclaris Therapeutics, Inc., and in September 2018, Vixen was dissolved. In August 2017, Confluence Life Sciences, Inc. (now known as Aclaris Life Sciences, Inc.) (“Confluence”) was acquired by Aclaris Therapeutics, Inc. and became a wholly-owned subsidiary thereof. Aclaris Therapeutics, Inc., ATIL, Vixen and Confluence are referred to collectively as the “Company.” The Company is a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases. In addition to developing its novel drug candidates, the Company is pursuing strategic alternatives, including identifying and consummating transactions with third-party partners, to further develop, obtain marketing approval for and/or commercialize its novel drug candidates. Liquidity The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. As of December 31, 2020, the Company had cash, cash equivalents and marketable securities of $54.1 million and an accumulated deficit of $504.5 million. Since inception, the Company has incurred net losses and negative cash flows from its operations. Prior to the acquisition of Confluence in August 2017, the Company had never generated revenue. There can be no assurance that profitable operations will ever be achieved, and, if achieved, will be sustained on a continuing basis. In addition, development activities, including clinical and preclinical testing of the Company’s drug candidates, will require significant additional financing. The future viability of the Company is dependent on its ability to successfully develop its drug candidates and to generate revenue from identifying and consummating transactions with third-party partners to further develop, obtain marketing approval for and/or commercialize its development assets or to raise additional capital to finance its operations. The Company will require additional capital to complete the clinical development of ATI-450 and ATI-1777, to develop its preclinical compounds, and to support its discovery efforts. The Company has taken a number of actions to support its operations and meet its liquidity needs. In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its drug candidates and commercial products. As a result of this decision, the Company restructured its operations and reduced its workforce, which lowered operating costs. In October 2019, the Company sold the worldwide rights to RHOFADE (oxymetazoline hydrochloride) cream, 1% (“RHOFADE”) to further its focus on its development programs and improve cash flow. In March 2020, the Company borrowed $11.0 million under a term loan facility with Silicon Valley Bank. In August 2020, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”). The Company’s plans to further address its liquidity needs primarily include its ability to control the timing and spending on its research and development programs. The Company may also consider other plans to fund its operations including: (1) raising additional capital through debt or equity financings; (2) identifying third-party partners to further develop, obtain marketing approval for and/or commercialize its drug candidates, which may generate revenue and/or milestone payments; (3) reducing spending on one or more research and development programs by delaying or discontinuing development; and/or (4) further restructuring its operations to change its overhead structure. Additional funds may not be available on a timely basis, on commercially acceptable terms, or at all, and such funds, if raised, may not be sufficient to enable the Company to continue to implement its long-term business strategy. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If the Company is unable to raise sufficient additional capital or generate revenue from transactions with potential third-party partners for the development and/or commercialization of its drug candidates, it may need to substantially curtail planned operations. The Company’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). The consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, Confluence, ATIL, and Vixen (for periods prior to its dissolution in 2018). All significant intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the consolidated statement of operations. Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. Discontinued Operations In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 17). Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown in economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates. Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Product Sales, net The Company sold RHOFADE and ESKATA (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”), its non-marketed product approved by the U.S. Food and Drug Administration, The Company recognized revenue from product sales at the point the Customer obtained control of the product, which generally occurred upon delivery. The Company also included estimates of variable consideration in the same period revenue was recognized. Components of variable consideration include trade discounts and allowances, product returns, government rebates, discounts and rebates, other incentives such as patient co-pay assistance, and other fee for service amounts. Variable consideration was recorded on the consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third party other than a Customer. The Company considered all relevant information when estimating variable consideration such as contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of net revenue that can be recognized is constrained by estimates of variable consideration which are included in the transaction price. Payment terms with Customers did not exceed one year and, therefore, the Company did not account for a financing component in its arrangements. The Company expensed incremental costs Trade Discounts and Allowances Government and Payor Rebates Other Incentives Product Returns was recognized. The Company’s estimate for product returns was based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. There is no return liability associated with sales of ESKATA as the Company had a no returns policy for ESKATA when it was commercialized. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue and as such, recognizes revenue in the amount which it has the right to invoice. ASC Topic 606 also provides an optional exemption, which the Company has elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient. The Company also received revenue from grants under the Small Business Innovation Research program of the National Institutes of Health, or NIH. During the year ended December 31, 2018, the Company had two active grants from NIH related to early-stage research. There are no remaining funds available under the grants. Other Revenue Licenses of Intellectual Property Milestone Payments Cash, Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of three months or less at acquisition date to be cash equivalents. Cash equivalents, which have consisted of money market accounts and commercial paper, are stated at fair value. Total cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows as of December 31, 2020 and 2019 includes $0 and $1.8 million, respectively, of restricted cash, consisting of funds in escrow pursuant to the asset purchase agreement with EPI Health, LLC (“EPI Health”) (see Note 15). Marketable Securities Marketable securities with original maturities of greater than three months and remaining maturities of less than one year from the balance sheet date are classified as short-term. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term. The Company classifies all of its marketable securities as available-for-sale securities. The Company’s marketable securities are measured and reported at fair value using either quoted prices in active markets for identical securities or quoted prices in markets that are not active for identical or similar securities. Unrealized gains and losses are reported as a separate component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses, if any, are included in other income (expense), net within the consolidated statement of operations and comprehensive loss. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers available evidence to evaluate the extent to which the decline is “other than temporary” and reduces the investment to fair value through a charge to the statement of operations and comprehensive loss. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the useful life of the asset. Computer equipment is depreciated over three years. Manufacturing and laboratory Impairment of Long-Lived Assets Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-lived intangible assets consist of a drug discovery platform the Company acquired through the acquisition of Confluence, and prior to the disposition in 2019, also included the intellectual property rights related to RHOFADE. Definite-lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D is either amortized over its estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned or otherwise impaired. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. During the year ended December 31, 2019, the Company performed an impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company’s impairment analysis, which primarily utilized a market-participant’s indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27.6 million, which is included in discontinued operations on the consolidated statement of operations, to adjust the carrying value of the RHOFADE intangible asset to its net realizable value (see Note 3). During the years ended December 31, 2020 and 2019, the Company did not record an IPR&D impairment. Goodwill Goodwill is not amortized, but rather is subject to testing for impairment at least annually, which the Company performs either during the fourth quarter or when indicators of an impairment are present. The Company considers each of its operating segments, therapeutics and contract research, to be a reporting unit since this is the lowest level for which discrete financial information is available. The impairment test performed by the Company is a qualitative assessment based upon the then current facts and circumstances related to operations of the reporting unit. If the qualitative assessment indicates an impairment may be present, the Company would perform the required quantitative analysis and an impairment charge would be recognized to the extent that the estimated fair value of the reporting unit is less than its carrying amount. However, any loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. During the year ended December 31, 2019, the Company performed an impairment analysis due to a decline in its stock price, which was considered a triggering event to evaluate goodwill for impairment. The Company’s impairment analysis, using a market approach, noted that its stock price, including a reasonable control premium, resulted in a fair value for the therapeutics reporting unit which was less than its carrying value. As a result, the Company recorded an impairment charge of $18.5 million. Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s consolidated balance sheet for both operating and finance leases. Contingent Consideration The Company initially recorded a contingent consideration liability related to future potential payments resulting from the acquisition of Confluence based upon the achievement of certain development, regulatory and commercial milestones, as well as future projected sales performance, at its estimated fair value on the date of acquisition. The ultimate amount of future payments, if any, is based on criteria such as sales performance and the achievement of certain regulatory and sales milestones. The Company estimates the fair value of the contingent consideration liability related to the achievement of regulatory milestones by assigning an achievement probability to each potential milestone and discounting the associated cash payment to its present value using a credit-risk-adjusted interest rate. The Company estimates the fair value of the contingent consideration liability associated with sales milestones and royalties by estimating future sales levels, assigning an achievement probability and discounting the associated cash payments to their present values using a risk-adjusted rate of return. Significant assumptions used in the Company’s estimates include the probability of success of both achieving regulatory milestones and commencing commercialization, which are based upon an asset’s current stage of development and ranged between 4% and 15%. The Company evaluates fair value estimates of contingent consideration liabilities on a quarterly basis. Any change in fair value reflects new information about the likelihood of the payment of the contingent consideration and the passage of time. For example, if the timing of the development of an acquired drug candidate, or the size of potential commercial opportunities related to an acquired drug candidate, differ from the Company’s assumptions, then the fair value of contingent consideration would be adjusted accordingly. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s consolidated statement of operations and comprehensive loss. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include salaries, stock-based compensation and benefits of employees, fees paid under licensing agreements, fees paid under a third party assignment agreement and other operational costs related to the Company’s research and development activities, including depreciation expenses and the cost of research and development contracts which the Company has entered into with outside vendors to conduct both preclinical studies and clinical trials. Significant judgment and estimates are made in determining the amount of research and development costs recognized in each reporting period. The Company analyzes the progress of its preclinical studies and clinical trials, completion of milestone events, invoices received and contracted costs when estimating research and development costs. Actual results could differ from the Company’s estimates. The Company’s historical estimates for research and development costs have not been materially different from the actual costs. Stock-Based Compensation The Company measures the compensation expense of stock-based awards granted to employees and directors using the grant date fair value of the award. The Company has issued stock options and restricted stock unit (“RSU”) awards with service-based vesting conditions, as well as with performance-based vesting conditions. The Company has not issued awards that include market-based conditions. For service-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For performance-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period beginning in the period that it becomes probable the performance conditions will occur. At each balance sheet date, the Company evaluates whether any performance conditions related to a performance-based award have changed. The effect of any change in performance conditions would be recognized as a cumulative catch-up adjustment in the period such change occurs, and any remaining unrecognized compensation expense would be recognized on a straight-line basis over the remaining requisite service period. The impact of forfeitures is recognized in the period in which they occur. The Company measures the compensation expense of stock-based awards granted to consultants using the grant date fair value of the award. The Company recognizes compensation expense over the period during which services are rendered by the consultant. The Company classifies stock-based compensation expense in its statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility based on the historical volatility of a set of peer companies, which are publicly traded, and expects to continue to do so until it has adequate historical data regarding the volatility of its own publicly-traded stock price. The expected term of the Company’s stock options has been determined using the “simplified” method for awards that qualify as “plain vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the future. The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant. Patent Costs All patent related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Foreign Currency Translation The reporting currency of the Company is the U.S. Dollar. The functional currency of ATIL, the Company’s wholly-owned subsidiary, is the British Pound. Assets and liabilities of ATIL are translated into U.S. Dollars based on exchange rates at the end of each reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a component of accumulated other comprehensive loss within the Company’s consolidated balance sheet. Gains and losses resulting from foreign currency transactions are reflected within the Company’s consolidated statement of operations. The Company has not utilized foreign currency hedging strategies to mitigate the effect of its foreign currency exposure. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. Comprehensive loss is comprised of net loss, foreign currency translation adjustments and unrealized gains (losses) on marketable securities. Net Loss per Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period, plus the weighted average number of potential shares of common stock from the assumed exercise of stock options and warrants and the assumed vesting of RSUs, if dilutive. Since the Company was in a net loss position, basic and diluted net loss per share was the same for each of the periods presented. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or 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. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s cash equivalents, marketable securities and contingent consideration are carried at fair value, determined according to the fair value hierarchy described above. The carrying value of the Company’s accounts payable and accrued expenses approximate fair value due to the short-term nature of these liabilities. The carrying value of the Company’s debt approximates fair value due to the debt bearing a variable interest rate which is reflective of current market rates. Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components. Segment Reporting Operating segments are components of a company for which separate financial information is available and evaluated regularly by the chief operating decision maker in assessing performance and deciding how to allocate resources. The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services to clients through Confluence, the Company’s wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States. Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718). The amendments in this ASU expand the scope of Topic 718 to include stock-based compensation arrangements with nonemployees except for specific guidance on option pricing model inputs and cost attribution. The Company adopted this standard as of January 1, 2019, the impact of which on its consolidated financial statements was not significant. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and 2018-11, Targeted Improvements, which included a number of technical corrections and improvements, including additional options for transition. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The amendments in ASU 2016-02 must be applied to all leases existing at the date a company initially applies the standard. The Company adopted the new standard as of January 1, 2019, using the effective date as the date of its initial application, and used the modified retrospective approach. The adoption of ASU 2016-02 |
RHOFADE
RHOFADE | 12 Months Ended |
Dec. 31, 2020 | |
RHOFADE | |
RHOFADE | 3. RHOFADE Disposition - Asset Purchase Agreement with EPI Health, LLC In October 2019, the Company entered into an asset purchase agreement with EPI Health pursuant to which the Company sold the worldwide rights to RHOFADE, which included the assignment of certain licenses for related intellectual property assets (the “Disposition”). Pursuant to the asset purchase agreement, EPI Health paid the Company an upfront payment of $35.2 million. In addition, EPI Health agreed to pay the Company (i) potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products as defined in the asset purchase agreement, (ii) a specified high single-digit royalty calculated as a percentage of net sales, on a product-by-product and country-by-country basis, until the date that the patent rights related to a particular product, such as RHOFADE, have expired, provided, that with respect to sales of RHOFADE in any territory outside of the United States, such royalty shall be paid until the date that the RHOFADE patent rights in the particular country have expired or, if later, 10 years from the date of the first commercial sale of RHOFADE in such country and (iii) 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the Disposition in any territory outside of the United States, subject to specified exceptions. Finally, EPI Health agreed to assume the Company’s obligation to pay specified royalties and milestone payments under certain agreements with third parties. Acquisition – Asset Purchase Agreement with Allergan Sales, LLC In November 2018, the Company acquired the worldwide rights to RHOFADE, which included an exclusive license to certain intellectual property, from Allergan Sales, LLC (“Allergan”) pursuant to an asset purchase agreement. The acquisition of RHOFADE was accounted for as an asset acquisition in accordance with FASB ASC 805-50. The following table summarizes the fair value of assets acquired in the acquisition of RHOFADE: (In thousands) Inventory $ 893 Intangible assets, net 66,229 Total assets acquired $ 67,122 |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value of Financial Assets and Liabilities | |
Fair Value of Financial Assets and Liabilities | 4. Fair Value of Financial Assets and Liabilities The following tables present information about the fair value measurements of the Company’s financial assets and liabilities which are measured at fair value on a recurring and non-recurring basis, and indicate the level of the fair value hierarchy utilized to determine such fair values: December 31, 2020 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 14,955 $ 1,500 $ — $ 16,455 Marketable securities — 32,068 — 32,068 Total assets $ 14,955 $ 33,568 $ — $ 48,523 Liabilities: Acquisition-related contingent consideration $ — $ — $ 4,061 $ 4,061 Total liabilities $ — $ — $ 4,061 $ 4,061 December 31, 2019 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 21,277 $ — $ — $ 21,277 Marketable securities — 39,078 — 39,078 Total assets $ 21,277 $ 39,078 $ — $ 60,355 Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,668 $ 1,668 Total liabilities $ — $ — $ 1,668 $ 1,668 As of December 31, 2020 and 2019, the Company’s cash equivalents included a money market fund, which was valued based upon Level 1 inputs. Cash equivalents as of December 31, 2020 also included commercial paper, which was valued based upon Level 2 inputs. The Company’s marketable securities as of December 31, 2020 and 2019 included U.S. government agency debt securities, commercial paper and asset-backed debt securities, which were valued based upon Level 2 inputs. Marketable securities as of December 31, 2019 also included corporate debt securities, which were valued based upon Level 2 inputs. In determining the fair value of its Level 2 investments, the Company relied on quoted prices for identical securities in markets that are not active. These quoted prices were obtained by the Company with the assistance of a third-party pricing service based on available trade, bid and other observable market data for identical securities. Quarterly, the Company compares the quoted prices obtained from the third-party pricing service to other available independent pricing information to validate the reasonableness of the quoted prices provided. The Company evaluates whether adjustments to third-party pricing are necessary and, historically, the Company has not made adjustments to quoted prices obtained from the third-party pricing service. During the years ended December 31, 2020 and 2019, there were no transfers between Level 1, Level 2 and Level 3. The increase in contingent consideration of $2.4 million during the year ended December 31, 2020 was primarily due to updates to the Company’s assumptions resulting from the successful completion of a Phase 1 clinical trial for ATI-450 and the submission and allowance of an Investigational New Drug Application (“IND”) for ATI-1777. The change in acquisition-related contingent consideration of $0.7 million during the year ended December 31, 2019 was the result of updates to the Company’s assumptions as a result of the submission and allowance of an IND for ATI-450. As of December 31, 2020 and 2019, the fair value of the Company’s available-for-sale marketable securities by type of security was as follows: December 31, 2020 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Commercial paper $ 20,483 $ — $ — $ 20,483 Asset-backed debt securities 4,036 1 — 4,037 U.S. government agency debt securities 7,547 1 — 7,548 Total marketable securities $ 32,066 $ 2 $ — $ 32,068 December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities $ 7,815 $ 2 $ — $ 7,817 Commercial paper 15,129 — — 15,129 Asset-backed debt securities 8,004 4 — 8,008 U.S. government agency debt securities 8,126 1 (3) 8,124 Total marketable securities $ 39,074 $ 7 $ (3) $ 39,078 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, Net | |
Property and Equipment, Net | 5. Property and Equipment, Net Property and equipment, net consisted of the following: December 31, December 31, (In thousands) 2020 2019 Computer equipment $ 1,197 $ 1,315 Finance lease right-of-use assets — 435 Lab equipment 1,340 1,250 Furniture and fixtures 617 647 Leasehold improvements 1,123 889 Property and equipment, gross 4,277 4,536 Accumulated depreciation (2,623) (2,066) Property and equipment, net $ 1,654 $ 2,470 Depreciation expense was $1.1 million, $1.5 million and $1.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets Intangible assets consisted of the following: Gross Cost Accumulated Amortization Remaining December 31, December 31, December 31, December 31, (In thousands, except years) Life (years) 2020 2019 2020 2019 Other intangible assets 6.6 751 751 257 181 IPR&D na 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 257 $ 181 Amortization expense was $75 thousand for each of the years ended December 31, 2020, 2019 and 2018. As of December 31, 2020, estimated future amortization expense is as follows: Year Ending (In thousands) December 31, 2021 $ 75 2022 75 2023 75 2024 75 2025 75 Thereafter 119 Total $ 494 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses | |
Accrued Expenses | 7. Accrued Expenses Accrued expenses consisted of the following: December 31, December 31, (In thousands) 2020 2019 Employee compensation expenses $ 3,971 $ 3,321 Research and development expenses 761 2,857 Other 1,174 1,543 Total accrued expenses $ 5,906 $ 7,721 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt | |
Debt | 8. Debt Loan and Security Agreement – Silicon Valley Bank In March 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (“SVB”). The Loan and Security Agreement provides for $11.0 million in term loans, of which the Company borrowed the entire amount on March 30, 2020. The Loan and Security Agreement is secured by substantially all of the assets of the Company other than intellectual property. In connection with the Loan and Security Agreement, the Company issued to SVB a warrant to purchase up to 460,251 shares of common stock (the “Warrant”) (see Note 9). The proceeds of the Loan and Security Agreement were allocated to the term loan and Warrant using a relative fair value approach. The term loan repayment schedule provides for interest only payments beginning April 1, 2020 and continuing through March 1, 2022, followed by 24 consecutive equal monthly installments of principal, plus monthly payments of accrued interest, starting on April 1, 2022 and continuing through the maturity date of March 1, 2024. All outstanding principal and accrued and unpaid interest will be due and payable on the maturity date. The Loan and Security Agreement provides for an annual interest rate equal to the greater of (i) the prime rate then in effect as reported in The Wall Street Journal plus 2% and (ii) 6.75%. The Loan and Security Agreement includes a final payment fee equal to 5% of the original principal amount borrowed. The Company has the option to prepay the outstanding balance of the term loans in full, subject to a prepayment premium of (i) 3% of the original principal amount borrowed for any prepayment on or prior to the first anniversary of March 30, 2020, (ii) 2% of the original principal amount borrowed for any prepayment after the first anniversary and on or before the second anniversary of March 30, 2020 or (iii) 1% of the original principal amount borrowed for any prepayment after the second anniversary of March 30, 2020 but before March 1, 2024. Loan and Security Agreement – Oxford Finance LLC In October 2018, the Company entered into a Loan and Security Agreement with Oxford Finance LLC. The Loan and Security Agreement provided for up to $65.0 million in term loans, of which the Company borrowed $30.0 million in October 2018. In October 2019, the Company repaid in full the $30.0 million that was outstanding under the Loan and Security Agreement, together with all accrued and unpaid interest and fees. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity Preferred Stock As of December 31, 2020 and 2019, the Company’s amended and restated certificate of incorporation authorized the Company to issue 10,000,000 shares of undesignated preferred stock. There were no shares of preferred stock outstanding as of December 31, 2020 and 2019. Common Stock As of December 31, 2020 and 2019, the Company’s amended and restated certificate of incorporation authorized the Company to issue 100,000,000 shares of $0.00001 par value common stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to any preferential dividend rights of any series of preferred stock that may be outstanding. No dividends have been declared through December 31, 2020. October 2018 Public Offering In October 2018, the Company entered into an underwriting agreement pursuant to which the Company issued and sold 9,941,750 shares of common stock under registration statements on Form S-3, including the underwriters’ full exercise of their option to purchase additional shares. The shares of common stock were sold to the public at a price of $10.75 per share, for gross proceeds of $106.9 million. The Company paid underwriting discounts and commissions of $6.4 million to the underwriters in connection with the offering. In addition, the Company incurred expenses of $0.3 million in connection with the offering. The net offering proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses, were $100.2 million. Warrants The Warrant issued to SVB in March 2020 had an initial exercise price of $0.956 per share, subject to adjustment as provided in the Warrant. The Warrant became immediately exercisable in full upon the funding of the term loan facility. The Company assigned a fair value of $0.4 million to the Warrant using a Black-Scholes valuation methodology, and also concluded that the Warrant was indexed to its own stock and therefore classified the Warrant as an equity instrument. In January 2021, SVB net exercised the Warrant in full, and the Company issued to SVB 388,119 shares of common stock. Equity Purchase Agreement with Lincoln Park Capital Fund, LLC In August 2020, the Company entered into the Purchase Agreement with Lincoln Park which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company may sell to Lincoln Park, at its discretion, up to $15.0 million of shares of its common stock over the 36-month term of the Purchase Agreement. U pon execution of the Purchase Agreement, the Company issued 121,584 shares of its common stock to Lincoln Park as commitment shares in accordance with the closing conditions contained within the Purchase Agreement. The commitment shares were valued using the closing price of the Company’s common stock on the effective date of the Purchase Agreement resulting in an aggregate fair value of $0.3 million. Through December 31, 2020, the Company sold 2,111,170 shares of its common stock to Lincoln Park under the Purchase Agreement for net proceeds of $7.7 million. The Company terminated the Purchase Agreement in January 2021. The Company did not sell any additional shares prior to terminating the Purchase Agreement in January 2021 in connection with the public offering of common stock described below (see Note 21). |
Stock-Based Awards
Stock-Based Awards | 12 Months Ended |
Dec. 31, 2020 | |
Stock-Based Awards | |
Stock-Based Awards | 10. Stock-Based Awards 2015 Equity Incentive Plan In September 2015, the Company’s board of directors adopted the 2015 Equity Incentive Plan (the “2015 Plan”), and the Company’s stockholders approved the 2015 Plan. The 2015 Plan became effective in connection with the Company’s initial public offering. Beginning at the time the 2015 Plan became effective, no further grants may be made under the Company’s 2012 Equity Compensation Plan, as amended and restated (the “2012 Plan”). The 2015 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards, cash-based awards and other stock-based awards. The number of shares initially reserved for issuance under the 2015 Plan was 1,643,872 shares of common stock. The number of shares of common stock that may be issued under the 2015 Plan will automatically increase on January 1 of each year ending on January 1, 2025, in an amount equal to the lesser of (i) 4.0% of the shares of the Company’s common stock outstanding on December 31 of the preceding calendar year or (ii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that expire, are otherwise terminated, settled in cash or repurchased by the Company under the 2015 Plan and the 2012 Plan will be added back to the shares of common stock available for issuance under the 2015 Plan. As of December 31, 2020, 2,423,020 shares remained available for grant under the 2015 Plan. As of January 1, 2021, the number of shares of common stock that may be issued under the 2015 Plan was automatically increased by 1,804,372 shares. 2017 Inducement Plan In July 2017, the Company’s board of directors adopted the 2017 Inducement Plan (the “2017 Inducement Plan”). The 2017 Inducement Plan is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Company had 443,000 stock options and 28,895 RSUs outstanding as of December 31, 2020 under the 2017 Inducement Plan. All shares of common stock that were eligible for issuance under the 2017 Inducement Plan after October 1, 2018, including any shares underlying any awards that expire or are otherwise terminated, reacquired to satisfy tax withholding obligations, settled in cash or repurchased by the Company in the future that would have been eligible for re-issuance under the 2017 Inducement Plan, were retired. 2012 Equity Compensation Plan Upon the 2015 Plan becoming effective, no further grants can be made under the 2012 Plan. The Company granted a total of 1,140,524 stock options under the 2012 Plan, of which 549,561 and 745,735 were outstanding as of December 31, 2020 and 2019, respectively. Stock options granted under the 2012 Plan vested over four years and expire after ten years. Stock Option Valuation The weighted average assumptions the Company used to estimate the fair value of stock options granted during the years ended December 31, 2020, 2019 and 2018 were as follows: Year Ended December 31, 2020 2019 2018 Risk-free interest rate 0.87 % 2.27 % 2.66 % Expected term (in years) 6.1 6.2 6.3 Expected volatility 85.19 % 99.36 % 96.78 % Expected dividend yield 0 % 0 % 0 % The Company recognizes compensation expense for awards over their vesting period. Compensation expense for awards includes the impact of forfeiture in the period when they occur. Stock Options The following table summarizes stock option activity for the years ended December 31, 2020, 2019 and 2018: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic (In thousands, except share and per share data and years) of Shares Price Term Value (in years) Outstanding as of December 31, 2017 3,328,757 $ 20.69 8.3 $ 19,812 Granted 1,459,800 20.97 Exercised (59,450) 9.70 724 Forfeited and cancelled (447,026) 24.62 Outstanding as of December 31, 2018 4,282,081 $ 20.53 7.9 $ 2,404 Granted 44,500 5.75 Exercised (142,779) 1.33 112 Forfeited and cancelled (1,081,581) 23.01 Outstanding as of December 31, 2019 3,102,221 $ 20.33 6.6 $ 148 Granted 734,800 1.30 Exercised (53,737) 1.30 145 Forfeited and cancelled (911,786) 22.41 Outstanding as of December 31, 2020 2,871,498 $ 15.16 6.8 $ 4,890 Options vested and expected to vest as of December 31, 2020 2,871,498 $ 15.16 6.8 $ 4,890 Options exercisable as of December 31, 2020 1,844,197 $ 18.92 5.8 $ 1,424 The weighted average grant date fair value of stock options granted during the years ended December 31, 2020, 2019 and 2018 was $0.93, $4.63 and $16.55 per share, respectively. Restricted Stock Units The following table summarizes RSU activity for the years ended December 31, 2020, 2019 and 2018. Weighted Average Grant Date Aggregate Number Fair Value Intrinsic (In thousands, except share and per share data) of Shares Per Share Value Outstanding as of December 31, 2017 283,553 $ 27.02 Granted 552,060 19.03 Vested (140,497) 27.22 $ 2,158 Forfeited and cancelled (68,709) 23.65 Outstanding as of December 31, 2018 626,407 $ 20.30 Granted 3,650,942 3.56 Vested (173,444) 21.31 $ 799 Forfeited and cancelled (510,990) 10.63 Outstanding as of December 31, 2019 3,592,915 $ 4.62 Granted 1,168,805 1.36 Vested (1,804,429) 3.33 $ 2,607 Forfeited and cancelled (713,134) 4.77 Outstanding as of December 31, 2020 2,244,157 $ 3.83 Stock-Based Compensation Stock-based compensation expense included in total costs and expenses on the consolidated statement of operations included the following: Year Ended December 31, (In thousands) 2020 2019 2018 Cost of revenue $ 946 $ 703 $ 766 Research and development 2,919 5,091 6,480 General and administrative 7,342 10,288 9,317 Total stock-based compensation expense $ 11,207 $ 16,082 $ 16,563 As of December 31, 2020, the Company had unrecognized stock-based compensation expense for stock options and RSUs of $4.2 million and $5.5 million, respectively, which is expected to be recognized over weighted average periods of 1.3 years and 1.8 years, respectively. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2020 | |
Net Loss per Share | |
Net Loss per Share | 11. Net Loss per Share Basic and diluted net loss per share is summarized in the following table: Year Ended December 31, (In thousands, except for share and per share data) 2020 2019 2018 Numerator: Net loss $ (51,015) $ (161,354) $ (132,738) Denominator: Weighted average shares of common stock outstanding, basic and diluted 42,539,293 41,323,921 32,909,762 Net loss per share, basic and diluted $ (1.20) $ (3.90) $ (4.03) The Company’s potentially dilutive securities, which included stock options, RSUs and warrants, have been excluded from the computation of diluted net loss per share since the effect would be to reduce the net loss per share. Therefore, the weighted average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. December 31, 2020 2019 2018 Options to purchase common stock 2,871,498 3,102,221 4,282,081 Restricted stock unit awards 2,244,157 3,592,915 626,407 Warrants 460,251 — — Total potential shares of common stock 5,575,906 6,695,136 4,908,488 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | 12. Leases The Company has operating leases for office space and laboratory facilities, and had finance leases for its laboratory equipment. As a result of the Company’s decision to actively seek partners for its commercial products, the Company terminated the finance leases for its fleet vehicles and recognized a loss on lease termination of $0.2 million during the year ended December 31, 2019. The components of lease expense were as follows: Year Ended December 31, (In thousands) 2020 2019 Operating lease expense $ 1,013 $ 808 Finance Leases: Amortization of right-to-use assets $ 113 $ 443 Interest expense 5 87 Total finance lease expenses $ 118 $ 530 Rent expense was $1.0 million, $1.0 million and $0.9 million for the years ended December 31, 2020, 2019 and 2018, respectively, which was recognized on a straight-line basis over the term of the lease. Operating Leases Agreements for Office Space The Company has a sublease agreement with Auxilium Pharmaceuticals, LLC (the “Sublandlord”) pursuant to which it subleases 33,019 square feet of office space for its headquarters in Wayne, Pennsylvania. The sublease has a term that runs through October 2023. If for any reason the lease between Chesterbrook Partners, LP (“Landlord”) and Sublandlord is terminated or expires prior to October 2023, the Company’s sublease will automatically terminate. In December 2020, the Company entered into a sub-sublease agreement under which it sub-subleased 8,115 square feet. The sub-sublease term runs concurrent with the original sublease agreement. In February 2019, the Company entered into a sublease agreement with a third party for 20,433 square feet of office and laboratory space in St. Louis, Missouri. The lease commenced in June 2019 and has a term that runs through June 2029. Supplemental balance sheet information related to operating leases is as follows: December 31, December 31, (In thousands) 2020 2019 Operating Leases: Gross cost $ 5,240 $ 5,213 Accumulated amortization (1,111) (480) Other assets $ 4,129 $ 4,733 Current portion of lease liabilities $ 603 $ 526 Other liabilities 2,894 3,548 Total operating liabilities $ 3,497 $ 4,074 Finance Leases Laboratory Equipment The Company leased laboratory equipment which it used in its laboratory space in St. Louis, Missouri under two finance lease financing arrangements which the Company entered into in August 2017 and October 2017, and which terms ended in October 2020 and December 2020, respectively. Fleet Vehicles The Company leased automobiles for its sales force and other field-based employees under the terms of a master lease agreement with a third party. The lease term for each automobile began on the date the Company took delivery and continued for a period of four years. The Company returned all leased vehicles during the year ended December 31, 2019. Supplemental balance sheet information related to finance leases is as follows: (In thousands) December 31, December 31, Finance Leases: 2020 2019 Property and equipment, gross $ — $ 435 Accumulated depreciation — (322) Property and equipment, net $ — $ 113 Current portion of lease liabilities $ — $ 111 Other liabilities — 21 Total finance $ — $ 132 Supplemental information related to operating and finance leases is as follows: Year Ended (In thousands, except for years and percentages) December 31, Supplemental Cash Flow Lease Information: 2020 2019 Operating cash flows from operating leases $ 907 $ 755 Operating cash flows from finance leases $ 5 $ 87 Financing cash flows from finance leases $ 137 $ 523 Leased assets obtained in exchange for new operating lease liabilities $ — $ 3,060 Weighted-Average Remaining Lease Term (in years): Operating leases 6.0 6.8 Finance leases — 0.9 Weighted-Average Discount Rate: Operating leases 10.1 % 10.1% Finance leases 10.0 % 10.0% Future minimum lease payments under operating and finance lease agreements are as follows: (In thousands) Operating Year Ending December 31, Leases 2021 $ 924 2022 949 2023 866 2024 343 2025 352 Thereafter 1,301 Total undiscounted lease payments 4,735 Less: unrecognized interest (1,238) Total lease liability $ 3,497 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | 13. Income Taxes During the years ended December 31, 2020, 2019 and 2018, the Company did not record an income tax benefit for net operating losses incurred in each year due to the uncertainty of realizing a benefit from those items. Loss before income taxes is allocated as follows: Year Ended December 31, (In thousands) 2020 2019 2018 U.S. operations $ (51,215) $ (161,192) $ (132,473) Foreign operations 18 (162) (265) Loss before income taxes $ (51,197) $ (161,354) $ (132,738) A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2020 2019 2018 Federal statutory income tax rate (21.0) % (21.0) % (21.0) % State taxes, net of federal benefit (7.5) (6.6) (3.5) Research and development tax credits (2.6) (1.5) (2.1) Permanent differences 2.6 3.0 0.8 Change in deferred tax asset valuation allowance 28.1 26.2 25.7 Effective income tax rate (0.4) % 0.1 % (0.1) % Deferred tax liabilities, net consisted of the following: December 31, (In thousands) 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 101,277 $ 90,298 Capitalized start-up costs 6,509 6,904 Research and development tax credit carryforwards 8,732 7,417 Capitalized research and development expense 4,611 4,456 Stock‑based compensation expense 14,526 12,973 Accrued compensation 745 588 Lease liabilities 888 945 Other 602 618 Total deferred tax assets 137,890 124,199 Deferred tax liabilities: Property and equipment (209) (206) Intangible asset (2,033) (1,741) Right-to-use assets (1,026) (1,235) Other (430) (600) Total deferred tax liabilities (3,698) (3,782) Valuation allowance (134,559) (120,966) Deferred tax liabilities, net $ (367) $ (549) As of December 31, 2020, the Company had federal and state net operating loss (“NOL”) carryforwards of $367.6 million and $369.6 million, respectively, which will begin to expire in 2032. As of December 31, 2020, the Company also had federal research and development tax credit carryforwards of $8.6 million which will begin to expire in 2032, and state research and development tax credit carryforwards of $0.1 million which will begin to expire in 2022. The Company also has $0.2 million of loss carryforwards in the United Kingdom which can be carried forward indefinitely. Utilization of the NOLs and research and development tax credit carryforwards in the United States may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that may have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has completed an analysis under Section 382 for NOLs generated from July 13, 2012 through July 20, 2020. Although the Company has experienced Section 382 ownership changes since 2012, the Company has concluded that it should have sufficient ability to utilize NOLs accumulated during the periods tested. The Company has not yet determined if a Section 382 ownership change has occurred after July 20, 2020. In addition, the Company may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of the Company’s control. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. The Company considered its history of cumulative net losses incurred since inception, its lack of substantial revenue generated to date, and its forecasted future operating losses and concluded that it is more likely than not that the Company will not realize the benefits of its deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2020 and 2019. The Company evaluates positive and negative evidence of its ability to realize deferred tax assets at each reporting period. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2020, 2019 and 2018 related primarily to the increases in NOLs, capitalized start-up costs, and research and development tax credit carryforwards and were as follows: Year Ended December 31, (In thousands) 2020 2019 2018 Valuation allowance at beginning of year $ (120,966) $ (80,985) $ (46,878) Decreases recorded as benefit to income tax provision — — — Decreases recorded to opening balance sheet 58 — — Increases recorded to income tax provision (13,651) (39,981) (34,107) Valuation allowance as of end of year $ (134,559) $ (120,966) $ (80,985) The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations. The Company’s tax years are still open under statute from 2017 to the present. All open years may be examined to the extent that tax credit or NOLs are used in future periods. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions | |
Related Party Transactions | 14. Related Party Transactions Mallinckrodt plc In April 2018, Bryan Reasons was appointed to the Company’s board of directors. Subsequently, in March 2019, Mr. Reasons became the Chief Financial Officer of Mallinckrodt plc. Prior to Mr. Reasons joining Mallinckrodt plc, in November 2018 the Company entered into a master services agreement with a subsidiary of Mallinckrodt plc pursuant to which Confluence provides laboratory services to the subsidiary (“Mallinckrodt”) in the ordinary course of business. Mr. Reasons was not involved in the negotiation or execution of the agreement, but may be deemed to have an interest in the ongoing transactions based on his employment as an executive officer of Mallinckrodt plc. During the years ended December 31, 2020 and 2019, the Company invoiced Mallinckrodt for $0.3 million and $0.1 million, respectively, under the master services agreement. As of December 31, 2020 and 2019, the Company had $0 of outstanding accounts receivable balances from Mallinckrodt. Mr. Reasons had no financial interest in these transactions. |
Agreements Related to Intellect
Agreements Related to Intellectual Property | 12 Months Ended |
Dec. 31, 2020 | |
Agreements Related to Intellectual Property | |
Agreements Related to Intellectual Property | 15. Agreements Related to Intellectual Property Asset Purchase Agreement – EPI Health, LLC In October 2019, the Company sold RHOFADE to EPI Health pursuant to an asset purchase agreement. EPI Health agreed to pay the Company a high single-digit royalty calculated as a percentage of net sales on a country-by-country basis until the date that the patent rights related to RHOFADE have expired or, if later, ten years from the date of the first commercial sale of RHOFADE in such country. The Company recorded royalty income under the asset purchase agreement of $0.7 million and $0 during the years ended December 31, 2020 and 2019, respectively. Royalty income is included in other revenue on the consolidated statements of operations and comprehensive loss. EPI Health has also agreed to pay the Company potential sales milestone payments of up to $20.0 million in the aggregate upon the achievement of specified levels of net sales of products covered by the asset purchase agreement, and 25% of any upfront, license, milestone, maintenance or fixed payment received by EPI Health in connection with any license or sublicense of the assets transferred in the disposition in any territory outside of the United States, subject to specified exceptions. Asset Purchase Agreement – Allergan Sales, LLC In November 2018, the Company acquired RHOFADE from Allergan pursuant to an asset purchase agreement. The Company agreed to pay Allergan specified royalties, ranging from a mid-single digit percentage to a mid-teen percentage of net sales, subject to specified reductions, limitations and other adjustments. The Company incurred royalties earned by Allergan under the asset purchase agreement of $0, $1.4 million and $0.1 million during the years ended December 31, 2020, 2019 and 2018, respectively. Agreement and Plan of Merger - Confluence In August 2017, the Company entered into an Agreement and Plan of Merger, pursuant to which it acquired Confluence (the “Confluence Agreement”). In November 2018, a development milestone specified in the Confluence Agreement was achieved, as a result of which the Company paid the former Confluence equity holders $2.5 million in cash and issued 253,208 shares of its common stock with a fair value of $2.2 million. Under the Confluence Agreement, the Company also agreed to pay the former Confluence equity holders aggregate remaining contingent consideration of up to $75.0 million, based upon the achievement of specified regulatory and commercial milestones set forth in the Confluence Agreement. In addition, the Company agreed to pay the former Confluence equity holders future royalty payments calculated as a low single-digit percentage of annual net sales, subject to specified reductions, limitations and other adjustments, until the date that all of the patent rights for that product have expired, as determined on a country-by-country and product-by-product basis or, in specified circumstances, ten years from the first commercial sale of such product. In addition to the payments described above, if the Company sells, licenses or transfers any of the intellectual property acquired from Confluence pursuant to the Confluence Agreement to a third party, the Company will be obligated to pay the former Confluence equity holders a portion of any consideration received from such sale, license or transfer in specified circumstances. License and Collaboration Agreement – Rigel Pharmaceuticals, Inc. In August 2015, the Company entered into an exclusive, worldwide license and collaboration agreement with Rigel Pharmaceuticals, Inc. (“Rigel”) for the development and commercialization of products containing two specified JAK inhibitors, which the Company refers to as ATI-501 and ATI-502. During the year ended December 31, 2019, the Company made a milestone payment of $4.0 million to Rigel upon the achievement of a specified development milestone which is included in research and development expenses on the Company’s consolidated statement of operations. In connection with an amendment of the agreement with Rigel in October 2019, the Company paid Rigel an amendment fee of $1.5 million during the year ended December 31, 2020. |
Retirement Savings Plan
Retirement Savings Plan | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Savings Plan | |
Retirement Savings Plan | 16. Retirement Savings Plan The Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the Company’s board of directors. The Company has elected to match 100% of employee contributions to the 401(k) Plan up to 4% of the employee’s earnings, subject to certain limitations. Company contributions under the 401(k) Plan were $0.4 million, $0.7 million and $0.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. |
Restructuring Charges
Restructuring Charges | 12 Months Ended |
Dec. 31, 2020 | |
Restructuring Charges | |
Restructuring Charges | 17. Restructuring Charges In September 2019, the Company announced the completion of a strategic review and its decision to refocus on its immuno-inflammatory development programs and to actively seek partners for its commercial products. As a result, the Company terminated 63 employees (“terminated employees”) and gave notice to an additional 23 employees (“noticed employees”) who were asked to provide transition services through termination dates ranging between 4 to 10 months from the date notice was given. The terminated employees were entitled to receive cash severance payments as well as cash payments in lieu of sixty days’ notice required by the Worker Adjustment and Retraining Notification Act (the “WARN Act”). The noticed employees were entitled to receive one-time cash severance payments which were not contingent upon providing additional services to the Company. In addition, certain noticed employees earned retention bonuses if they continued to be employed by the Company through certain termination dates. The Company recorded a restructuring charge for the one-time severance and WARN Act payments, which was triggered immediately upon either terminating or giving notice to the impacted employees. The Company expensed the cost of retention bonuses for noticed employees over their respective service terms. During the year ended December 31, 2020, the Company recognized aggregate expenses of $0.1 million and made payments of $0.3 million related to termination benefits for employees. During the year ended December 31, 2019, the Company recognized aggregate expenses of $2.7 million and made payments of $2.3 million related to termination benefits for employees. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations | |
Discontinued Operations | 18. Discontinued Operations Year Ended December 31, (In thousands, except share and per share data) 2020 2019 2018 Revenues: Product sales, net $ 424 $ 13,896 $ 3,940 Total revenue, net 424 13,896 3,940 Costs and expenses: Cost of revenue (excludes amortization) — 4,522 1,969 Research and development 1 503 2,168 Sales and marketing 283 23,112 47,827 General and administrative 1 2,929 2,058 Intangible asset impairment — 27,638 — Amortization of definite-lived intangible — 4,426 552 Total costs and expenses 285 63,130 54,574 Income (loss) from operations 139 (49,234) (50,634) Other income, net — 1,422 — Income (loss) from discontinued operations before income taxes 139 (47,812) (50,634) Income tax benefit — — — Net income (loss) from discontinued operations $ 139 $ (47,812) $ (50,634) Net income (loss) from discontinued operations per share, basic and diluted $ 0.00 $ (1.16) $ (1.54) Weighted average common shares outstanding, basic and diluted 42,539,293 41,323,921 32,909,762 Year Ended December 31, (In thousands) 2020 2019 2018 ESKATA $ — $ 312 $ 2,804 RHOFADE 424 13,584 1,136 Total product sales, net $ 424 $ 13,896 $ 3,940 The Company recorded $0.4 million of RHOFADE product sales, net during the year ended December 31, 2020 due to a reversal of previously accrued product sales-related reserves. December 31, December 31, (In thousands) 2020 2019 Accounts receivable, net $ — $ 4,966 Discontinued operations - current assets $ — $ 4,966 Accounts payable $ 1,175 $ 1,705 Accrued expenses 1,936 2,452 Discontinued operations - current liabilities $ 3,111 $ 4,157 The Company relied on Allergan to distribute RHOFADE on its behalf pursuant to the terms of a transition services agreement. Accounts receivable, net as of December 31, 2019 included $5.0 million related to amounts invoiced by Allergan for sales of RHOFADE. The following table presents certain non-cash items related to discontinued operations, which are included in the Company’s consolidated statement of cash flows: Year Ended December 31, (In thousands) 2020 2019 Depreciation and amortization $ — $ 313 Stock-based compensation expense — 95 Intangible asset impairment charge — 27,638 Loss on disposal of property and equipment — 248 — 28,294 Gain on sale of RHOFADE — 1,670 Total non-cash items $ — $ 26,624 As a result of the Company’s decision to actively seek partners for its commercial products, the Company terminated the finance leases for its fleet vehicles and recognized a loss on lease termination of $0.2 million in the year ended December 31, 2019, which is included in other income, net in the Company’s consolidated statement of operations. During the year ended December 31, 2019, the Company performed an impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company’s impairment analysis, which primarily utilized a third-party indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27.6 million to adjust the carrying value of the RHOFADE intangible asset to its net realizable value. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2020 | |
Segment Information | |
Segment Information | 19. Segment Information The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services to clients through Confluence, the Company’s wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. Corporate and other includes general and administrative expenses as well as eliminations of intercompany transactions. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States. The Company’s results of operations by segment for the years ended December 31, 2020, 2019 and 2018 are summarized in the tables below: (In thousands) Contract Corporate Total Year Ended December 31, 2020 Therapeutics Research and Other Company Total revenue $ 696 $ 13,319 $ (7,533) $ 6,482 Cost of revenue — 12,228 (7,095) 5,133 Research and development 32,170 — (439) 31,731 General and administrative — 2,794 17,736 20,530 Loss from operations $ (31,474) $ (1,703) $ (17,735) $ (50,912) Income (loss) from discontinued operations $ 140 $ — $ (1) $ 139 Contract Corporate Total Year Ended December 31, 2019 Therapeutics Research and Other Company Total revenue $ — $ 16,824 $ (12,597) $ 4,227 Cost of revenue — 16,253 (12,198) 4,055 Research and development 65,298 — (399) 64,899 General and administrative 620 2,738 24,469 27,827 Goodwill impairment 18,504 — — 18,504 Loss from operations $ (84,422) $ (2,167) $ (24,469) $ (111,058) Loss from discontinued operations $ (46,305) $ — $ (1,507) $ (47,812) Contract Corporate Total Year Ended December 31, 2018 Therapeutics Research and Other Company Revenue, net $ 1,500 $ 13,135 $ (8,484) $ 6,151 Cost of revenue — 11,399 (7,070) 4,329 Research and development 62,255 — (1,414) 60,841 General and administrative 160 2,181 23,420 25,761 Loss from operations $ (60,915) $ (445) $ (23,420) $ (84,780) Loss from discontinued operations $ (48,576) $ — $ (2,058) $ (50,634) Intersegment Revenue Revenue for the contract research segment included $7.5 million, $12.6 million and $8.5 million for services performed on behalf of the therapeutics segment for the years ended December 31, 2020, 2019 and 2018, respectively. All intersegment revenue has been eliminated in the Company’s consolidated statement of operations. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2020 | |
Legal Proceedings | |
Legal Proceedings | 20. Legal Proceedings Securities Class Action On July 30, 2019, plaintiff Linda Rosi (“Rosi”) filed a putative class action complaint captioned Rosi v. Aclaris Therapeutics, Inc., et al. On September 5, 2019, an additional plaintiff, Robert Fulcher (“Fulcher”), filed a substantially identical putative class action complaint captioned Fulcher v. Aclaris Therapeutics, Inc., et al. On November 6, 2019, the court consolidated the Rosi and Fulcher actions (together, the “Consolidated Securities Action”) and appointed Fulcher “lead plaintiff” for the putative class. On January 24, 2020, Fulcher filed a consolidated amended complaint in the Consolidated Securities Action, naming two additional executive officers as defendants, extending the putative class period to August 12, 2019, and adding allegations concerning, among other things, alleged statements and omissions throughout the putative class period concerning ESKATA’s risks, tolerability and effectiveness. The defendants filed a motion to dismiss the consolidated amended complaint on April 17, 2020. Fulcher filed an opposition to the defendants’ motion on June 15, 2020, and the defendants filed a reply to such opposition on August 4, 2020. Oral argument on the pending motion to dismiss is scheduled for February 25, 2021. The motion remains under judicial consideration. The Company and the other defendants dispute plaintiffs’ claims in the Consolidated Securities Action and intend to defend the matter vigorously. At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter. Stockholder Derivative Action On November 15, 2019, plaintiff Keith Allred (“Allred”) filed a derivative stockholder complaint captioned Allred v. Walker et al. On November 25, 2019, an additional plaintiff, Bruce Brown (“Brown”), filed a substantially identical complaint captioned Brown v. Walker et al. On December 12, 2019, the court consolidated the Allred and Brown actions under the caption In re Aclaris Therapeutics, Inc. Derivative Litigation The defendants dispute plaintiffs’ claims in the Consolidated Derivative Action and intend to defend the matter vigorously. At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter. Product Liability Lawsuit On December 18, 2020, plaintiff Daurie Mancini filed an amended complaint under the caption Daurie Mancini v. Aclaris Therapeutics, Inc. et al The Company disputes plaintiff’s claims and intends to defend the matter vigorously. At this time, the Company cannot reasonably predict the outcome or potential loss, if any, that could result from this matter. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events January 2021 Public Offering In January 2021, the Company closed a public offering in which it sold 6,306,271 shares of common stock at a price to the public of $17.50 per share, for aggregate gross proceeds of $110.4 million. The Company paid underwriting discounts and commissions of $6.6 million, and also incurred expenses of $0.3 million in connection with the offering. As a result, the net offering proceeds received by the Company, after deducting underwriting discounts, commissions and offering expenses, were $103.5 million. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”). The consolidated financial statements of the Company include the accounts of the operating parent company, Aclaris Therapeutics, Inc., and its wholly-owned subsidiaries, Confluence, ATIL, and Vixen (for periods prior to its dissolution in 2018). All significant intercompany transactions have been eliminated. Based upon the Company’s revenue, the Company believes that gross profit does not provide a meaningful measure of profitability and, therefore, has not included a line item for gross profit on the consolidated statement of operations. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. |
Discontinued Operations | Discontinued Operations In September 2019, the Company announced the completion of a strategic review and its decision to refocus its resources on its immuno-inflammatory development programs and to actively seek partners for its commercial products. The Company also announced a plan to terminate 86 employees (see Note 17). |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, research and development expenses, contingent consideration and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The COVID-19 pandemic has resulted in a global slowdown in economic activity. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require an update to its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. Actual results could differ from the Company’s estimates. |
Revenue Recognition | Revenue Recognition The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Product Sales, net The Company sold RHOFADE and ESKATA (hydrogen peroxide) topical solution, 40% (w/w) (“ESKATA”), its non-marketed product approved by the U.S. Food and Drug Administration, The Company recognized revenue from product sales at the point the Customer obtained control of the product, which generally occurred upon delivery. The Company also included estimates of variable consideration in the same period revenue was recognized. Components of variable consideration include trade discounts and allowances, product returns, government rebates, discounts and rebates, other incentives such as patient co-pay assistance, and other fee for service amounts. Variable consideration was recorded on the consolidated balance sheet as either a reduction of accounts receivable, if payable to a Customer, or as a current liability, if payable to a third party other than a Customer. The Company considered all relevant information when estimating variable consideration such as contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The amount of net revenue that can be recognized is constrained by estimates of variable consideration which are included in the transaction price. Payment terms with Customers did not exceed one year and, therefore, the Company did not account for a financing component in its arrangements. The Company expensed incremental costs Trade Discounts and Allowances Government and Payor Rebates Other Incentives Product Returns was recognized. The Company’s estimate for product returns was based upon available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel. There is no return liability associated with sales of ESKATA as the Company had a no returns policy for ESKATA when it was commercialized. Contract Research The Company earns contract research revenue from the provision of laboratory services to clients through Confluence, its wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis and are generally billed on a monthly basis in arrears for services rendered. Revenue related to these contracts is generally recognized as the laboratory services are performed, based upon the rates specified in the contracts. Under ASC Topic 606, the Company elected to apply the “right to invoice” practical expedient when recognizing contract research revenue and as such, recognizes revenue in the amount which it has the right to invoice. ASC Topic 606 also provides an optional exemption, which the Company has elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient. The Company also received revenue from grants under the Small Business Innovation Research program of the National Institutes of Health, or NIH. During the year ended December 31, 2018, the Company had two active grants from NIH related to early-stage research. There are no remaining funds available under the grants. Other Revenue Licenses of Intellectual Property Milestone Payments |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all short-term, highly liquid investments with original maturities of three months or less at acquisition date to be cash equivalents. Cash equivalents, which have consisted of money market accounts and commercial paper, are stated at fair value. Total cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows as of December 31, 2020 and 2019 includes $0 and $1.8 million, respectively, of restricted cash, consisting of funds in escrow pursuant to the asset purchase agreement with EPI Health, LLC (“EPI Health”) (see Note 15). |
Marketable Securities | Marketable Securities Marketable securities with original maturities of greater than three months and remaining maturities of less than one year from the balance sheet date are classified as short-term. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long-term. The Company classifies all of its marketable securities as available-for-sale securities. The Company’s marketable securities are measured and reported at fair value using either quoted prices in active markets for identical securities or quoted prices in markets that are not active for identical or similar securities. Unrealized gains and losses are reported as a separate component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses, if any, are included in other income (expense), net within the consolidated statement of operations and comprehensive loss. If any adjustment to fair value reflects a decline in the value of the investment, the Company considers available evidence to evaluate the extent to which the decline is “other than temporary” and reduces the investment to fair value through a charge to the statement of operations and comprehensive loss. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the useful life of the asset. Computer equipment is depreciated over three years. Manufacturing and laboratory |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its fair value, determined based on discounted cash flows. |
Intangible Assets | Intangible Assets Intangible assets include both definite-lived and indefinite-lived assets. Definite-lived intangible assets consist of a drug discovery platform the Company acquired through the acquisition of Confluence, and prior to the disposition in 2019, also included the intellectual property rights related to RHOFADE. Definite-lived intangible assets are amortized over their estimated useful life based on the pattern over which the intangible assets are consumed or otherwise used up. If that pattern cannot be reliably determined, the straight-line method of amortization is used. Indefinite-lived intangible assets consist of an in-process research and development (“IPR&D”) drug candidate acquired through the acquisition of Confluence. IPR&D assets are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. The cost of IPR&D is either amortized over its estimated useful life beginning when the underlying drug candidate is approved and launched commercially, or expensed immediately if development of the drug candidate is abandoned or otherwise impaired. Definite-lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Indefinite-lived intangible assets are tested for impairment at least annually, which the Company performs during the fourth quarter, or when indicators of an impairment are present. The Company recognizes impairment losses when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. During the year ended December 31, 2019, the Company performed an impairment analysis of the RHOFADE intangible asset due to its decision to discontinue commercial operations and actively seek a commercialization partner for RHOFADE. The Company’s impairment analysis, which primarily utilized a market-participant’s indication of fair value, resulted in a fair value for the RHOFADE intangible asset which was less than its carrying value. As a result, the Company recorded an impairment charge of $27.6 million, which is included in discontinued operations on the consolidated statement of operations, to adjust the carrying value of the RHOFADE intangible asset to its net realizable value (see Note 3). During the years ended December 31, 2020 and 2019, the Company did not record an IPR&D impairment. |
Goodwill | Goodwill Goodwill is not amortized, but rather is subject to testing for impairment at least annually, which the Company performs either during the fourth quarter or when indicators of an impairment are present. The Company considers each of its operating segments, therapeutics and contract research, to be a reporting unit since this is the lowest level for which discrete financial information is available. The impairment test performed by the Company is a qualitative assessment based upon the then current facts and circumstances related to operations of the reporting unit. If the qualitative assessment indicates an impairment may be present, the Company would perform the required quantitative analysis and an impairment charge would be recognized to the extent that the estimated fair value of the reporting unit is less than its carrying amount. However, any loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. During the year ended December 31, 2019, the Company performed an impairment analysis due to a decline in its stock price, which was considered a triggering event to evaluate goodwill for impairment. The Company’s impairment analysis, using a market approach, noted that its stock price, including a reasonable control premium, resulted in a fair value for the therapeutics reporting unit which was less than its carrying value. As a result, the Company recorded an impairment charge of $18.5 million. |
Leases | Leases Leases represent a company’s right to use an underlying asset and a corresponding obligation to make payments to a lessor for the right to use those assets. The Company evaluates leases at their inception to determine if they are an operating lease or a finance lease. A lease is accounted for as a finance lease if it meets one of the following five criteria: the lease has a purchase option that is reasonably certain of being exercised, the present value of the future cash flows are substantially all of the fair market value of the underlying asset, the lease term is for a significant portion of the remaining economic life of the underlying asset, the title to the underlying asset transfers at the end of the lease term, or if the underlying asset is of such a specialized nature that it is expected to have no alternative uses to the lessor at the end of the term. Leases that do not meet the finance lease criteria are accounted for as an operating lease. The Company recognizes assets and liabilities for leases at their inception based upon the present value of all payments due under the lease. The Company uses an implicit interest rate to determine the present value of finance leases, and its incremental borrowing rate to determine the present value of operating leases. The Company determines incremental borrowing rates by referencing collateralized borrowing rates for debt instruments with terms similar to the respective lease. The Company recognizes expense for operating and finance leases on a straight-line basis over the term of each lease, and interest expense related to finance leases is recognized over the lease term based on the effective interest method. The Company includes estimates for any residual value guarantee obligations under its leases in lease liabilities recorded on its consolidated balance sheet. Right-of-use assets are included in other assets and property and equipment, net on the Company’s consolidated balance sheet for operating and finance leases, respectively. Obligations for lease payments are included in current portion of lease liabilities and other liabilities on the Company’s consolidated balance sheet for both operating and finance leases. |
Contingent Consideration | Contingent Consideration The Company initially recorded a contingent consideration liability related to future potential payments resulting from the acquisition of Confluence based upon the achievement of certain development, regulatory and commercial milestones, as well as future projected sales performance, at its estimated fair value on the date of acquisition. The ultimate amount of future payments, if any, is based on criteria such as sales performance and the achievement of certain regulatory and sales milestones. The Company estimates the fair value of the contingent consideration liability related to the achievement of regulatory milestones by assigning an achievement probability to each potential milestone and discounting the associated cash payment to its present value using a credit-risk-adjusted interest rate. The Company estimates the fair value of the contingent consideration liability associated with sales milestones and royalties by estimating future sales levels, assigning an achievement probability and discounting the associated cash payments to their present values using a risk-adjusted rate of return. Significant assumptions used in the Company’s estimates include the probability of success of both achieving regulatory milestones and commencing commercialization, which are based upon an asset’s current stage of development and ranged between 4% and 15%. The Company evaluates fair value estimates of contingent consideration liabilities on a quarterly basis. Any change in fair value reflects new information about the likelihood of the payment of the contingent consideration and the passage of time. For example, if the timing of the development of an acquired drug candidate, or the size of potential commercial opportunities related to an acquired drug candidate, differ from the Company’s assumptions, then the fair value of contingent consideration would be adjusted accordingly. Future changes in the fair value of the contingent consideration, if any, will be recorded as income or expense in the Company’s consolidated statement of operations and comprehensive loss. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include salaries, stock-based compensation and benefits of employees, fees paid under licensing agreements, fees paid under a third party assignment agreement and other operational costs related to the Company’s research and development activities, including depreciation expenses and the cost of research and development contracts which the Company has entered into with outside vendors to conduct both preclinical studies and clinical trials. Significant judgment and estimates are made in determining the amount of research and development costs recognized in each reporting period. The Company analyzes the progress of its preclinical studies and clinical trials, completion of milestone events, invoices received and contracted costs when estimating research and development costs. Actual results could differ from the Company’s estimates. The Company’s historical estimates for research and development costs have not been materially different from the actual costs. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the compensation expense of stock-based awards granted to employees and directors using the grant date fair value of the award. The Company has issued stock options and restricted stock unit (“RSU”) awards with service-based vesting conditions, as well as with performance-based vesting conditions. The Company has not issued awards that include market-based conditions. For service-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. For performance-based awards the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period beginning in the period that it becomes probable the performance conditions will occur. At each balance sheet date, the Company evaluates whether any performance conditions related to a performance-based award have changed. The effect of any change in performance conditions would be recognized as a cumulative catch-up adjustment in the period such change occurs, and any remaining unrecognized compensation expense would be recognized on a straight-line basis over the remaining requisite service period. The impact of forfeitures is recognized in the period in which they occur. The Company measures the compensation expense of stock-based awards granted to consultants using the grant date fair value of the award. The Company recognizes compensation expense over the period during which services are rendered by the consultant. The Company classifies stock-based compensation expense in its statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility based on the historical volatility of a set of peer companies, which are publicly traded, and expects to continue to do so until it has adequate historical data regarding the volatility of its own publicly-traded stock price. The expected term of the Company’s stock options has been determined using the “simplified” method for awards that qualify as “plain vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The Company uses an expected dividend yield of zero based on the fact that the Company has never paid cash dividends and does not expect to pay cash dividends in the future. The fair value of each RSU is measured using the closing price of the Company’s common stock on the date of grant. |
Patent Costs | Patent Costs All patent related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. |
Foreign Currency Translation | Foreign Currency Translation The reporting currency of the Company is the U.S. Dollar. The functional currency of ATIL, the Company’s wholly-owned subsidiary, is the British Pound. Assets and liabilities of ATIL are translated into U.S. Dollars based on exchange rates at the end of each reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. Gains and losses arising from the translation of assets and liabilities are included as a component of accumulated other comprehensive loss within the Company’s consolidated balance sheet. Gains and losses resulting from foreign currency transactions are reflected within the Company’s consolidated statement of operations. The Company has not utilized foreign currency hedging strategies to mitigate the effect of its foreign currency exposure. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those with stockholders. Comprehensive loss is comprised of net loss, foreign currency translation adjustments and unrealized gains (losses) on marketable securities. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period, plus the weighted average number of potential shares of common stock from the assumed exercise of stock options and warrants and the assumed vesting of RSUs, if dilutive. Since the Company was in a net loss position, basic and diluted net loss per share was the same for each of the periods presented. |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or 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. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s cash equivalents, marketable securities and contingent consideration are carried at fair value, determined according to the fair value hierarchy described above. The carrying value of the Company’s accounts payable and accrued expenses approximate fair value due to the short-term nature of these liabilities. The carrying value of the Company’s debt approximates fair value due to the debt bearing a variable interest rate which is reflective of current market rates. |
Concentration of Credit Risk and of Significant Suppliers | Concentration of Credit Risk and of Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company holds all cash, cash equivalents and marketable securities balances at one accredited financial institution, in amounts that exceed federally insured limits. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is dependent on third-party manufacturers to supply drug product, including all underlying components, for its research and development activities, including preclinical and clinical testing. These activities could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or other components. |
Segment Reporting | Segment Reporting Operating segments are components of a company for which separate financial information is available and evaluated regularly by the chief operating decision maker in assessing performance and deciding how to allocate resources. The Company has two reportable segments, therapeutics and contract research. The therapeutics segment is focused on identifying and developing innovative therapies to address significant unmet needs for immuno-inflammatory diseases. The contract research segment earns revenue from the provision of laboratory services to clients through Confluence, the Company’s wholly-owned subsidiary. Contract research revenue is generally evidenced by contracts with clients which are on an agreed upon fixed-price, fee-for-service basis. The Company does not report balance sheet information by segment since it is not reviewed by the chief operating decision maker, and all of the Company’s tangible assets are held in the United States. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In November 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606, which, among other things, provides guidance on how to assess whether certain collaborative arrangement transactions should be accounted for under Topic 606. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40). ASU 2018-15 requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The FASB developed the amendments to ASC 820 as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to financial statements by focusing on requirements that clearly communicate the most important information to users of the financial statements. This update eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some of the existing disclosure requirements. The Company adopted this standard as of January 1, 2020, the impact of which on its consolidated financial statements was not significant. In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718). The amendments in this ASU expand the scope of Topic 718 to include stock-based compensation arrangements with nonemployees except for specific guidance on option pricing model inputs and cost attribution. The Company adopted this standard as of January 1, 2019, the impact of which on its consolidated financial statements was not significant. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, and 2018-11, Targeted Improvements, which included a number of technical corrections and improvements, including additional options for transition. The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The amendments in ASU 2016-02 must be applied to all leases existing at the date a company initially applies the standard. The Company adopted the new standard as of January 1, 2019, using the effective date as the date of its initial application, and used the modified retrospective approach. The adoption of ASU 2016-02 resulted in the Company recording additional assets and liabilities of $2.1 million and $2.3 million, respectively, upon adoption on January 1, 2019. The adoption of ASU 2016-02 did not have a material impact on the Company’s consolidated statement of operations and comprehensive loss or cash flows. |
RHOFADE (Tables)
RHOFADE (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
RHOFADE | |
RHOFADE | |
Schedule of fair value of assets acquired | The following table summarizes the fair value of assets acquired in the acquisition of RHOFADE: (In thousands) Inventory $ 893 Intangible assets, net 66,229 Total assets acquired $ 67,122 |
Fair Value of Financial Asset_2
Fair Value of Financial Assets and Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value of Financial Assets and Liabilities | |
Schedule of assets and liabilities measured at fair value on a recurring basis | December 31, 2020 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 14,955 $ 1,500 $ — $ 16,455 Marketable securities — 32,068 — 32,068 Total assets $ 14,955 $ 33,568 $ — $ 48,523 Liabilities: Acquisition-related contingent consideration $ — $ — $ 4,061 $ 4,061 Total liabilities $ — $ — $ 4,061 $ 4,061 December 31, 2019 (In thousands) Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 21,277 $ — $ — $ 21,277 Marketable securities — 39,078 — 39,078 Total assets $ 21,277 $ 39,078 $ — $ 60,355 Liabilities: Acquisition-related contingent consideration $ — $ — $ 1,668 $ 1,668 Total liabilities $ — $ — $ 1,668 $ 1,668 |
Schedule of the fair value of available for sale marketable securities | December 31, 2020 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Commercial paper $ 20,483 $ — $ — $ 20,483 Asset-backed debt securities 4,036 1 — 4,037 U.S. government agency debt securities 7,547 1 — 7,548 Total marketable securities $ 32,066 $ 2 $ — $ 32,068 December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair (In thousands) Cost Gain Loss Value Marketable securities: Corporate debt securities $ 7,815 $ 2 $ — $ 7,817 Commercial paper 15,129 — — 15,129 Asset-backed debt securities 8,004 4 — 8,008 U.S. government agency debt securities 8,126 1 (3) 8,124 Total marketable securities $ 39,074 $ 7 $ (3) $ 39,078 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | December 31, December 31, (In thousands) 2020 2019 Computer equipment $ 1,197 $ 1,315 Finance lease right-of-use assets — 435 Lab equipment 1,340 1,250 Furniture and fixtures 617 647 Leasehold improvements 1,123 889 Property and equipment, gross 4,277 4,536 Accumulated depreciation (2,623) (2,066) Property and equipment, net $ 1,654 $ 2,470 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets | |
Schedule of intangible assets | Gross Cost Accumulated Amortization Remaining December 31, December 31, December 31, December 31, (In thousands, except years) Life (years) 2020 2019 2020 2019 Other intangible assets 6.6 751 751 257 181 IPR&D na 6,629 6,629 — — Total intangible assets $ 7,380 $ 7,380 $ 257 $ 181 |
Schedule of estimated future amortization expenses | Year Ending (In thousands) December 31, 2021 $ 75 2022 75 2023 75 2024 75 2025 75 Thereafter 119 Total $ 494 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, December 31, (In thousands) 2020 2019 Employee compensation expenses $ 3,971 $ 3,321 Research and development expenses 761 2,857 Other 1,174 1,543 Total accrued expenses $ 5,906 $ 7,721 |
Stock-Based Awards (Tables)
Stock-Based Awards (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stock-Based Awards | |
Assumptions used to determine fair value of stock options granted | Year Ended December 31, 2020 2019 2018 Risk-free interest rate 0.87 % 2.27 % 2.66 % Expected term (in years) 6.1 6.2 6.3 Expected volatility 85.19 % 99.36 % 96.78 % Expected dividend yield 0 % 0 % 0 % |
Summary of stock option activity | Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic (In thousands, except share and per share data and years) of Shares Price Term Value (in years) Outstanding as of December 31, 2017 3,328,757 $ 20.69 8.3 $ 19,812 Granted 1,459,800 20.97 Exercised (59,450) 9.70 724 Forfeited and cancelled (447,026) 24.62 Outstanding as of December 31, 2018 4,282,081 $ 20.53 7.9 $ 2,404 Granted 44,500 5.75 Exercised (142,779) 1.33 112 Forfeited and cancelled (1,081,581) 23.01 Outstanding as of December 31, 2019 3,102,221 $ 20.33 6.6 $ 148 Granted 734,800 1.30 Exercised (53,737) 1.30 145 Forfeited and cancelled (911,786) 22.41 Outstanding as of December 31, 2020 2,871,498 $ 15.16 6.8 $ 4,890 Options vested and expected to vest as of December 31, 2020 2,871,498 $ 15.16 6.8 $ 4,890 Options exercisable as of December 31, 2020 1,844,197 $ 18.92 5.8 $ 1,424 |
Summary of restricted stock units activity | Weighted Average Grant Date Aggregate Number Fair Value Intrinsic (In thousands, except share and per share data) of Shares Per Share Value Outstanding as of December 31, 2017 283,553 $ 27.02 Granted 552,060 19.03 Vested (140,497) 27.22 $ 2,158 Forfeited and cancelled (68,709) 23.65 Outstanding as of December 31, 2018 626,407 $ 20.30 Granted 3,650,942 3.56 Vested (173,444) 21.31 $ 799 Forfeited and cancelled (510,990) 10.63 Outstanding as of December 31, 2019 3,592,915 $ 4.62 Granted 1,168,805 1.36 Vested (1,804,429) 3.33 $ 2,607 Forfeited and cancelled (713,134) 4.77 Outstanding as of December 31, 2020 2,244,157 $ 3.83 |
Stock-based compensation expense | Year Ended December 31, (In thousands) 2020 2019 2018 Cost of revenue $ 946 $ 703 $ 766 Research and development 2,919 5,091 6,480 General and administrative 7,342 10,288 9,317 Total stock-based compensation expense $ 11,207 $ 16,082 $ 16,563 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Net Loss per Share | |
Basic and diluted net loss per share | Year Ended December 31, (In thousands, except for share and per share data) 2020 2019 2018 Numerator: Net loss $ (51,015) $ (161,354) $ (132,738) Denominator: Weighted average shares of common stock outstanding, basic and diluted 42,539,293 41,323,921 32,909,762 Net loss per share, basic and diluted $ (1.20) $ (3.90) $ (4.03) |
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | December 31, 2020 2019 2018 Options to purchase common stock 2,871,498 3,102,221 4,282,081 Restricted stock unit awards 2,244,157 3,592,915 626,407 Warrants 460,251 — — Total potential shares of common stock 5,575,906 6,695,136 4,908,488 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Schedule of lease expense | Year Ended December 31, (In thousands) 2020 2019 Operating lease expense $ 1,013 $ 808 Finance Leases: Amortization of right-to-use assets $ 113 $ 443 Interest expense 5 87 Total finance lease expenses $ 118 $ 530 |
Schedule of supplemental balance sheet information related to operating leases | December 31, December 31, (In thousands) 2020 2019 Operating Leases: Gross cost $ 5,240 $ 5,213 Accumulated amortization (1,111) (480) Other assets $ 4,129 $ 4,733 Current portion of lease liabilities $ 603 $ 526 Other liabilities 2,894 3,548 Total operating liabilities $ 3,497 $ 4,074 |
Schedule of supplemental balance sheet information related to finance leases | (In thousands) December 31, December 31, Finance Leases: 2020 2019 Property and equipment, gross $ — $ 435 Accumulated depreciation — (322) Property and equipment, net $ — $ 113 Current portion of lease liabilities $ — $ 111 Other liabilities — 21 Total finance $ — $ 132 |
Schedule of future maturities lease liabilities under operating leases | Year Ended (In thousands, except for years and percentages) December 31, Supplemental Cash Flow Lease Information: 2020 2019 Operating cash flows from operating leases $ 907 $ 755 Operating cash flows from finance leases $ 5 $ 87 Financing cash flows from finance leases $ 137 $ 523 Leased assets obtained in exchange for new operating lease liabilities $ — $ 3,060 Weighted-Average Remaining Lease Term (in years): Operating leases 6.0 6.8 Finance leases — 0.9 Weighted-Average Discount Rate: Operating leases 10.1 % 10.1% Finance leases 10.0 % 10.0% |
Schedule of future maturities lease liabilities under finance leases | (In thousands) Operating Year Ending December 31, Leases 2021 $ 924 2022 949 2023 866 2024 343 2025 352 Thereafter 1,301 Total undiscounted lease payments 4,735 Less: unrecognized interest (1,238) Total lease liability $ 3,497 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of loss before income taxes by jurisdiction | Year Ended December 31, (In thousands) 2020 2019 2018 U.S. operations $ (51,215) $ (161,192) $ (132,473) Foreign operations 18 (162) (265) Loss before income taxes $ (51,197) $ (161,354) $ (132,738) |
Reconciliation of statutory to effective rate | Year Ended December 31, 2020 2019 2018 Federal statutory income tax rate (21.0) % (21.0) % (21.0) % State taxes, net of federal benefit (7.5) (6.6) (3.5) Research and development tax credits (2.6) (1.5) (2.1) Permanent differences 2.6 3.0 0.8 Change in deferred tax asset valuation allowance 28.1 26.2 25.7 Effective income tax rate (0.4) % 0.1 % (0.1) % |
Schedule of deferred tax assets and liabilities | December 31, (In thousands) 2020 2019 Deferred tax assets: Net operating loss carryforwards $ 101,277 $ 90,298 Capitalized start-up costs 6,509 6,904 Research and development tax credit carryforwards 8,732 7,417 Capitalized research and development expense 4,611 4,456 Stock‑based compensation expense 14,526 12,973 Accrued compensation 745 588 Lease liabilities 888 945 Other 602 618 Total deferred tax assets 137,890 124,199 Deferred tax liabilities: Property and equipment (209) (206) Intangible asset (2,033) (1,741) Right-to-use assets (1,026) (1,235) Other (430) (600) Total deferred tax liabilities (3,698) (3,782) Valuation allowance (134,559) (120,966) Deferred tax liabilities, net $ (367) $ (549) |
Changes in deferred tax asset valuation allowance | Year Ended December 31, (In thousands) 2020 2019 2018 Valuation allowance at beginning of year $ (120,966) $ (80,985) $ (46,878) Decreases recorded as benefit to income tax provision — — — Decreases recorded to opening balance sheet 58 — — Increases recorded to income tax provision (13,651) (39,981) (34,107) Valuation allowance as of end of year $ (134,559) $ (120,966) $ (80,985) |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Discontinued Operations | |
Schedule of discontinued operations | Year Ended December 31, (In thousands, except share and per share data) 2020 2019 2018 Revenues: Product sales, net $ 424 $ 13,896 $ 3,940 Total revenue, net 424 13,896 3,940 Costs and expenses: Cost of revenue (excludes amortization) — 4,522 1,969 Research and development 1 503 2,168 Sales and marketing 283 23,112 47,827 General and administrative 1 2,929 2,058 Intangible asset impairment — 27,638 — Amortization of definite-lived intangible — 4,426 552 Total costs and expenses 285 63,130 54,574 Income (loss) from operations 139 (49,234) (50,634) Other income, net — 1,422 — Income (loss) from discontinued operations before income taxes 139 (47,812) (50,634) Income tax benefit — — — Net income (loss) from discontinued operations $ 139 $ (47,812) $ (50,634) Net income (loss) from discontinued operations per share, basic and diluted $ 0.00 $ (1.16) $ (1.54) Weighted average common shares outstanding, basic and diluted 42,539,293 41,323,921 32,909,762 Year Ended December 31, (In thousands) 2020 2019 2018 ESKATA $ — $ 312 $ 2,804 RHOFADE 424 13,584 1,136 Total product sales, net $ 424 $ 13,896 $ 3,940 The Company recorded $0.4 million of RHOFADE product sales, net during the year ended December 31, 2020 due to a reversal of previously accrued product sales-related reserves. December 31, December 31, (In thousands) 2020 2019 Accounts receivable, net $ — $ 4,966 Discontinued operations - current assets $ — $ 4,966 Accounts payable $ 1,175 $ 1,705 Accrued expenses 1,936 2,452 Discontinued operations - current liabilities $ 3,111 $ 4,157 The Company relied on Allergan to distribute RHOFADE on its behalf pursuant to the terms of a transition services agreement. Accounts receivable, net as of December 31, 2019 included $5.0 million related to amounts invoiced by Allergan for sales of RHOFADE. The following table presents certain non-cash items related to discontinued operations, which are included in the Company’s consolidated statement of cash flows: Year Ended December 31, (In thousands) 2020 2019 Depreciation and amortization $ — $ 313 Stock-based compensation expense — 95 Intangible asset impairment charge — 27,638 Loss on disposal of property and equipment — 248 — 28,294 Gain on sale of RHOFADE — 1,670 Total non-cash items $ — $ 26,624 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Information | |
Summary of results of operations by segment | (In thousands) Contract Corporate Total Year Ended December 31, 2020 Therapeutics Research and Other Company Total revenue $ 696 $ 13,319 $ (7,533) $ 6,482 Cost of revenue — 12,228 (7,095) 5,133 Research and development 32,170 — (439) 31,731 General and administrative — 2,794 17,736 20,530 Loss from operations $ (31,474) $ (1,703) $ (17,735) $ (50,912) Income (loss) from discontinued operations $ 140 $ — $ (1) $ 139 Contract Corporate Total Year Ended December 31, 2019 Therapeutics Research and Other Company Total revenue $ — $ 16,824 $ (12,597) $ 4,227 Cost of revenue — 16,253 (12,198) 4,055 Research and development 65,298 — (399) 64,899 General and administrative 620 2,738 24,469 27,827 Goodwill impairment 18,504 — — 18,504 Loss from operations $ (84,422) $ (2,167) $ (24,469) $ (111,058) Loss from discontinued operations $ (46,305) $ — $ (1,507) $ (47,812) Contract Corporate Total Year Ended December 31, 2018 Therapeutics Research and Other Company Revenue, net $ 1,500 $ 13,135 $ (8,484) $ 6,151 Cost of revenue — 11,399 (7,070) 4,329 Research and development 62,255 — (1,414) 60,841 General and administrative 160 2,181 23,420 25,761 Loss from operations $ (60,915) $ (445) $ (23,420) $ (84,780) Loss from discontinued operations $ (48,576) $ — $ (2,058) $ (50,634) |
Organization and Nature of Bu_2
Organization and Nature of Business (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Jan. 31, 2021 | Aug. 31, 2020 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Production information | |||||
Cash, cash equivalents and marketable securities | $ 54,100 | ||||
Accumulated deficit | $ 504,542 | $ 453,527 | |||
Purchase Agreement | Subsequent event | Public Offering | |||||
Production information | |||||
Common stock, sold | 6,306,271 | ||||
Proceeds from common stock | $ 103,500 | ||||
Lincoln Park Capital Fund, LLC | Purchase Agreement | |||||
Production information | |||||
Common stock sell | $ 15,000 | ||||
Purchase agreement term | 36 months | ||||
Common stock, sold | 2,111,170 | ||||
Proceeds from common stock | $ 7,700 | ||||
Term Loan Facility | |||||
Production information | |||||
Loan borrowed | $ 11,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2019employee | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Summary Of Accounting Policies [Line Items] | |||
Number of employees to be terminated | employee | 86 | ||
Revenue Recognition | |||
Revenue, Practical Expedient, Financing Component [true false] | false | ||
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] | true | ||
Maximum | |||
Cash, Cash Equivalents and Restricted Cash | |||
Probability of success of achieving regulatory and sales milestones | 15.00% | ||
Minimum | |||
Cash, Cash Equivalents and Restricted Cash | |||
Probability of success of achieving regulatory and sales milestones | 4.00% | ||
EPI Health, LLC | |||
Cash, Cash Equivalents and Restricted Cash | |||
Cash deposited in escrow | $ | $ 0 | $ 1.8 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Computer equipment | |
Summary Of Accounting Policies [Line Items] | |
Depreciation period (in years) | 3 years |
Manufacturing equipment | |
Summary Of Accounting Policies [Line Items] | |
Depreciation period (in years) | 5 years |
Lab equipment | |
Summary Of Accounting Policies [Line Items] | |
Depreciation period (in years) | 5 years |
Furniture and fixtures | |
Summary Of Accounting Policies [Line Items] | |
Depreciation period (in years) | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Intangible Assets (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
RHOFADE | |
Disaggregation of Revenue [Line Items] | |
Write-down of equipment held for sale | $ 27.6 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Summary of Significant Accounting Policies | |
Goodwill impairment charge | $ 18,504 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Stock-Based Compensation and Concentration of Credit Risk and of Significant Suppliers (Details) - item | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Number of financial institutions holding entity funds | 1 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2020segment | |
Summary of Significant Accounting Policies | |
Number of operating segments | 2 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Recent Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease liability | $ 3,497 | $ 4,074 | |
Adjustment | ASU 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
ROU assets | $ 2,100 | ||
Lease liability | $ 2,300 |
RHOFADE - Amount Paid for Asset
RHOFADE - Amount Paid for Assets Acquired (Details) $ in Millions | 1 Months Ended |
Oct. 31, 2019USD ($) | |
Business Acquisition [Line Items] | |
Percentage of payments received in connection with license or sublicense of assets transferred | 25.00% |
EPI Health, LLC | |
Business Acquisition [Line Items] | |
Upfront payment made | $ 35.2 |
Potential milestones payable | $ 20 |
Period of royalty payment from first commercial sale | 10 years |
RHOFADE - Summary of Fair Value
RHOFADE - Summary of Fair Value Assets Acquired (Details) - APA - Nonrecurring - Allergan $ in Thousands | Nov. 30, 2018USD ($) |
Business Acquisition [Line Items] | |
Inventory | $ 893 |
Intangible assets, net | 66,229 |
Total assets acquired | $ 67,122 |
Fair Value of Financial Asset_3
Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Assets: | |||
Marketable securities | $ 32,068 | $ 39,078 | |
Liabilities: | |||
Transfers from Level 1 to Level 2 | 0 | 0 | |
Transfers from Level 2 to Level 1 | 0 | 0 | |
Transfers into or out of Level 3 | 0 | 0 | |
Change in fair value of contingent consideration | 2,393 | 734 | $ 1,272 |
Confluence | |||
Liabilities: | |||
Change in fair value of contingent consideration | 2,400 | 700 | |
Recurring | |||
Assets: | |||
Cash equivalents | 16,455 | 21,277 | |
Marketable securities | 32,068 | 39,078 | |
Total assets measured at fair value | 48,523 | 60,355 | |
Liabilities: | |||
Acquisition-related contingent consideration | 4,061 | 1,668 | |
Total liabilities measured at fair value | 4,061 | 1,668 | |
Recurring | Level 1 | |||
Assets: | |||
Cash equivalents | 14,955 | 21,277 | |
Total assets measured at fair value | 14,955 | 21,277 | |
Recurring | Level 2 | |||
Assets: | |||
Cash equivalents | 1,500 | ||
Marketable securities | 32,068 | 39,078 | |
Total assets measured at fair value | 33,568 | 39,078 | |
Recurring | Level 3 | |||
Liabilities: | |||
Acquisition-related contingent consideration | 4,061 | 1,668 | |
Total liabilities measured at fair value | $ 4,061 | $ 1,668 |
Fair Value of Financial Asset_4
Fair Value of Financial Assets and Liabilities - By Type (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Marketable securities: | ||
Amortized Cost | $ 32,066 | $ 39,074 |
Gross Unrealized Gain | 2 | 7 |
Gross Unrealized Loss | (3) | |
Fair Value | 32,068 | 39,078 |
Corporate debt securities | ||
Marketable securities: | ||
Amortized Cost | 7,815 | |
Gross Unrealized Gain | 2 | |
Fair Value | 7,817 | |
Commercial paper | ||
Marketable securities: | ||
Amortized Cost | 20,483 | 15,129 |
Fair Value | 20,483 | 15,129 |
Asset-backed securities | ||
Marketable securities: | ||
Amortized Cost | 4,036 | 8,004 |
Gross Unrealized Gain | 1 | 4 |
Fair Value | 4,037 | 8,008 |
U.S. government agency debt securities | ||
Marketable securities: | ||
Amortized Cost | 7,547 | 8,126 |
Gross Unrealized Gain | 1 | 1 |
Gross Unrealized Loss | (3) | |
Fair Value | $ 7,548 | $ 8,124 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment, Net | |||
Finance lease right-of-use assets | $ 435 | ||
Property and equipment, gross | $ 4,277 | 4,536 | |
Accumulated depreciation | (2,623) | (2,066) | |
Property and equipment, net | 1,654 | 2,470 | |
Depreciation expense | 1,100 | 1,500 | $ 1,200 |
Computer equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 1,197 | 1,315 | |
Lab equipment | |||
Property and Equipment, Net | |||
Property and equipment, gross | 1,340 | 1,250 | |
Furniture and fixtures | |||
Property and Equipment, Net | |||
Property and equipment, gross | 617 | 647 | |
Leasehold improvements | |||
Property and Equipment, Net | |||
Property and equipment, gross | $ 1,123 | $ 889 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Definite-lived intangible assets | ||
Accumulated Amortization | $ 257 | $ 181 |
Intangible assets, net | ||
Gross cost | 7,380 | 7,380 |
IPR&D | ||
Indefinite-lived intangible assets | ||
Gross cost | $ 6,629 | 6,629 |
Other intangible assets | ||
Finite Lived And Indefinite Lived Intangible Assets By Major Class [Line Items] | ||
Remaining life | 6 years 7 months 6 days | |
Definite-lived intangible assets | ||
Gross Cost | $ 751 | 751 |
Accumulated Amortization | $ 257 | $ 181 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 75 | $ 75 | $ 75 |
Future amortization expenses | |||
2021 | 75 | ||
2022 | 75 | ||
2023 | 75 | ||
2024 | 75 | ||
2025 | 75 | ||
Thereafter | 119 | ||
Total | $ 494 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Expenses | ||
Employee compensation expenses | $ 3,971 | $ 3,321 |
Research and development expenses | 761 | 2,857 |
Other | 1,174 | 1,543 |
Total accrued expenses | $ 5,906 | $ 7,721 |
Debt (Details)
Debt (Details) $ in Millions | Mar. 30, 2020 | Mar. 31, 2020USD ($)installmentshares | Oct. 31, 2019USD ($) | Oct. 31, 2018USD ($) |
SVB | ||||
Debt Instrument [Line Items] | ||||
Common stock warrants | shares | 460,251 | |||
Term Loan Facility | ||||
Debt Instrument [Line Items] | ||||
Loan borrowed | $ 11 | |||
Number of consecutive monthly installments | installment | 24 | |||
Annual interest rate | 6.75% | |||
Final payment fee percentage | 5.00% | |||
Term Loan Facility | Oxford Finance LLC | ||||
Debt Instrument [Line Items] | ||||
Loan borrowed | $ 30 | |||
Loan, maximum borrowing capacity | $ 65 | |||
Loan repaid | $ 30 | |||
Term Loan Facility | Prepayment prior to the first anniversary of the Funding Date | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage | 3.00% | |||
Term Loan Facility | Prepayment between the first and second anniversaries of the Funding Date | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage | 2.00% | |||
Term Loan Facility | Prepayment after the second anniversary of the Funding Date but before October 1, 2023 | ||||
Debt Instrument [Line Items] | ||||
Prepayment fee percentage | 1.00% | |||
Term Loan Facility | Prime Rate | ||||
Debt Instrument [Line Items] | ||||
Basis spread over LIBOR | 2.00% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2020USD ($)shares | Dec. 31, 2020USD ($)Vote$ / sharesshares | Jan. 31, 2021shares | Mar. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019$ / sharesshares | |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Preferred stock, shares outstanding | 0 | 0 | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | |||
Number of votes per share | Vote | 1 | ||||
Dividends declared | $ | $ 0 | ||||
Lincoln Park Capital Fund, LLC | Purchase Agreement | |||||
Class of Stock [Line Items] | |||||
Common stock sell | $ | $ 15,000 | ||||
Purchase agreement term | 36 months | ||||
Common stock shares issued | 121,584 | ||||
Aggregate fair value | $ | $ 300 | ||||
Common stock, sold | 2,111,170 | ||||
Proceeds from common stock | $ | $ 7,700 | ||||
SVB | |||||
Class of Stock [Line Items] | |||||
Common stock warrants | 460,251 | ||||
Initial exercise price | $ / shares | $ 0.956 | ||||
Fair value of warrants | $ | $ 400 | ||||
SVB | Subsequent event | |||||
Class of Stock [Line Items] | |||||
Common stock warrants | 388,119 |
Stockholders' Equity - Other Of
Stockholders' Equity - Other Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended |
Oct. 31, 2018 | Dec. 31, 2020 | |
Subsidiary, Sale of Stock [Line Items] | ||
Underwriters' discounts and commissions | $ 211 | |
Public Offering October 2018 | ||
Subsidiary, Sale of Stock [Line Items] | ||
Issuance of common stock in connection with equity purchase agreement, shares | 9,941,750 | |
Issuance price (in dollars per share) | $ 10.75 | |
Aggregate gross proceeds | $ 106,900 | |
Underwriters' discounts and commissions | 6,400 | |
Expenses related to stock issuance | 300 | |
Net offering proceeds | $ 100,200 |
Stock-Based Awards (Details)
Stock-Based Awards (Details) - shares | Jan. 01, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 14, 2015 | Dec. 31, 2017 | Sep. 30, 2015 |
Stock-based awards | |||||||
Options granted (in shares) | 734,800 | 44,500 | 1,459,800 | ||||
Options outstanding | 2,871,498 | 3,102,221 | 4,282,081 | 3,328,757 | |||
Stock Option Valuation | |||||||
Risk-free interest rate (as a percent) | 0.87% | 2.27% | 2.66% | ||||
Expected term (in years) | 6 years 1 month 6 days | 6 years 2 months 12 days | 6 years 3 months 18 days | ||||
Expected volatility (as a percent) | 85.19% | 99.36% | 96.78% | ||||
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | ||||
2017 Inducement Plan | |||||||
Stock-based awards | |||||||
Options outstanding | 443,000 | ||||||
2017 Inducement Plan | Restricted stock unit awards | |||||||
Stock-based awards | |||||||
Number of shares outstanding | 28,895 | ||||||
2015 Equity Incentive Plan | |||||||
Stock-based awards | |||||||
Number of shares authorized | 1,643,872 | ||||||
Number of shares available for grant | 2,423,020 | ||||||
Percentage increase to shares available for grant from common outstanding as of preceding December 31 (as a percent) | 4.00% | ||||||
Additional shares available | 1,804,372 | ||||||
2012 Equity Compensation Plan | |||||||
Stock-based awards | |||||||
Number of shares available for grant | 0 | ||||||
Options granted (in shares) | 1,140,524 | ||||||
Options outstanding | 549,561 | 745,735 | |||||
Vesting period (in years) | 4 years | ||||||
Term of award (in years) | 10 years |
Stock-Based Awards - Option Act
Stock-Based Awards - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options, Number of Shares | ||||
Number of Shares, beginning balance | 3,102,221 | 4,282,081 | 3,328,757 | |
Number of Shares, Granted | 734,800 | 44,500 | 1,459,800 | |
Number of Shares, Exercised | (53,737) | (142,779) | (59,450) | |
Number of Shares, Forfeited and cancelled | (911,786) | (1,081,581) | (447,026) | |
Number of Shares, ending balance | 2,871,498 | 3,102,221 | 4,282,081 | 3,328,757 |
Number of Shares, Options vested and expected to vest | 2,871,498 | |||
Number of Shares, Options exercisable | 1,844,197 | |||
Options, Weighted Average Exercise Price | ||||
Weighted Average Exercise Price, beginning balance (in dollars per share) | $ 20.33 | $ 20.53 | $ 20.69 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 1.30 | 5.75 | 20.97 | |
Weighted Average Exercise Price, Exercised (in dollars per share) | 1.30 | 1.33 | 9.70 | |
Weighted Average Exercise Price, Forfeited and cancelled (in dollars per share) | 22.41 | 23.01 | 24.62 | |
Weighted Average Exercise Price, ending balance (in dollars per share) | 15.16 | $ 20.33 | $ 20.53 | $ 20.69 |
Weighted Average Exercise Price, Options vested and expected to vest (in dollars per share) | 15.16 | |||
Weighted Average Exercise Price, Options exercisable (in dollars per share) | $ 18.92 | |||
Options, Weighted Average Remaining Contractual Term | ||||
Weighted Average Remaining Contractual Term (in years) | 6 years 9 months 18 days | 6 years 7 months 6 days | 7 years 10 months 24 days | 8 years 3 months 18 days |
Weighted Average Remaining Contractual Term, Options vested and expected to vest (in years) | 6 years 9 months 18 days | |||
Weighted Average Remaining Contractual Term, Options exercisable (in years) | 5 years 9 months 18 days | |||
Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value | $ 4,890 | $ 148 | $ 2,404 | $ 19,812 |
Aggregate Intrinsic Value, Exercised | 145 | $ 112 | $ 724 | |
Aggregate Intrinsic Value, Options vested and expected to vest | 4,890 | |||
Aggregate Intrinsic Value, Options exercisable | $ 1,424 | |||
Weighted average grant-date fair value of stock options granted (in dollars per share) | $ 0.93 | $ 4.63 | $ 16.55 |
Stock-Based Awards - RSUs (Deta
Stock-Based Awards - RSUs (Details) - Restricted stock unit awards - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
RSU, Number of Units | |||
Units outstanding, beginning of period | 3,592,915 | 626,407 | 283,553 |
Granted | 1,168,805 | 3,650,942 | 552,060 |
Vested | (1,804,429) | (173,444) | (140,497) |
Forfeited and cancelled | (713,134) | (510,990) | (68,709) |
Units outstanding, end of period | 2,244,157 | 3,592,915 | 626,407 |
RSU, Weighted Average Grant Date Fair Value Per Unit | |||
Weighted average grant date fair value, beginning balance (in dollars per share) | $ 4.62 | $ 20.30 | $ 27.02 |
Weighted average grant date fair value, granted (in dollars per share) | 1.36 | 3.56 | 19.03 |
Weighted average grant date fair value, vested (in dollars per share) | 3.33 | 21.31 | 27.22 |
Forfeited and cancelled, estimated grant date fair value (in dollars per share) | 4.77 | 10.63 | 23.65 |
Weighted average grant date fair value, ending balance (in dollars per share) | $ 3.83 | $ 4.62 | $ 20.30 |
Aggregate intrinsic value of awards that vested during the period | $ 2,607 | $ 799 | $ 2,158 |
Stock-Based Awards - Compensati
Stock-Based Awards - Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense | |||
Stock-based compensation expense | $ 11,207 | $ 16,082 | $ 16,563 |
Unrecognized stock-based compensation cost, options | 4,200 | ||
Unrecognized compensation, RSUs | 5,500 | ||
Cost of revenue. | |||
Stock-based compensation expense | |||
Stock-based compensation expense | 946 | 703 | 766 |
Research and development | |||
Stock-based compensation expense | |||
Stock-based compensation expense | 2,919 | 5,091 | 6,480 |
General and administrative | |||
Stock-based compensation expense | |||
Stock-based compensation expense | $ 7,342 | $ 10,288 | $ 9,317 |
Options to purchase common stock | |||
Stock-based compensation expense | |||
Weighted average recognition period unrecognized stock-based compensation cost (in years) | 1 year 3 months 18 days | ||
Restricted stock unit awards | |||
Stock-based compensation expense | |||
Weighted average recognition period unrecognized stock-based compensation cost (in years) | 1 year 9 months 18 days |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Numerator: | |||
Net loss | $ (51,015) | $ (161,354) | $ (132,738) |
Denominator: | |||
Weighted average shares of common stock outstanding, basic and diluted (in shares) | 42,539,293 | 41,323,921 | 32,909,762 |
Net loss per share, basic and diluted | $ (1.20) | $ (3.90) | $ (4.03) |
Net Loss per Share - Anti-dilut
Net Loss per Share - Anti-dilution (Details) - shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 5,575,906 | 6,695,136 | 4,908,488 |
Options to purchase common stock | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 2,871,498 | 3,102,221 | 4,282,081 |
Restricted stock unit awards | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 2,244,157 | 3,592,915 | 626,407 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Potential common shares excluded from the calculation of diluted net loss per share attributable to common stockholders | 460,251 |
Leases (Details)
Leases (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020USD ($)ft²item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Feb. 28, 2019ft² | |
Lessee, Lease, Description [Line Items] | ||||
Loss on lease termination | $ 200 | |||
Rent expense | $ 900 | |||
Area leased, sublease agreement | ft² | 33,019 | 20,433 | ||
Rent expense | $ 1,000 | $ 1,000 | ||
Number of lease financing arrangements | item | 2 | |||
Finance lease term | 4 years | |||
Sub-subleased | ft² | 8,115 | |||
Operating Leases: | ||||
Gross cost | $ 4,277 | $ 4,536 | ||
Accumulated amortization | (2,623) | (2,066) | ||
Property and equipment, net | 1,654 | 2,470 | ||
Current portion of lease liabilities | $ 603 | $ 526 | ||
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent | ||
Other liabilities | $ 2,894 | $ 3,548 | ||
Financial position | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent | ||
Total operating lease liabilities | $ 3,497 | $ 4,074 | ||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Total operating lease liabilities | |||
Operating Leases | ||||
Operating Leases: | ||||
Gross cost | $ 5,240 | 5,213 | ||
Accumulated amortization | (1,111) | (480) | ||
Property and equipment, net | $ 4,129 | $ 4,733 |
Leases - Lease Costs (Details)
Leases - Lease Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Lease Costs | ||
Operating lease expense | $ 1,013 | $ 808 |
Amortization of right-to-use assets | 113 | 443 |
Interest expense | 5 | 87 |
Total finance lease expenses | $ 118 | $ 530 |
Leases - Finance Leases (Detail
Leases - Finance Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Finance Leases: | ||
Property and equipment, gross | $ 4,277 | $ 4,536 |
Accumulated depreciation | (2,623) | (2,066) |
Property and equipment, net | $ 1,654 | 2,470 |
Finance Leases | ||
Finance Leases: | ||
Property and equipment, gross | 435 | |
Accumulated depreciation | (322) | |
Property and equipment, net | 113 | |
Current portion of lease liabilities | $ 111 | |
Financial position | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Other liabilities | $ 21 | |
Financial position | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Total finance lease liabilities | $ 132 |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Operating and Finance Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | ||
Operating cash flows from operating leases | $ 907 | $ 755 |
Operating cash flows from finance leases | 5 | 87 |
Financing cash flows from finance leases | $ 137 | 523 |
Leased assets obtained in exchange for new operating lease liabilities | $ 3,060 | |
Weighted-Average Remaining Lease Term (in years): | ||
Operating leases | 6 years | 6 years 9 months 18 days |
Finance leases | 10 months 24 days | |
Weighted-Average Discount Rate: | ||
Operating leases | 10.10% | 10.10% |
Finance leases | 10.00% | 10.00% |
Leases - Future Maturities of L
Leases - Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Operating Leases | ||
2021 | $ 924 | |
2022 | 949 | |
2023 | 866 | |
2024 | 343 | |
2025 | 352 | |
Thereafter | 1,301 | |
Total undiscounted lease payments | 4,735 | |
Less: unrecognized interest | (1,238) | |
Total lease liability | $ 3,497 | $ 4,074 |
Income Taxes - Rate Reconciliat
Income Taxes - Rate Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | |||
Federal income tax benefit | $ 0 | $ 0 | $ 0 |
State income tax benefit | 0 | 0 | 0 |
Loss before income taxes | |||
U.S. operations | (51,215) | (161,192) | (132,473) |
Foreign operations | 18 | (162) | (265) |
Loss before income taxes | $ (51,197) | $ (161,354) | $ (132,738) |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Federal statutory income tax rate | (21.00%) | (21.00%) | (21.00%) |
State taxes, net of federal benefit | (7.50%) | (6.60%) | (3.50%) |
Research and development tax credits | (2.60%) | (1.50%) | (2.10%) |
Permanent differences | 2.60% | 3.00% | 0.80% |
Change in deferred tax asset valuation allowance | 28.10% | 26.20% | 25.70% |
Effective income tax rate | (0.40%) | 0.10% | (0.10%) |
Income Taxes - Deferred Assets
Income Taxes - Deferred Assets and Liabilities, CFDs (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Components of net deferred tax assets | ||||
Net operating loss carryforwards | $ 101,277 | $ 90,298 | ||
Capitalized start-up costs | 6,509 | 6,904 | ||
Research and development tax credit carryforwards | 8,732 | 7,417 | ||
Capitalized research and development expenses | 4,611 | 4,456 | ||
Stock-based compensation expenses | 14,526 | 12,973 | ||
Accrued compensation | 745 | 588 | ||
Lease liabilities | 888 | 945 | ||
Other | 602 | 618 | ||
Total deferred tax assets | 137,890 | 124,199 | ||
Property and equipment | (209) | (206) | ||
Intangible asset | (2,033) | (1,741) | ||
Right-to-use assets | (1,026) | (1,235) | ||
Other | (430) | (600) | ||
Total deferred tax liabilities | (3,698) | (3,782) | ||
Valuation allowance | (134,559) | (120,966) | $ (80,985) | $ (46,878) |
Deferred tax liabilities, net | (367) | $ (549) | ||
United Kingdom Tax Authority | ||||
Components of net deferred tax assets | ||||
Operating loss carryforwards | 200 | |||
Federal | ||||
Components of net deferred tax assets | ||||
Operating loss carryforwards | 367,600 | |||
Federal | Research Tax Credit Carryforward [Member] | ||||
Components of net deferred tax assets | ||||
Tax credit carryforward | 8,600 | |||
State | ||||
Components of net deferred tax assets | ||||
Operating loss carryforwards | 369,600 | |||
State | Research Tax Credit Carryforward [Member] | ||||
Components of net deferred tax assets | ||||
Tax credit carryforward | $ 100 |
Income Taxes - Valuation Allowa
Income Taxes - Valuation Allowance and Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in valuation allowance for deferred tax assets | |||
Valuation allowance at beginning of year | $ (120,966) | $ (80,985) | $ (46,878) |
Decreases recorded to opening balance sheet | 58 | ||
Increases recorded to income tax provision | (13,651) | (39,981) | (34,107) |
Valuation allowance as of end of year | $ (134,559) | $ (120,966) | $ (80,985) |
Related Party Transactions (Det
Related Party Transactions (Details) - Mallinckrodt PlC - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Related Party Transactions | ||
Invoice amount | $ 0.3 | $ 0.1 |
Outstanding accounts receivable | $ 0 | $ 0 |
Agreements Related to Intelle_2
Agreements Related to Intellectual Property (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Oct. 31, 2019 | Nov. 30, 2018 | Aug. 31, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Agreements Related to Intellectual Property | ||||||
Revenue, Net | $ 6,482 | $ 4,227 | $ 6,151 | |||
EPI Health LLC | ||||||
Agreements Related to Intellectual Property | ||||||
Potential milestone payments | 20,000 | |||||
Percentage of upfront and license fees | 25.00% | |||||
Term of agreement | 10 years | |||||
EPI Health LLC | Royalty | ||||||
Agreements Related to Intellectual Property | ||||||
Revenue, Net | 700 | 0 | ||||
Rigel | ||||||
Agreements Related to Intellectual Property | ||||||
Milestone payment | 4,000 | |||||
Amendment fees payable | 1,500 | |||||
Agreement and Plan of Merger | Confluence | ||||||
Agreements Related to Intellectual Property | ||||||
Payment in cash | $ 2,500 | |||||
Number of shares | 253,208 | |||||
Fair value of common stock | $ 2,200 | |||||
Additional contingent consideration based on milestones, maximum, per Agreement | $ 75,000 | |||||
Royalty term | 10 years | |||||
APA | Allergan | ||||||
Agreements Related to Intellectual Property | ||||||
Aggregate royalty payments | $ 0 | $ 1,400 | $ 100 |
Retirement Savings Plan (Detail
Retirement Savings Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Savings Plan | |||
Employer match of employee contributions (as a percent) | 100.00% | ||
Employee earnings subject to employer match (as a percent) | 4.00% | ||
Company contributions | $ 0.4 | $ 0.7 | $ 0.7 |
Restructuring Charges (Details)
Restructuring Charges (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2019employee | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Accrued Expenses | |||
Number of employees | 86 | ||
Expenses recognized | $ | $ 0.1 | $ 2.7 | |
Payments made | $ | $ 0.3 | $ 2.3 | |
Minimum | |||
Accrued Expenses | |||
Period for which transition services is provided by noticed employees | 4 months | ||
Maximum | |||
Accrued Expenses | |||
Period for which transition services is provided by noticed employees | 10 months | ||
Terminated employees | |||
Accrued Expenses | |||
Number of employees | 63 | ||
Noticed employees | |||
Accrued Expenses | |||
Number of employees | 23 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total revenue, net | $ 424 | $ 13,896 | $ 3,940 |
Accounts receivable, net | 4,966 | ||
Loss on lease termination | 200 | ||
Impairment charge | 27,638 | ||
Product sales, net | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total revenue, net | 424 | 13,896 | 3,940 |
RHOFADE | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Total revenue, net | $ 424 | 13,584 | $ 1,136 |
Impairment charge | $ 27,600 |
Discontinued Operations - Loss
Discontinued Operations - Loss (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||
Total revenue, net | $ 424 | $ 13,896 | $ 3,940 |
Cost of revenue (excludes amortization) | 4,522 | 1,969 | |
Research and development | 1 | 503 | 2,168 |
Sales and marketing | 283 | 23,112 | 47,827 |
General and administrative | 1 | 2,929 | 2,058 |
Intangible asset impairment | 27,638 | ||
Amortization of definite-lived intangible | 4,426 | 552 | |
Total costs and expenses | 285 | 63,130 | 54,574 |
Loss from discontinued operations | 139 | (49,234) | (50,634) |
Other income, net | 1,422 | ||
Income (loss) from discontinued operations before income taxes | 139 | (47,812) | (50,634) |
Income tax benefit | (182) | ||
Loss from discontinued operations | $ 139 | $ (47,812) | $ (50,634) |
Net loss from discontinued operations per share, basic and diluted | $ 0 | $ (1.16) | $ (1.54) |
Weighted average common shares outstanding, basic and diluted | 42,539,293 | 41,323,921 | 32,909,762 |
Product sales, net | |||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||
Total revenue, net | $ 424 | $ 13,896 | $ 3,940 |
ESKATA | |||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||
Total revenue, net | 312 | 2,804 | |
RHOFADE | |||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||
Total revenue, net | $ 424 | $ 13,584 | $ 1,136 |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Disposal Group, Including Discontinued Operation, Balance Sheet Disclosures [Abstract] | ||
Accounts receivable, net | $ 4,966 | |
Discontinued operations - current assets | 4,966 | |
Accounts payable | $ 1,175 | 1,705 |
Accrued expenses | 1,936 | 2,452 |
Discontinued operations - current liabilities | $ 3,111 | $ 4,157 |
Discontinued Operations - Cash
Discontinued Operations - Cash Flow (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Depreciation and amortization | $ 313 |
Stock-based compensation expense | 95 |
Intangible asset impairment charge | 27,638 |
Loss on disposal of property and equipment | 248 |
Non-cash items | 28,294 |
Total non-cash items | 26,624 |
RHOFADE | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Gain on sale of RHOFADE | $ 1,670 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | item | 2 | ||
Total revenue | $ 6,482 | $ 4,227 | $ 6,151 |
Cost of revenue | 5,133 | 4,055 | 4,329 |
Research and development | 31,731 | 64,899 | 60,841 |
General and administrative | 20,530 | 27,827 | 25,761 |
Goodwill impairment | 18,504 | ||
Amortization expense | 75 | 75 | 75 |
Loss from operations | (50,912) | (111,058) | (84,780) |
Loss from discontinued operations | 139 | (49,234) | (50,634) |
Income (loss) from discontinued operations | 139 | (47,812) | (50,634) |
Dermatology Therapeutics Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 696 | 1,500 | |
Research and development | 32,170 | 65,298 | 62,255 |
General and administrative | 620 | 160 | |
Goodwill impairment | 18,504 | ||
Loss from operations | (31,474) | (84,422) | (60,915) |
Income (loss) from discontinued operations | 140 | (46,305) | (48,576) |
Contract Research Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | 13,319 | 16,824 | 13,135 |
Cost of revenue | 12,228 | 16,253 | 11,399 |
General and administrative | 2,794 | 2,738 | 2,181 |
Loss from operations | (1,703) | (2,167) | (445) |
Corporate and Other | |||
Segment Reporting Information [Line Items] | |||
Total revenue | (7,533) | (12,597) | (8,484) |
Cost of revenue | (7,095) | (12,198) | (7,070) |
Research and development | (439) | (399) | (1,414) |
General and administrative | 17,736 | 24,469 | 23,420 |
Loss from operations | (17,735) | (24,469) | (23,420) |
Income (loss) from discontinued operations | (1) | (1,507) | (2,058) |
Intersegment Eliminations | Contract Research Segment | |||
Segment Reporting Information [Line Items] | |||
Total revenue | $ 7,500 | $ 12,600 | $ (8,500) |
Legal Proceedings (Details)
Legal Proceedings (Details) | Jan. 24, 2020item |
Executive officer | |
Other Commitments [Line Items] | |
Number of defendants | 2 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended |
Jan. 31, 2021 | Dec. 31, 2020 | |
Subsequent events | ||
Expenses incurred in offering | $ 211 | |
Subsequent event | January 2021 Public Offering | ||
Subsequent events | ||
Common stock, sold | 6,306,271 | |
Common stock, price per share | $ 17.50 | |
Aggregate gross proceeds | $ 110,400 | |
Underwriting discounts and commissions | 6,600 | |
Expenses incurred in offering | 300 | |
Proceeds from common stock | $ 103,500 |