Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 30, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Dermira, Inc. | |
Entity Central Index Key | 1557883 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 24,670,911 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $52,144 | $55,358 |
Short-term investments | 70,332 | 41,793 |
Collaboration receivable from a related party | 7,300 | |
Prepaid expenses and other current assets | 2,014 | 1,012 |
Total current assets | 124,490 | 105,463 |
Property and equipment, net | 177 | 192 |
Long-term investments | 35,668 | 66,483 |
Intangible assets | 3,520 | 3,520 |
Goodwill | 771 | 771 |
Other assets | 985 | 1,792 |
Total assets | 165,611 | 178,221 |
Current liabilities: | ||
Accounts payable | 6,783 | 5,563 |
Accrued liabilities | 5,213 | 6,327 |
Total current liabilities | 11,996 | 11,890 |
Long-term liabilities: | ||
Deferred revenue | 10,000 | 10,000 |
Bank term loan | 1,940 | 1,936 |
Deferred tax liability | 816 | 816 |
Total liabilities | 24,752 | 24,642 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock | ||
Common stock | 25 | 25 |
Additional paid-in capital | 237,550 | 236,414 |
Accumulated other comprehensive loss | -32 | -211 |
Accumulated deficit | -96,684 | -82,649 |
Total stockholders' equity | 140,859 | 153,579 |
Total liabilities and stockholders' equity | $165,611 | $178,221 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating expenses: | ||
Research and development | $10,088 | $6,685 |
General and administrative | 4,146 | 1,812 |
Total operating expenses | 14,234 | 8,497 |
Loss from operations | -14,234 | -8,497 |
Interest and other income (expense), net | 237 | -9 |
Interest expense | -38 | -33 |
Net loss | ($14,035) | ($8,539) |
Net loss per share, basic and diluted (in dollars per share) | ($0.57) | ($9.56) |
Weighted-average common shares used to compute net loss per share, basic and diluted (in shares) | 24,655,011 | 893,542 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Net loss | ($14,035) | ($8,539) |
Other comprehensive income: | ||
Unrealized gain on available-for-sale securities, net of tax | 179 | |
Total comprehensive loss | ($13,856) | ($8,539) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities | ||
Net loss | ($14,035) | ($8,539) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 19 | 14 |
Stock-based compensation | 1,094 | 136 |
Amortization of premiums on available-for-sale securities | 455 | |
Revaluation of convertible preferred stock warrant liability | -1 | |
Changes in assets and liabilities: | ||
Collaboration receivable from a related party | 7,300 | |
Prepaid expenses and other current assets | -863 | -51 |
Other assets | 807 | |
Accounts payable | 1,220 | 7 |
Accrued liabilities | -1,114 | 848 |
Net cash used in operating activities | -5,117 | -7,586 |
Cash flows from investing activities | ||
Purchases of available-for-sale securities | -23,139 | |
Maturities of available-for-sale securities | 25,000 | |
Purchases of property and equipment | -8 | |
Net cash provided by (used in) investing activities | 1,861 | -8 |
Cash flows from financing activities | ||
Proceeds from common stock option exercises | 42 | 2 |
Net cash provided by financing activities | 42 | 2 |
Net decrease in cash and cash equivalents | -3,214 | -7,592 |
Cash and cash equivalents at beginning of period | 55,358 | 22,144 |
Cash and cash equivalents at end of period | $52,144 | $14,552 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2015 | |
Organization | |
Organization | |
1. Organization | |
Dermira, Inc. (the “Company”) was incorporated in the State of Delaware in August 2010 under the name Skintelligence, Inc. The Company changed its name to Dermira, Inc. in September 2011. In August 2011, the Company acquired Valocor Therapeutics, Inc., which was subsequently renamed Dermira (Canada), Inc. (“Dermira Canada”) and is the Company’s wholly owned subsidiary. The Company is a specialty biopharmaceutical company focused on bringing innovative and differentiated products to dermatologists and their patients. The Company’s portfolio of five product candidates targets significant market opportunities and includes three late-stage product candidates: Cimzia (certolizumab pegol), in Phase 3 development in collaboration with UCB Pharma S.A., a related party (“UCB”), for the treatment of moderate-to-severe plaque psoriasis; DRM04, a topical treatment for hyperhidrosis; and DRM01, a topical sebum inhibitor for the treatment of acne. The Company is headquartered in Menlo Park, California. | |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Summary of Significant Accounting Policies | ||||||||
2. Summary of Significant Accounting Policies | ||||||||
Significant accounting policies followed in the preparation of these condensed consolidated financial statements are as follows: | ||||||||
Basis of Presentation | ||||||||
The condensed consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s financial information. The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015 or any other future period. The consolidated balance sheet as of December 31, 2014 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Dermira Canada. All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the Company’s audited consolidated financial statements and the related notes thereto for the year ended December 31, 2014 included in its Annual Report on Form 10-K, filed March 25, 2015 with the SEC. | ||||||||
Reverse Stock Split | ||||||||
The Company effected a 5.8-to-1 reverse stock split of each share of the Company’s outstanding capital stock on September 18, 2014, the date that the Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Delaware Secretary of State. The reverse stock split did not result in an adjustment to par value. All references to shares of common stock outstanding, average number of shares outstanding and per share amounts in these condensed consolidated financial statements and related notes thereto reflect the reverse stock split. | ||||||||
Use of Estimates | ||||||||
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, investments, accrued research and development expenses, goodwill, intangible assets, other long-lived assets, stock-based compensation and the valuation of deferred tax assets. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates. | ||||||||
Risks and Uncertainties | ||||||||
The product candidates developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) and foreign regulatory agencies prior to commercial sales in the United States or foreign jurisdictions, respectively. There can be no assurance that the Company’s current and future product candidates will receive the necessary approvals. If the Company is denied approval or approval is delayed, it may have a material adverse impact on the Company’s business and its financial condition. | ||||||||
The Company is subject to risks common to early-stage companies in the pharmaceutical industry, including dependence on the clinical and commercial success of its product candidates, ability to obtain regulatory approval of its product candidates, compliance with regulatory requirements, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and patients, significant competition and ability to manage third party manufacturers, suppliers and contract research organizations (“CROs”). | ||||||||
Concentration of Credit Risk | ||||||||
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and collaboration receivable from a related party. The Company invests its excess cash primarily in money market funds, repurchase agreements and corporate debt. Bank deposits are primarily held by a single financial institution and these deposits may exceed insured limits. The Company is exposed to credit risk in the event of a default by the financial institution holding its cash and cash equivalents and issuers of investments to the extent recorded on the condensed consolidated balance sheets. The Company’s investment policy limits investments to money market funds, certain types of debt securities issued by the U.S. government and its agencies, repurchase agreements, commercial paper, municipal bonds and corporate debt, and places restrictions on the credit ratings, maturities and concentration by type and issuer. | ||||||||
Collaboration receivables are typically unsecured. Accordingly, we may be exposed to credit risk generally associated with our collaboration agreement. To date, we have not experienced any losses related to these receivables. | ||||||||
Fair Value of Financial Instruments | ||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company primarily applies the market approach for recurring fair value measurements. | ||||||||
The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amount of the Company’s cash and cash equivalents, investments, collaboration receivable from a related party, prepaid expenses, other assets, accounts payable and accrued liabilities approximate fair value due to their short maturities. Based on borrowing rates currently available to the Company for bank term loans with similar terms, the carrying value of the Company’s bank term loan approximates its fair value. | ||||||||
Research and Development Expenses | ||||||||
The Company expenses research and development expenses as they are incurred. The Company’s research and development expenses consist primarily of costs incurred for the development of its product candidates and include: (1) expenses incurred under agreements with CROs, investigative sites and consultants to conduct clinical trials and preclinical and non-clinical studies; (2) costs to acquire, develop and manufacture supplies for clinical trials and other studies, including fees paid to contract manufacturing organizations (“CMOs”); (3) salaries and related costs, including stock-based compensation and travel expenses, for personnel in research and development functions; (4) costs related to compliance with drug development regulatory requirements; (5) depreciation and other allocated facility-related and overhead expenses; and (6) licensing fees and milestone payments incurred under product license agreements. | ||||||||
Accrued Research and Development Expenses | ||||||||
The Company records accruals for estimated costs of research, preclinical and clinical studies and manufacturing development, which are a significant component of research and development expenses. A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers, including CROs. The Company’s contracts with CROs generally include pass-through fees such as regulatory expenses, investigator fees, travel costs and other miscellaneous costs, including shipping and printing fees. The financial terms of these contracts are subject to negotiation, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The Company accrues the costs incurred under agreements with these third parties based on actual work completed in accordance with the respective agreements. In the event the Company makes advance payments, the payments are recorded as a prepaid expense and recognized as the services are performed. The Company determines the estimated costs through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fees to be paid for such services. | ||||||||
In addition, the Company’s CRO for the Cimzia Phase 3 program (the “Cimzia CRO”) can earn bonuses or incur penalties based on the Cimzia CRO’s achievement of certain milestones specified in the agreement. If, in any period, it becomes probable that the Cimzia CRO would earn a bonus and the amount is estimable, the Company would accrue the full amount of such bonus in the period in which the bonus is earned. If the Cimzia CRO incurs a penalty, it has the right to recoup such penalty if it achieves a subsequent milestone. In this case, the Company would continue to maintain the full amount owed to the Cimzia CRO until the right of recoupment has expired. | ||||||||
The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. As actual costs become known, the Company adjusts its accruals. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in the Company reporting amounts that are too high or too low in any particular period. The Company’s accrual is dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. To date, there have been no material differences between the Company’s accrued estimated expenses and the actual clinical trial expenses. However, variations in the assumptions used to estimate accruals, including, but not limited to the number of patients enrolled, the rate of patient enrollment and the actual services performed may vary from the Company’s estimates, resulting in adjustments to clinical trial expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect its condensed consolidated financial condition and results of operations. | ||||||||
Net Loss Per Share | ||||||||
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for dilutive potential shares of common stock. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive for all periods presented. | ||||||||
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except share and per share amounts): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net loss per share: | ||||||||
Numerator: | ||||||||
Net loss | $ | (14,035 | ) | $ | (8,539 | ) | ||
Denominator: | ||||||||
Weighted-average shares of common stock outstanding used in the calculation of basic and diluted net loss per share | 24,655,011 | 901,779 | ||||||
Less: Weighted-average shares subject to repurchase | — | (8,237 | ) | |||||
Denominator for basic and diluted net loss per share | 24,655,011 | 893,542 | ||||||
Net loss per share, basic and diluted | $ | (0.57 | ) | $ | (9.56 | ) | ||
The following outstanding dilutive potential shares of common stock were excluded from the computations of diluted net loss per share for the periods presented as the effect of including such securities would be antidilutive: | ||||||||
Outstanding as of March 31, | ||||||||
2015 | 2014 | |||||||
Convertible preferred stock, as converted to common stock | — | 9,540,158 | ||||||
Warrant to purchase convertible preferred stock, as converted to a common stock warrant | — | 11,276 | ||||||
Options to purchase common stock | 3,446,904 | 1,771,897 | ||||||
Common stock subject to repurchase | — | 6,286 | ||||||
3,446,904 | 11,329,617 | |||||||
Recent Accounting Pronouncements | ||||||||
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which is an amendment to the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. ASU 2014-15 establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company will evaluate the guidance under ASU 2014-15 and present the required disclosures in its consolidated financial statements at the time of adoption. | ||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which converges the FASB and the International Accounting Standards Board standards on revenue recognition. Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. This guidance is effective for the fiscal years and interim reporting periods beginning after December 15, 2016. In April 2015, the FASB proposed a deferral of the effective date of the updated standard by one year, but to permit entities to adopt one year earlier if they choose. The proposed effective date deferral is not currently approved. The Company is currently evaluating the impact that the adoption of ASU 2014-09 will have on its consolidated financial statements and related disclosures. | ||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Fair Value Measurements | ||||||||||||||
3. Fair Value Measurements | ||||||||||||||
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) 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 should maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting guidance for fair value establishes a three-level hierarchy for disclosure of fair value measurements, as follows: | ||||||||||||||
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | ||||||||||||||
Level 2—Inputs (other than quoted market prices included in Level 1) that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life. | ||||||||||||||
Level 3—Unobservable inputs that are supported by little or no market activity and reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | ||||||||||||||
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | ||||||||||||||
The following tables set forth the fair value of the Company’s financial instruments that were measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014 (in thousands): | ||||||||||||||
As of March 31, 2015 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 7,005 | $ | — | $ | — | $ | 7,005 | ||||||
Repurchase agreements | — | 45,000 | — | 45,000 | ||||||||||
Corporate debt | — | 105,514 | — | 105,514 | ||||||||||
Other short-term interest-bearing securities | — | 485 | — | 485 | ||||||||||
Total financial assets | $ | 7,005 | $ | 150,999 | $ | — | $ | 158,004 | ||||||
As of December 31, 2014 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 10,088 | $ | — | $ | — | $ | 10,088 | ||||||
Repurchase agreements | — | 70,000 | — | 70,000 | ||||||||||
Corporate debt | — | 83,276 | — | 83,276 | ||||||||||
Total financial assets | $ | 10,088 | $ | 153,276 | $ | — | $ | 163,364 | ||||||
Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs obtained from various third-party data providers, including but not limited to benchmark yields, reported trades and broker/dealer quotes. The Company classifies repurchase agreements, corporate debt and other short-term interest-bearing securities as Level 2. In certain cases where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3. | ||||||||||||||
There were no transfers between Level 1 and Level 2 during the periods presented. | ||||||||||||||
Investments
Investments | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Investments | ||||||||||||||
Investments | 4. Investments | |||||||||||||
Investments included available-for-sale securities and investment securities classified as cash equivalents. Investment securities consisted of the following (in thousands): | ||||||||||||||
As of March 31, 2015 | ||||||||||||||
Amortized Cost | Gross Unrealized | Gross Unrealized | Fair Value | |||||||||||
Gains | Losses | |||||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 7,005 | $ | — | $ | — | $ | 7,005 | ||||||
Repurchase agreements | 45,000 | — | — | 45,000 | ||||||||||
Corporate debt | 105,546 | 39 | (71 | ) | 105,514 | |||||||||
Other short-term interest bearing securities | 485 | — | — | 485 | ||||||||||
Total investments | $ | 158,036 | $ | 39 | $ | (71 | ) | $ | 158,004 | |||||
As of December 31, 2014 | ||||||||||||||
Amortized Cost | Gross Unrealized | Gross Unrealized | Fair Value | |||||||||||
Gains | Losses | |||||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 10,088 | $ | — | $ | — | $ | 10,088 | ||||||
Repurchase agreements | 70,000 | — | — | 70,000 | ||||||||||
Corporate debt | 83,487 | 2 | (213 | ) | 83,276 | |||||||||
Total investments | $ | 163,575 | $ | 2 | $ | (213 | ) | $ | 163,364 | |||||
As of March 31, 2015, the Company held $35.7 million of available-for-sale investment securities with contractual maturity dates of more than one year and less than two years. The Company did not hold any investment securities exceeding a two-year maturity. As of March 31, 2015, there were no investments with gross unrealized losses that had been in a continuous loss position for 12 months or more. The Company believes that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value. There were no realized gains or losses on the available-for-sale securities during the three months ended March 31, 2015 and 2014, respectively. | ||||||||||||||
Accrued_Liabilities
Accrued Liabilities | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Accrued Liabilities | ||||||||
Accrued Liabilities | 5. Accrued Liabilities | |||||||
Accrued liabilities consisted of the following (in thousands): | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Accrued compensation | $ | 1,498 | $ | 2,463 | ||||
Accrued outside research and development services | 2,884 | 3,670 | ||||||
Accrued professional and consulting services | 687 | 108 | ||||||
Other | 144 | 86 | ||||||
$ | 5,213 | $ | 6,327 | |||||
Loan_Agreement
Loan Agreement | 3 Months Ended |
Mar. 31, 2015 | |
Loan Agreement | |
Loan Agreement | |
6. Loan Agreement | |
The Company is party to a loan and security agreement (the “Loan Agreement”) with Square 1 Bank (the “Bank”) that provides for two term loans available to the Company of $2.0 million and $5.5 million, respectively. Borrowings under the term loans bear interest at the greater of: (1) 5.10% above the treasury rate in effect on the date that a term loan is funded; or (2) 5.50%, which rate will be fixed on the date of funding of the term loan. The Company may prepay borrowings without paying a penalty or premium. | |
In December 2013, the Company borrowed $2.0 million under the first term loan (“Term Loan A”). The amount borrowed under Term Loan A matures December 19, 2018 and is secured by all assets of the Company other than the Company’s intellectual property, subject to certain limited exceptions, and bears interest at a rate of 5.77% per annum. The amount borrowed under Term Loan A is to be repaid over a period of 60 months as follows: (1) commencing on January 11, 2014, 30 monthly payments of interest only; and (2) commencing on June 19, 2016, 30 equal monthly payments of $66,666.67, plus interest. Upon final repayment of Term Loan A, the Company is required to pay the Bank a fee of $120,000. The Company is accruing this fee monthly over the loan term on a straight-line basis and is recording it as interest expense in the condensed consolidated statements of operations. The Company incurred interest expense in connection with Term Loan A totaling $38,000 and $33,000 for the three months ended March 31, 2015 and 2014, respectively. | |
The second term loan (“Term Loan B”) of $5.5 million is available to the Company through September 30, 2015. Borrowings, if any, under Term Loan B would be repaid as follows: (1) commencing on the 11th day following the date of Term Loan B, monthly payments of interest only to the earlier of (a) June 19, 2016 or (b) six months following the date of Term Loan B; and (2) commencing on the last day of the month immediately following the interest only end date, equal monthly payments of principal, plus interest, to the maturity date of December 19, 2018. Upon final repayment of Term Loan B, the Company would be required to pay the Bank a fee equal to 2.75% of the original principal amount borrowed under Term Loan B. In addition, if the Company were to borrow funds under Term Loan B, it would be required to issue the Bank a warrant to purchase up to 6,528 shares of the Company’s common stock (equal to 1% of the amount of borrowings divided by 8.4245), with an exercise price of $8.4245 per share. As of March 31, 2015, there have been no amounts borrowed under Term Loan B. | |
The Loan Agreement is subject to certain representations and warranties, certain affirmative and negative covenants, certain conditions and events of default that are customarily required for similar financings. The affirmative covenants include, among other things, that the Company delivers timely consolidated financial statements and reports to the Bank, timely files taxes, maintains certain operating accounts subject to control agreements in favor of the Bank, maintains liability and other insurance, maintains at least two active and ongoing drug development programs and pledges security interests in any ownership interest of a future subsidiary. The negative covenants preclude, among other things, disposing of certain assets, engaging in certain mergers or acquisitions, incurring additional indebtedness, encumbering any collateral, paying dividends or making prohibited investments, in each case, without the prior consent of the Bank. As of March 31, 2015 and December 31, 2014, the Company was in compliance with all of the covenants under the Loan Agreement. | |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | |
7. Commitments and Contingencies | |
Facility Lease | |
The Company leases its corporate headquarters facility in Menlo Park, California under a non-cancelable operating lease agreement. The leased space is a facility totaling 18,651 square feet. The base rent is $97,918 per month during the first year of the lease and increases by three percent annually. Rent expenses include the base rent plus additional fees to cover the Company’s share of certain facility expenses, including utilities, property taxes, insurance and maintenance. The estimated amount of these additional fees is $22,381 per month during the first year of the lease. The term of the lease is five years, commencing in December 2014 and terminating in November 2019, with an option to renew for an additional three-year term. | |
In addition, the Company is required to issue the lessor of the building either a security deposit or a letter of credit of $500,000 that may be used by or drawn upon by the lessor in the event of default of certain terms under the lease agreement. If there is no event of default under the agreement after the 30th month of the lease term, the letter of credit may be reduced to $250,000. The Company provided a letter of credit to the lessor in the amount of $500,000, which is collateralized by a money market account. The collateralized money market account is restricted cash and recorded in the Company’s condensed consolidated balance sheet in other assets. | |
Prior to moving to its headquarters in Menlo Park, California in December 2014, the Company leased its corporate headquarters in Redwood City, California under a non-cancelable operating lease agreement that was entered into in September 2011 and amended in November 2011. In December 2013, the Company entered into a month-to-month lease agreement for additional space in the same building. In March 2014 and May 2014, the Company entered into sublease agreements for additional space in the same building, which commenced in May 2014. All lease agreements associated with the Redwood City, California building expired in November 2014. | |
Rent expense for the three months ended March 31, 2015 and 2014 was $314,000 and $87,000, respectively. The terms of the facility leases provide for rental payments on a monthly basis on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. | |
CRO Agreement | |
Per the terms of the Company’s agreement with its CRO for the Cimzia Phase 3 program, the Cimzia CRO can earn bonus payments or incur penalties (which are adjusted from the total amount payable pursuant to the agreement) based on the achievement of milestones specified in the agreement. The Cimzia CRO can earn a maximum aggregate bonus of $3.6 million and incur a maximum aggregate penalty of $3.2 million. If, in any period, it becomes probable that the Cimzia CRO would earn a bonus and the amount is estimable, the Company would recognize the full amount of such bonus in that same period as an expense, even if the bonus would not be earned by and paid to the Cimzia CRO until the milestone is achieved. If the Cimzia CRO incurs a penalty, it has the right to recoup the applicable amount if it achieves a subsequent milestone, and the Cimzia CRO would adjust subsequent billings as necessary to reflect such penalty and any recouped amount. If the Cimzia CRO incurs a penalty prior to the expiration of the right of recoupment, the Company would maintain the full amount owed to the Cimzia CRO in accrued liabilities in its condensed consolidated balance sheet until (1) the right of recoupment has expired, at which time the Company would reflect the amount as a reduction in operating expenses and eliminate the liability, or (2) the Cimzia CRO has recouped the penalty, at which time the Company would increase the payment to the Cimzia CRO by the recouped amount and eliminate the liability. As of March 31, 2015, the Company has not recognized an amount for either a bonus earned or a penalty incurred under the agreement in its condensed consolidated financial statements. | |
Contingencies | |
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company would accrue a liability for such matters when it is probable that future expenditures would be made and such expenditures could be reasonably estimated. The Company is not subject to any current pending legal matters or claims. | |
Indemnification | |
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made. The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. | |
The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. | |
No amounts associated with such indemnifications have been recorded to date. | |
Technology_and_Financing_Agree
Technology and Financing Agreements | 3 Months Ended |
Mar. 31, 2015 | |
Technology and Financing Agreements | |
Technology and Financing Agreements | 8. Technology and Financing Agreements |
Maruho Agreement | |
In March 2013, the Company entered into a Right of First Negotiation Agreement with Maruho Co., Ltd. Under the terms of the agreement, the Company provided Maruho with certain information and the right to negotiate an exclusive license to develop and commercialize certain of the Company’s product candidates in specified territories. In connection with the entry into this agreement, Maruho paid the Company a non-refundable upfront payment of $10.0 million, which will be credited against certain payments payable by Maruho to the Company if the two parties enter into an exclusive license for any of the Company’s products. If the parties do not enter into such an arrangement, the Company will be entitled to keep the funds without further obligation. As of March 31, 2015 and December 31, 2014, the Company recorded the $10.0 million as deferred revenue on its condensed consolidated balance sheets. The revenue will be recognized in connection with and pursuant to a future license arrangement, if any, or at the time the parties decide not to enter into such a license, at which point the entire amount would be recognized as revenue. | |
Rose U Agreement | |
In April 2013, the Company entered into an exclusive license agreement with Rose U, LLC to license certain patents, patent applications and know-how. This agreement includes a sublicense and assignment of certain know-how licensed and assigned to Rose U by Stiefel Laboratories, Inc., a GSK Company, or Stiefel, the prior licensee of such patents. In connection with this agreement, the Company also entered into a letter agreement with Stiefel. The Company paid license and other fees of $0.3 million to Rose U in connection with execution of these agreements and is required to pay additional amounts totaling up to $4.6 million upon the achievement of specified development, commercialization and other milestones under these agreements to Rose U and Stiefel. In addition, the Company is also obligated to pay Rose U low-to-mid single-digit royalties on net product sales and low double-digit royalties on sublicense fees and certain milestone, royalty and other contingent payments received from sublicensees, to the extent such amounts are in excess of the milestone and royalty payments the Company is obligated to pay Rose U directly upon the events or sales triggering such payments. | |
UCB (a Related Party) Agreement | |
In March 2014, the Company entered into a development and commercialization agreement with UCB, a related party (the “UCB agreement”), which provides that the Company will develop Cimzia for the treatment of psoriasis in order for UCB to seek regulatory approval from the FDA, European Medicines Agency (“EMA”) and the Canadian federal department for health (“Health Canada”), and upon the grant of regulatory approval in the United States and Canada, for the Company to promote sales of Cimzia to dermatologists and conduct related medical affairs activities in the United States and Canada. Unless earlier terminated, the term of the UCB agreement is 12.5 years following the first commercial launch following regulatory approval of Cimzia for the treatment of psoriasis in the United States or Canada. | |
The Company has agreed with UCB on a development plan to obtain regulatory approval from the FDA, the EMA and Health Canada, which may be amended as necessary to meet the requirements of these regulatory authorities for approval. The Company is responsible for development costs under the development plan up to a specified cap greater than $75.0 million and less than $95.0 million, plus its internal development costs. Any development costs in excess of this cap or for any required clinical trials in pediatric patients will be shared equally. Development costs for any EMA-specific post-approval studies will be borne solely by UCB. UCB is obligated to pay the Company up to an aggregate of $36.0 million if certain development milestones are met, and up to an additional aggregate of $13.5 million upon the grant of regulatory approval, including pricing and reimbursement approval, in certain European countries. In December 2014, the Company earned the first development milestone of $7.3 million for dosing of the first patient in the Phase 3 clinical program for Cimzia and recorded the amount as collaboration revenue from a related party in the consolidated statements of operations for the year ended December 31, 2014. As a result of achieving this milestone, there is $28.7 million in remaining development milestone payments that the Company is eligible to receive. No collaboration revenue was recognized for the three months ended March 31, 2015 and 2014. | |
Under the terms of the UCB agreement, the Company will have the exclusive rights upon regulatory approval of the psoriasis indication to promote Cimzia to dermatologists in the United States and Canada. Following such regulatory approval, UCB will book sales and is obligated to pay the Company royalties representing a percentage of the annual gross profits (after subtracting the costs of certain commercialization support services to be provided by UCB) from Cimzia sales attributed to dermatologists in all indications in the United States and Canada. In each year, the royalties payable to the Company are tiered based upon increasing levels of annual net sales attributed to dermatologists in such year, with UCB retaining between 10% and, above $150.0 million of such annual net sales in such year, 50%, and the Company receiving the balance, of such annual gross profits. In addition, UCB is obligated to pay the Company up to an aggregate of $40.0 million upon the achievement of tiered milestones based on annual net sales of Cimzia attributed to dermatologists in the United States and Canada. | |
As of March 31, 2015, UCB beneficially owned 1,841,234 shares of the Company’s outstanding common stock. One of the members of the Company’s Board of Directors is an Executive Vice President and the Chief Operating Officer of UCB S.A. | |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation | |||||||||
Stock-based Compensation | 9. Stock-Based Compensation | ||||||||
In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”), which provided for the granting of stock options to employees, directors and consultants of the Company. In September 2014, the Company’s Board of Directors approved the 2014 Equity Incentive Plan (the “2014 EIP”), which became effective on October 1, 2014, the day prior to the effective date of the Company’s registration statement on Form S-1 (“Form S-1”). As of the effective date of the 2014 EIP, the 2010 Plan was terminated and no further stock awards will be granted pursuant to the 2010 Plan. Outstanding stock options granted under the 2010 Plan will continue to be governed by the provisions of the 2010 Plan until the earlier of the stock option’s expiration or exercise. In September 2014, the Company’s Board of Directors approved the 2014 Employee Stock Purchase Plan (the “2014 ESPP”), which became effective on October 2, 2014, the day of the effective date of the Form S-1. | |||||||||
The following table reflects a summary of stock option activity and related information for the period from December 31, 2014 through March 31, 2015: | |||||||||
Shares | Shares | Weighted- | |||||||
Available for | Subject to | Average | |||||||
Grant | Outstanding | Exercise | |||||||
Options | Price | ||||||||
Per Share | |||||||||
Options outstanding at December 31, 2014 | 941,339 | 3,401,395 | $ | 6.88 | |||||
Additional shares reserved under plan | 738,860 | — | — | ||||||
Options granted | (87,750 | ) | 87,750 | 17.86 | |||||
Options exercised | — | (42,241 | ) | 1 | |||||
Options forfeited | — | — | — | ||||||
Options outstanding at March 31, 2015 | 1,592,449 | 3,446,904 | $ | 7.23 | |||||
Total stock-based compensation expense related to the 2014 ESPP and options granted to employees and nonemployees was allocated as follows (in thousands): | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Research and development | $ | 455 | $ | 106 | |||||
General and administrative | 639 | 30 | |||||||
Total stock-based compensation expense | $ | 1,094 | $ | 136 | |||||
There were no capitalized stock-based compensation costs or recognized stock-based compensation tax benefits during the three months ended March 31, 2015 and 2014. | |||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Poliies) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Basis of Presentation | ||||||||
Basis of Presentation | ||||||||
The condensed consolidated financial statements of the Company have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s financial information. The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015 or any other future period. The consolidated balance sheet as of December 31, 2014 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Dermira Canada. All intercompany accounts and transactions have been eliminated in consolidation. | ||||||||
The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the Company’s audited consolidated financial statements and the related notes thereto for the year ended December 31, 2014 included in its Annual Report on Form 10-K, filed March 25, 2015 with the SEC. | ||||||||
Reverse Stock Split | ||||||||
Reverse Stock Split | ||||||||
The Company effected a 5.8-to-1 reverse stock split of each share of the Company’s outstanding capital stock on September 18, 2014, the date that the Certificate of Amendment to the Restated Certificate of Incorporation was filed with the Delaware Secretary of State. The reverse stock split did not result in an adjustment to par value. All references to shares of common stock outstanding, average number of shares outstanding and per share amounts in these condensed consolidated financial statements and related notes thereto reflect the reverse stock split. | ||||||||
Use of Estimates | ||||||||
Use of Estimates | ||||||||
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, investments, accrued research and development expenses, goodwill, intangible assets, other long-lived assets, stock-based compensation and the valuation of deferred tax assets. The Company bases its estimates on its historical experience and also on assumptions that it believes are reasonable; however, actual results could significantly differ from those estimates. | ||||||||
Risks and Uncertainties | ||||||||
Risks and Uncertainties | ||||||||
The product candidates developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) and foreign regulatory agencies prior to commercial sales in the United States or foreign jurisdictions, respectively. There can be no assurance that the Company’s current and future product candidates will receive the necessary approvals. If the Company is denied approval or approval is delayed, it may have a material adverse impact on the Company’s business and its financial condition. | ||||||||
The Company is subject to risks common to early-stage companies in the pharmaceutical industry, including dependence on the clinical and commercial success of its product candidates, ability to obtain regulatory approval of its product candidates, compliance with regulatory requirements, the need for substantial additional financing to achieve its goals, uncertainty of broad adoption of its approved products, if any, by physicians and patients, significant competition and ability to manage third party manufacturers, suppliers and contract research organizations (“CROs”). | ||||||||
Concentration of Credit Risk | ||||||||
Concentration of Credit Risk | ||||||||
Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash and cash equivalents, investments and collaboration receivable from a related party. The Company invests its excess cash primarily in money market funds, repurchase agreements and corporate debt. Bank deposits are primarily held by a single financial institution and these deposits may exceed insured limits. The Company is exposed to credit risk in the event of a default by the financial institution holding its cash and cash equivalents and issuers of investments to the extent recorded on the condensed consolidated balance sheets. The Company’s investment policy limits investments to money market funds, certain types of debt securities issued by the U.S. government and its agencies, repurchase agreements, commercial paper, municipal bonds and corporate debt, and places restrictions on the credit ratings, maturities and concentration by type and issuer. | ||||||||
Collaboration receivables are typically unsecured. Accordingly, we may be exposed to credit risk generally associated with our collaboration agreement. To date, we have not experienced any losses related to these receivables. | ||||||||
Fair Value of Financial Instruments | ||||||||
Fair Value of Financial Instruments | ||||||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company primarily applies the market approach for recurring fair value measurements. | ||||||||
The Company measures certain financial assets and liabilities at fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The carrying amount of the Company’s cash and cash equivalents, investments, collaboration receivable from a related party, prepaid expenses, other assets, accounts payable and accrued liabilities approximate fair value due to their short maturities. Based on borrowing rates currently available to the Company for bank term loans with similar terms, the carrying value of the Company’s bank term loan approximates its fair value. | ||||||||
Research and Development Expenses | ||||||||
Research and Development Expenses | ||||||||
The Company expenses research and development expenses as they are incurred. The Company’s research and development expenses consist primarily of costs incurred for the development of its product candidates and include: (1) expenses incurred under agreements with CROs, investigative sites and consultants to conduct clinical trials and preclinical and non-clinical studies; (2) costs to acquire, develop and manufacture supplies for clinical trials and other studies, including fees paid to contract manufacturing organizations (“CMOs”); (3) salaries and related costs, including stock-based compensation and travel expenses, for personnel in research and development functions; (4) costs related to compliance with drug development regulatory requirements; (5) depreciation and other allocated facility-related and overhead expenses; and (6) licensing fees and milestone payments incurred under product license agreements. | ||||||||
Accrued Research and Development Expenses | ||||||||
Accrued Research and Development Expenses | ||||||||
The Company records accruals for estimated costs of research, preclinical and clinical studies and manufacturing development, which are a significant component of research and development expenses. A substantial portion of the Company’s ongoing research and development activities is conducted by third-party service providers, including CROs. The Company’s contracts with CROs generally include pass-through fees such as regulatory expenses, investigator fees, travel costs and other miscellaneous costs, including shipping and printing fees. The financial terms of these contracts are subject to negotiation, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The Company accrues the costs incurred under agreements with these third parties based on actual work completed in accordance with the respective agreements. In the event the Company makes advance payments, the payments are recorded as a prepaid expense and recognized as the services are performed. The Company determines the estimated costs through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fees to be paid for such services. | ||||||||
In addition, the Company’s CRO for the Cimzia Phase 3 program (the “Cimzia CRO”) can earn bonuses or incur penalties based on the Cimzia CRO’s achievement of certain milestones specified in the agreement. If, in any period, it becomes probable that the Cimzia CRO would earn a bonus and the amount is estimable, the Company would accrue the full amount of such bonus in the period in which the bonus is earned. If the Cimzia CRO incurs a penalty, it has the right to recoup such penalty if it achieves a subsequent milestone. In this case, the Company would continue to maintain the full amount owed to the Cimzia CRO until the right of recoupment has expired. | ||||||||
The Company makes significant judgments and estimates in determining the accrual balance in each reporting period. As actual costs become known, the Company adjusts its accruals. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in the Company reporting amounts that are too high or too low in any particular period. The Company’s accrual is dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. To date, there have been no material differences between the Company’s accrued estimated expenses and the actual clinical trial expenses. However, variations in the assumptions used to estimate accruals, including, but not limited to the number of patients enrolled, the rate of patient enrollment and the actual services performed may vary from the Company’s estimates, resulting in adjustments to clinical trial expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect its condensed consolidated financial condition and results of operations. | ||||||||
Net Loss Per Share | ||||||||
Net Loss Per Share | ||||||||
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for dilutive potential shares of common stock. Diluted net loss per share is the same as basic net loss per share, since the effects of potentially dilutive securities are antidilutive for all periods presented. | ||||||||
A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except share and per share amounts): | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net loss per share: | ||||||||
Numerator: | ||||||||
Net loss | $ | (14,035 | ) | $ | (8,539 | ) | ||
Denominator: | ||||||||
Weighted-average shares of common stock outstanding used in the calculation of basic and diluted net loss per share | 24,655,011 | 901,779 | ||||||
Less: Weighted-average shares subject to repurchase | — | (8,237 | ) | |||||
Denominator for basic and diluted net loss per share | 24,655,011 | 893,542 | ||||||
Net loss per share, basic and diluted | $ | (0.57 | ) | $ | (9.56 | ) | ||
The following outstanding dilutive potential shares of common stock were excluded from the computations of diluted net loss per share for the periods presented as the effect of including such securities would be antidilutive: | ||||||||
Outstanding as of March 31, | ||||||||
2015 | 2014 | |||||||
Convertible preferred stock, as converted to common stock | — | 9,540,158 | ||||||
Warrant to purchase convertible preferred stock, as converted to a common stock warrant | — | 11,276 | ||||||
Options to purchase common stock | 3,446,904 | 1,771,897 | ||||||
Common stock subject to repurchase | — | 6,286 | ||||||
3,446,904 | 11,329,617 | |||||||
Recent Accounting Pronouncements | ||||||||
Recent Accounting Pronouncements | ||||||||
In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”), which is an amendment to the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. ASU 2014-15 establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company will evaluate the guidance under ASU 2014-15 and present the required disclosures in its consolidated financial statements at the time of adoption. | ||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which converges the FASB and the International Accounting Standards Board standards on revenue recognition. Areas of revenue recognition that will be affected include, but are not limited to, transfer of control, variable consideration, allocation of transfer pricing, licenses, time value of money, contract costs and disclosures. This guidance is effective for the fiscal years and interim reporting periods beginning after December 15, 2016. In April 2015, the FASB proposed a deferral of the effective date of the updated standard by one year, but to permit entities to adopt one year earlier if they choose. The proposed effective date deferral is not currently approved. The Company is currently evaluating the impact that the adoption of ASU 2014-09 will have on its consolidated financial statements and related disclosures. | ||||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Summary of Significant Accounting Policies | ||||||||
Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share | A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share is as follows (in thousands, except share and per share amounts): | |||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2015 | 2014 | |||||||
Net loss per share: | ||||||||
Numerator: | ||||||||
Net loss | $ | (14,035 | ) | $ | (8,539 | ) | ||
Denominator: | ||||||||
Weighted-average shares of common stock outstanding used in the calculation of basic and diluted net loss per share | 24,655,011 | 901,779 | ||||||
Less: Weighted-average shares subject to repurchase | — | (8,237 | ) | |||||
Denominator for basic and diluted net loss per share | 24,655,011 | 893,542 | ||||||
Net loss per share, basic and diluted | $ | (0.57 | ) | $ | (9.56 | ) | ||
Schedule of outstanding dilutive potential shares of common stock excluded from the computations of diluted net loss per share | ||||||||
Outstanding as of March 31, | ||||||||
2015 | 2014 | |||||||
Convertible preferred stock, as converted to common stock | — | 9,540,158 | ||||||
Warrant to purchase convertible preferred stock, as converted to a common stock warrant | — | 11,276 | ||||||
Options to purchase common stock | 3,446,904 | 1,771,897 | ||||||
Common stock subject to repurchase | — | 6,286 | ||||||
3,446,904 | 11,329,617 | |||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Schedule of fair value of the Company's financial instruments that were measured at fair value on a recurring basis | The following tables set forth the fair value of the Company’s financial instruments that were measured at fair value on a recurring basis as of March 31, 2015 and December 31, 2014 (in thousands): | |||||||||||||
As of March 31, 2015 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 7,005 | $ | — | $ | — | $ | 7,005 | ||||||
Repurchase agreements | — | 45,000 | — | 45,000 | ||||||||||
Corporate debt | — | 105,514 | — | 105,514 | ||||||||||
Other short-term interest-bearing securities | — | 485 | — | 485 | ||||||||||
Total financial assets | $ | 7,005 | $ | 150,999 | $ | — | $ | 158,004 | ||||||
As of December 31, 2014 | ||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 10,088 | $ | — | $ | — | $ | 10,088 | ||||||
Repurchase agreements | — | 70,000 | — | 70,000 | ||||||||||
Corporate debt | — | 83,276 | — | 83,276 | ||||||||||
Total financial assets | $ | 10,088 | $ | 153,276 | $ | — | $ | 163,364 | ||||||
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||||||
Mar. 31, 2015 | ||||||||||||||
Investments | ||||||||||||||
Schedule of investment securities | Investments included available-for-sale securities and investment securities classified as cash equivalents. Investment securities consisted of the following (in thousands): | |||||||||||||
As of March 31, 2015 | ||||||||||||||
Amortized Cost | Gross Unrealized | Gross Unrealized | Fair Value | |||||||||||
Gains | Losses | |||||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 7,005 | $ | — | $ | — | $ | 7,005 | ||||||
Repurchase agreements | 45,000 | — | — | 45,000 | ||||||||||
Corporate debt | 105,546 | 39 | (71 | ) | 105,514 | |||||||||
Other short-term interest bearing securities | 485 | — | — | 485 | ||||||||||
Total investments | $ | 158,036 | $ | 39 | $ | (71 | ) | $ | 158,004 | |||||
As of December 31, 2014 | ||||||||||||||
Amortized Cost | Gross Unrealized | Gross Unrealized | Fair Value | |||||||||||
Gains | Losses | |||||||||||||
Financial assets: | ||||||||||||||
Money market funds | $ | 10,088 | $ | — | $ | — | $ | 10,088 | ||||||
Repurchase agreements | 70,000 | — | — | 70,000 | ||||||||||
Corporate debt | 83,487 | 2 | (213 | ) | 83,276 | |||||||||
Total investments | $ | 163,575 | $ | 2 | $ | (213 | ) | $ | 163,364 | |||||
Accrued_Liabilities_Tables
Accrued Liabilities (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Accrued Liabilities | ||||||||
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Accrued compensation | $ | 1,498 | $ | 2,463 | ||||
Accrued outside research and development services | 2,884 | 3,670 | ||||||
Accrued professional and consulting services | 687 | 108 | ||||||
Other | 144 | 86 | ||||||
$ | 5,213 | $ | 6,327 | |||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Stock-Based Compensation | |||||||||
Summary of stock option activity and related information | |||||||||
Shares | Shares | Weighted- | |||||||
Available for | Subject to | Average | |||||||
Grant | Outstanding | Exercise | |||||||
Options | Price | ||||||||
Per Share | |||||||||
Options outstanding at December 31, 2014 | 941,339 | 3,401,395 | $ | 6.88 | |||||
Additional shares reserved under plan | 738,860 | — | — | ||||||
Options granted | (87,750 | ) | 87,750 | 17.86 | |||||
Options exercised | — | (42,241 | ) | 1 | |||||
Options forfeited | — | — | — | ||||||
Options outstanding at March 31, 2015 | 1,592,449 | 3,446,904 | $ | 7.23 | |||||
Schedule of stock-based compensation expense | Total stock-based compensation expense related to the 2014 ESPP and options granted to employees and nonemployees was allocated as follows (in thousands): | ||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2015 | 2014 | ||||||||
Research and development | $ | 455 | $ | 106 | |||||
General and administrative | 639 | 30 | |||||||
Total stock-based compensation expense | $ | 1,094 | $ | 136 | |||||
Organization_Details
Organization (Details) | Mar. 31, 2015 |
item | |
Organization | |
Number of product candidates | 5 |
Number of late-stage product candidates | 3 |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) | 0 Months Ended |
Sep. 18, 2014 | |
Summary of Significant Accounting Policies | |
Reverse Stock Split ratio | 0.172414 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Numerator: | ||
Net loss | ($14,035) | ($8,539) |
Denominator: | ||
Weighted-average shares of common stock outstanding used in the calculation of basic and diluted net loss per share | 24,655,011 | 901,779 |
Less: Weighted-average shares subject to repurchase | -8,237 | |
Denominator for basic and diluted net loss per share | 24,655,011 | 893,542 |
Net loss per share, basic and diluted | ($0.57) | ($9.56) |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 3) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Anti dilutive securities excluded in calculation of EPS | ||
Anti dilutive securities excluded in calculation of EPS | 3,446,904 | 11,329,617 |
Convertible Preferred Stock | ||
Anti dilutive securities excluded in calculation of EPS | ||
Anti dilutive securities excluded in calculation of EPS | 9,540,158 | |
Warrant | ||
Anti dilutive securities excluded in calculation of EPS | ||
Anti dilutive securities excluded in calculation of EPS | 11,276 | |
Options to purchase common stock | ||
Anti dilutive securities excluded in calculation of EPS | ||
Anti dilutive securities excluded in calculation of EPS | 3,446,904 | 1,771,897 |
Common stock subject to repurchase | ||
Anti dilutive securities excluded in calculation of EPS | ||
Anti dilutive securities excluded in calculation of EPS | 6,286 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (Recurring, USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Total | ||
Financial assets: | ||
Total financial assets | $158,004 | $163,364 |
Total | Money market funds | ||
Financial assets: | ||
Total financial assets | 7,005 | 10,088 |
Total | Repurchase agreements | ||
Financial assets: | ||
Total financial assets | 45,000 | 70,000 |
Total | Corporate debt securities | ||
Financial assets: | ||
Total financial assets | 105,514 | 83,276 |
Total | Other Short Term Interest Bearing Securities | ||
Financial assets: | ||
Total financial assets | 485 | |
Level 1 | ||
Financial assets: | ||
Total financial assets | 7,005 | 10,088 |
Level 1 | Money market funds | ||
Financial assets: | ||
Total financial assets | 7,005 | 10,088 |
Level 2 | ||
Financial assets: | ||
Total financial assets | 150,999 | 153,276 |
Level 2 | Repurchase agreements | ||
Financial assets: | ||
Total financial assets | 45,000 | 70,000 |
Level 2 | Corporate debt securities | ||
Financial assets: | ||
Total financial assets | 105,514 | 83,276 |
Level 2 | Other Short Term Interest Bearing Securities | ||
Financial assets: | ||
Total financial assets | $485 |
Fair_Value_Measurements_Detail1
Fair Value Measurements (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Fair value transfers between level 1 and 2 | ||
Transfer from level 1 to level 2 | $0 | $0 |
Transfer from level 2 to level 1 | $0 | $0 |
Investments_Details
Investments (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Investment securities | ||
Amortized Cost | $158,036 | $163,575 |
Gross Unrealized Gains | 39 | 2 |
Gross Unrealized Losses | -71 | -213 |
Fair Value | 158,004 | 163,364 |
Money market funds | ||
Investment securities | ||
Amortized Cost | 7,005 | 10,088 |
Fair Value | 7,005 | 10,088 |
Repurchase agreements | ||
Investment securities | ||
Amortized Cost | 45,000 | 70,000 |
Fair Value | 45,000 | 70,000 |
Corporate debt securities | ||
Investment securities | ||
Amortized Cost | 105,546 | 83,487 |
Gross Unrealized Gains | 39 | 2 |
Gross Unrealized Losses | -71 | -213 |
Fair Value | 105,514 | 83,276 |
Other Short Term Interest Bearing Securities | ||
Investment securities | ||
Amortized Cost | 485 | |
Fair Value | $485 |
Investments_Details_2
Investments (Details 2) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Available-for-sale investment securities with contractual maturity dates of more than one year and less than two years | ||
Available-for-sale investment securities with contractual maturity dates of more than one year and less than two years | $35.70 | |
Continuous unrealized loss position | ||
Investments in a continuous loss position for 12 months or more, gross unrealized losses | 0 | |
Realized gains or losses | ||
Realized gains or losses on the available-for-sale securities | $0 | $0 |
Accrued_Liabilities_Details
Accrued Liabilities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Accrued Liabilities | ||
Accrued compensation | $1,498 | $2,463 |
Accrued outside research and development services | 2,884 | 3,670 |
Accrued professional and consulting services | 687 | 108 |
Other | 144 | 86 |
Total | $5,213 | $6,327 |
Loan_Agreement_Details
Loan Agreement (Details) (USD $) | 1 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended |
Dec. 31, 2013 | Mar. 31, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | |
loan | loan | |||
Term Loan | Line of Credit | ||||
Loan Agreement | ||||
Number of term loans | 2 | 2 | ||
Fixed interest rate (as a percent) | 5.50% | |||
Treasury Rate | Term Loan | Line of Credit | ||||
Loan Agreement | ||||
Basis spread on reference rate (as a percent) | 5.10% | |||
Term Loan A | Term Loan | Line of Credit | ||||
Loan Agreement | ||||
Term loan amount | 2,000,000 | 2,000,000 | ||
Interest rate (as a percent) | 5.77% | 5.77% | ||
Period of term loan | 60 months | |||
Number of interest only monthly payments | 30 | |||
Number of monthly payments | 30 | |||
Principal amount to be repaid monthly | 66,666.67 | |||
Bank fee | 120,000 | |||
Interest expense recognized | 38,000 | 33,000 | ||
Term Loan B | ||||
Loan Agreement | ||||
Term loan amount | 0 | |||
Term Loan B | Warrant | Common Stock | ||||
Loan Agreement | ||||
Number of shares to be purchased in exchange of warrant | 6,528 | 6,528 | ||
Exercise price of warrants (in dollars per share) | 8.4245 | 8.4245 | ||
Percentage of the amount drawn under Loan Agreement used to calculate number of shares issuable pursuant to the warrant | 1.00% | 1.00% | ||
Divisor used to calculate number of shares issuable pursuant to the warrant | 8.4245 | 8.4245 | ||
Term Loan B | Term Loan | Line of Credit | ||||
Loan Agreement | ||||
Term loan amount | 5,500,000 | 5,500,000 | ||
Maximum number of interest only monthly payments | 6 | 6 | ||
Repayment fee (as a percent) | 2.75% | 2.75% |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | 1 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Jul. 31, 2014 | Aug. 31, 2014 | |
sqft | ||||
Facility Lease | ||||
Rent expense | $314,000 | $87,000 | ||
Menlo Park, California facility lease | ||||
Facility Lease | ||||
Area of office (n square feet) | 18,651 | |||
Base rent expense per month | 97,918 | |||
Annual increase in base rent (as a percent) | 3.00% | |||
Estimated additional fees per month | 22,381 | |||
Lease term | 5 years | |||
Renewal lease | 3 years | |||
Value of security/ debt obligation required to be issued to lessor | 500,000 | |||
Reduced value of security/ debt obligation required to be issued to lessor on no defaults made after 30 months | 250,000 | |||
Letter of credit | $500,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details 2) (Contract research organization agreement, Cimzia, USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Contract research organization agreement | Cimzia | |
CRO Agreement | |
CRO aggregate bonus, maximum | $3.60 |
CRO aggregate penalty, maximum | 3.2 |
CRO aggregate bonus | 0 |
CRO aggregate penalty | $0 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 3) (Indemnification, USD $) | Mar. 31, 2015 |
Indemnification | |
Commitments and Contingencies | |
Loss contingency amount | $0 |
Technology_and_Financing_Agree1
Technology and Financing Agreements (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2013 | Apr. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
item | ||||||
Technology and Financing Agreements | ||||||
Deferred revenue | $10,000,000 | $10,000,000 | ||||
Right of First Negotiation Agreement | Maruho Co. Ltd. | ||||||
Technology and Financing Agreements | ||||||
Nonrefundable upfront payment received | 10,000,000 | |||||
Number of parties, which enter into an exclusive license for entities products | 2 | |||||
Deferred revenue | 10,000,000 | 10,000,000 | ||||
Exclusive License Agreement | Rose U | ||||||
Technology and Financing Agreements | ||||||
Payment for execution of agreements | 300,000 | |||||
Additional payment upon the achievement of specified development, commercialization and other milestones | 4,600,000 | |||||
Investor | UCB | ||||||
Technology and Financing Agreements | ||||||
Common stock outstanding | 1,841,234 | |||||
Investor | Development and Commercialization Agreement | UCB | ||||||
Technology and Financing Agreements | ||||||
Agreement term | 12 years 6 months | |||||
Development costs - company responsibility, minimum | 75,000,000 | 75,000,000 | ||||
Development costs - company responsibility, maximum | 95,000,000 | 95,000,000 | ||||
Potential proceeds from development milestones | 36,000,000 | 28,700,000 | 36,000,000 | |||
Additional proceeds received upon the grant of regulatory approval | 13,500,000 | 13,500,000 | ||||
Collaboration revenue from a related party | 0 | 0 | 7,300,000 | |||
Minimum royalty percentage up to base annual net sales | 10.00% | |||||
Base annual net sales for retaining | 150,000,000 | |||||
Royalty percentage above base annual net sales | 50.00% | |||||
Proceeds received from achievement of tiered milestones based on annual net sales | $40,000,000 | $40,000,000 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) (Stock options, USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Stock options | |
Shares Available for Grant | |
Options outstanding (in shares) | 941,339 |
Additional shares reserved under plan | 738,860 |
Options granted (in shares) | -87,750 |
Options outstanding (in shares) | 1,592,449 |
Shares Subject to Outstanding Options | |
Options outstanding (in shares) | 3,401,395 |
Options granted (in shares) | 87,750 |
Options exercised (in shares) | -42,241 |
Options outstanding (in shares) | 3,446,904 |
Weighted-Average Exercise Price Per Share | |
Options outstanding (in dollars per share) | $6.88 |
Options granted (in dollars per share) | $17.86 |
Options exercised (in dollars per share) | $1 |
Options outstanding (in dollars per share) | $7.23 |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Total stock-based compensation | ||
Total stock-based compensation expense | $1,094 | $136 |
Capitalized stock-based compensation costs | 0 | 0 |
Research and development | ||
Total stock-based compensation | ||
Total stock-based compensation expense | 455 | 106 |
General and administrative | ||
Total stock-based compensation | ||
Total stock-based compensation expense | $639 | $30 |