Kindred Biosciences (KIN) 10-Q 5 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2016	Apr. 30, 2016
Entity [Abstract]
Entity Registrant Name	Kindred Biosciences, Inc.
Entity Central Index Key	1,561,743
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		19,838,610

Condensed Balance Sheets

Condensed Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 9,611	$ 19,992
Short-term investments	58,962	53,051
Prepaid expenses and other	862	712
Total current assets	69,435	73,755
Property and equipment, net	1,701	1,244
Long-term investments	1,903	4,590
Other assets	30	30
Total assets	73,069	79,619
Current liabilities:
Accounts payable	567	717
Accrued compensation	746	1,922
Accrued liabilities	582	569
Total current liabilities	1,895	3,208
Long-term liability	33	40
Total liabilities	$ 1,928	$ 3,248
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock, $0.0001 par value; 100,000,000 shares authorized; 19,836,360 shares issued and outstanding at March 31, 2016 and December 31, 2015	$ 2	$ 2
Additional paid-in capital	135,783	135,021
Accumulated other comprehensive income (loss)	18	(50)
Accumulated deficit	(64,662)	(58,602)
Total stockholders' equity	71,141	76,371
Total liabilities and stockholders' equity	$ 73,069	$ 79,619

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value, in dollar per share	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	19,836,360	19,836,360
Common stock, shares outstanding	19,836,360	19,836,360

Consolidated Statements of Oper

Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating expenses:
Research and development	$ 3,437	$ 4,809
General and administrative	2,020	1,953
Restructuring costs	655	0
Total operating expenses	6,112	6,762
Loss from operations	(6,112)	(6,762)
Interest and other income, net	52	30
Net loss	(6,060)	(6,732)
Change in unrealized gains or losses on available-for-sale securities	68	17
Comprehensive loss	$ (5,992)	$ (6,715)
Net loss per share, basic and diluted, in dollars per share	$ (0.31)	$ (0.34)
Weighted-average number of common shares outstanding, basic and diluted, in shares	19,836	19,726

Condensed Statement of Cash Flo

Condensed Statement of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash Flows from Operating Activities
Net loss	$ (6,060)	$ (6,732)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	762	1,078
Depreciation and amortization expense	38	34
Amortization of premium on marketable securities	77	32
Changes in operating assets and liabilities:
Prepaid expenses and other	(150)	(114)
Accounts payable	117	(73)
Accrued liabilities and accrued compensation	(1,268)	(628)
Net cash used in operating activities	(6,484)	(6,403)
Cash Flows from Investing Activities
Purchase of investments	(33,673)	(25,128)
Sale of investments	0	3,000
Maturities of investments	30,440	21,000
Purchase of property and equipment	(664)	(31)
Net cash used in investing activities	(3,897)	(1,159)
Cash Flows from Financing Activities
Exercise of stock options	0	11
Net cash provided by financing activities	0	11
Net change in cash and cash equivalents	(10,381)	(7,551)
Cash and cash equivalents at beginning of period	19,992	12,969
Cash and cash equivalents at end of period	9,611	5,418
Supplemental disclosure of non-cash investing activities:
Purchase of property and equipment included in accrued liabilities	$ 98	$ 0

Description of Business, Basis

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Description of Business, Basis of Presentation and Summary of Significant Accounting Policies	Description of Business, Basis of Presentation and Summary of Significant Accounting Policies Kindred Biosciences, Inc. ("we", "us" or "our") was incorporated on September 25, 2012 (inception) in the State of Delaware. We are a biopharmaceutical company focused on saving and improving the lives of pets. Our activities since inception have consisted principally of raising capital, establishing facilities, recruiting management and technical staff and performing research and development and advancing our product candidates seeking regulatory approval. Our headquarters are in Burlingame, California. We are subject to risks common to companies in the biotechnology and pharmaceutical industries. There can be no assurance that our research and development will be successfully completed, that adequate patent or other intellectual property protection for our technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. We operate in an environment of substantial competition from other animal health companies. In addition, we are dependent upon the services of our employees and consultants, as well as third-party contract research organizations and manufacturers. The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2015 included in our annual report on Form 10-K as filed with the SEC on March 4, 2016. In the opinion of management, all adjustments, consisting of a normal and recurring nature, considered necessary for a fair presentation, have been included in these unaudited interim condensed financial statements. Liquidity We have incurred losses and negative cash flows from operations and have not generated any revenue since our inception. We expect to continue to incur losses and negative cash flows, which will increase significantly from historical levels as we expand our product development activities, seek regulatory approvals for our product candidates, establish a biologics manufacturing capability, and begin to commercialize any approved products. To date, we have been funded primarily through sales of our former convertible preferred stock, the sale of our common stock in our initial public offering in December 2013 and the sale of our common stock in our April 2014 follow-on public offering. We believe that our cash, cash equivalents, short-term and long-term investments totaling $70,476,000 as of March 31, 2016 , are sufficient to fund our planned operations for at least the next 24 months. If we require additional funding for operations, we may seek such funding through public or private equity or debt financings or other sources, such as corporate collaborations and licensing arrangements. We may not be able to obtain financing on acceptable terms, or at all, and we may not be able to enter into corporate collaborations or licensing arrangements. The terms of any financing may result in dilution or otherwise adversely affect the holdings or the rights of our stockholders. Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed financial statements include, but are not limited to, the valuation of stock-based awards, the realization of deferred tax assets, the recoverability of long-lived assets and the accrual of research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates. Comprehensive Loss Our comprehensive loss includes the change in unrealized gains or losses on available-for-sale securities. The cumulative amount of gains or losses are reflected as a separate component of stockholders' equity in the condensed balance sheets as accumulated other comprehensive income (loss). Recently Issued Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, "Balance Sheet Classification of Deferred Taxes", requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The update is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities", which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments and also amends certain disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", requiring organizations that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which amends ASC Topic 718, “Compensation - Stock Compensation”. The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. Our early adoption of this standard in the quarter ended March 31, 2016 did not have any material impact on our condensed financial statements. We do not believe there are any other recently issued standards not yet effective that will have a material impact on our financial statements when the standards become effective.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements Certain assets and liabilities are carried at fair value. 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 must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: 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 carrying amount of financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to the short maturities of these financial instruments. Financial assets, which consist of money market funds and available-for-sale securities, are measured at fair value on a recurring basis. Financial assets, which consist of money market funds and available-for-sale securities, are measured at fair value on a recurring basis and are summarized as follows (in thousands): Fair Value Measurements as of March 31, 2016 Description Total Quoted Prices in Significant Other Unobservable Inputs Cash equivalents: Money market funds $ 2,718 $ 2,718 $ — $ — U.S. government agency notes 5,461 — 5,461 — U.S. treasury bonds 1,002 — 1,002 — Short-term investments: U.S. treasury bills 29,457 — 29,457 — U.S. government agency notes 8,335 — 8,335 — U.S. treasury bonds 21,170 — 21,170 — Long-term investments: U.S. government agency notes 901 — 901 — U.S. treasury bonds 1,002 — 1,002 — $ 70,046 $ 2,718 $ 67,328 $ — Fair Value Measurements as of December 31, 2015 Description Total Quoted Prices in Significant Other Unobservable Inputs Cash equivalents: Money market funds $ 8,169 $ 8,169 $ — $ — U.S. government agency notes 4,385 — 4,385 — Short-term investments: U.S. treasury bills 41,282 — 41,282 — U.S. government agency notes 11,769 — 11,769 — Long-term investments: U.S. treasury bills 4,590 — 4,590 — $ 70,195 $ 8,169 $ 62,026 $ — There were no transfers of assets between Level 1, Level 2 or Level 3 of the fair value hierarchy at March 31, 2016 or December 31, 2015 . At March 31, 2016 and December 31, 2015 , we did not have any financial liabilities which were measured at fair value on a recurring basis.

Investments

Investments	3 Months Ended
	Mar. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Short-Term Investments	Investments We classify all highly-liquid investments with stated maturities of greater than three months from the date of purchase and remaining maturities of less than one year as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such investments are viewed as being available to support current operations. We classify and account for investments as available-for-sale and reflect realized gains and losses using the specific identification method. Changes in market value, if any, excluding other-than-temporary impairments, are reflected in other comprehensive income (loss). The fair value of available-for-sale investments by type of security at March 31, 2016 were as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments: U.S. treasury bills $ 29,443 $ 14 $ — $ 29,457 U.S. government agency notes 8,335 — — 8,335 U.S. treasury bonds 21,168 6 (4 ) 21,170 58,946 20 (4 ) 58,962 Long-term investments: U.S. government agency notes 900 1 — 901 U.S. treasury bonds 1,001 1 — 1,002 Total available-for-sale investments $ 60,847 $ 22 $ (4 ) $ 60,865 The fair value of available-for-sale investments by type of security at December 31, 2015 were as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments: U.S. treasury bills $ 41,293 $ 14 $ (25 ) $ 41,282 U.S. government agency notes 11,776 — (7 ) 11,769 U.S. treasury bonds 25 9 (34 ) — 53,094 23 (66 ) 53,051 Long-term investments: U.S. treasury bills 4,597 — (7 ) 4,590 Total available-for-sale investments $ 57,691 $ 23 $ (73 ) $ 57,641

Accrued Liabilities

Accrued Liabilities	3 Months Ended
	Mar. 31, 2016
Payables and Accruals [Abstract]
Accrued Liabilities	Accrued Liabilities Accrued liabilities consisted of the following (in thousands): March 31, 2016 December 31, 2015 Accrued consulting $ 33 $ 83 Accrued research and development costs 387 345 Other expenses 146 128 Deferred rent 49 53 615 609 Less current portion (582 ) (569 ) Long-term liability (deferred rent) $ 33 $ 40

Stock-Based Awards and Common S

Stock-Based Awards and Common Stock	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Awards and Common Stock	Stock-Based Awards and Common Stock The table below shows the number of shares of common stock underlying options granted to employees, directors and consultants, the assumptions used in the Black-Scholes option pricing model used to value those options and the resulting weighted-average grant date fair value per share: Stock Option Plan Three months ended March 31, 2016 2015 Shares underlying options granted 682,833 646,333 Weighted-average exercise price $3.39 $6.77 Weighted average risk- free interest rate 1.65 % 1.44 % Weighted average expected term (years) 6.1 6.1 Weighted average expected volatility 82% 97% Expected dividend yield — — Weighted-average grant date fair value per share $2.38 $5.24 Our Employee Stock Purchase Plan (the "Stock Purchase Plan"), adopted in December 2014, permits eligible employees to purchase common stock at a discount through payroll deductions during defined six -month consecutive offering periods beginning December 1 with the exception of our first offering period which commenced on January 1, 2015 for a five month duration. The price at which the stock is purchased is equal to the lower of 85% of the fair market value of the common stock on the first day of the offering or 85% of the fair market value of our common stock on the purchase date. A total of 200,000 shares of common stock are authorized for issuance under the Stock Purchase Plan. A participant may purchase a maximum of 2,000 shares of common stock during each offering period, not to exceed $25,000 worth of common stock on the offering date during each calendar year. We use the Black-Scholes option pricing model, in combination with the discounted employee price, in determining the value of the Stock Purchase Plan expense to be recognized during each offering period. The following assumptions were used in the Black-Scholes option pricing model to calculate employee stock-based compensation: Stock Purchase Plan Three months ended March 31, 2016 2015 Weighted average risk-free interest rate 0.42% 0.08% Weighted average expected term (years) 0.5 0.4 Weighted average expected volatility 72.7% 58.6% Expected dividend yield — — Weighted-average grant date fair value per share $1.28 $2.06 We did not issue any common stock under the Stock Purchase Plan for the three months ended March 31, 2016. At March 31, 2016 and December 31, 2015, we had an outstanding liability of $83,000 and $25,000 , respectively, which is included in accrued compensation on the condensed balance sheets, for employee contributions to the Stock Purchase Plan for shares pending issuance at the end of the next offering period. We recorded stock-based compensation expense as follows (in thousands): Three months ended March 31, 2016 2015 Research and development $ 259 $ 464 General and administrative 503 614 $ 762 $ 1,078 We had an aggregate of approximately $7,599,000 of unrecognized stock-based compensation expense for options outstanding and the Stock Purchase Plan as of March 31, 2016 which is expected to be recognized over a weighted-average period of 2.5 years.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies In April 2014, we entered into new non-cancelable operating leases for laboratory space and office space through November 2017. In January, August and November 2015, we amended our original operating lease for laboratory space to expand the facility with an additional 2,431 square feet, 131 square feet and 123 square feet, respectively, of manufacturing space through May 2017. In August 2015, we entered into a new non-cancelable operating lease for 3,126 square feet of office space in San Diego, California through September 2019. In February 2016, we further amended our original operating lease for laboratory space to further expand the facility with an additional 3,599 square feet of quality control laboratory space through May 2017. In addition, we have three equipment leases expiring through 2020. As of March 31, 2016 , we are obligated to make minimum lease payments under noncancelable operating leases as follows (in thousands): Year ending December 31, Lease Payments 2016 (remaining of year) $ 416 2017 404 2018 103 2019 80 2020 2 Total $ 1,005

Net Loss Per Share

Net Loss Per Share	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Net Loss Per Share	Net Loss Per Share Basic and diluted net loss per share was calculated as follows (in thousands, except per share amounts): Three months ended March 31, 2016 2015 Basic and diluted net loss per share: Numerator: Net loss $ (6,060 ) $ (6,732 ) Denominator: Weighted-average number of common shares outstanding, basic and diluted 19,836 19,726 Net loss per share, basic and diluted $ (0.31 ) $ (0.34 ) There was no difference between the Company’s net loss and the net loss attributable to common stockholders for all periods presented. Stock options to purchase 3,543,683 shares of common stock as of March 31, 2016 , were excluded from the computation of diluted net loss per share attributable to common stockholders for the three months ended March 31, 2016 , because their effect was anti-dilutive. Stock options and unvested restricted stock awards to purchase 2,947,748 shares of common stock were excluded from the computation of diluted net loss per share attributable to common stockholders for the three months ended March 31, 2015 , because their effect was anti-dilutive.

Restructuring Plan (Notes)

Restructuring Plan (Notes)	3 Months Ended
	Mar. 31, 2016
Restructuring and Related Activities [Abstract]
Restructuring Plan	Restructuring Plan On January 8, 2016, our Board of Directors committed to a restructuring plan intended to better align our workforce to our revised operating needs and program development plans. On January 11, 2016, we implemented the restructuring plan that focused on streamlining our development programs and to ensure our remaining funds are sufficient to fund our planned operations through 2018. To match these priorities, we reduced our workforce by 18 positions, or approximately 31% of our workforce, resulting in a total workforce of 39 positions. As a result of the restructuring plan which has been completed, we recorded a restructuring charge of approximately $655,000 related to severance payments which was entirely paid in the quarter ended March 31, 2016.

Subsequent Event

Subsequent Event	3 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent Event	Subsequent Event On April 25, 2016, we filed a Certificate of Incorporation with the State of Delaware for a wholly owned subsidiary, KindredBio Equine, Inc. ("Subsidiary"). The Subsidiary has one class of capital stock which is designated common stock, $.0001 par value per share. The authorized number of shares of common stock is 1,000 .

Description of Business, Basi15

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Basis of Presentation	Kindred Biosciences, Inc. ("we", "us" or "our") was incorporated on September 25, 2012 (inception) in the State of Delaware. We are a biopharmaceutical company focused on saving and improving the lives of pets. Our activities since inception have consisted principally of raising capital, establishing facilities, recruiting management and technical staff and performing research and development and advancing our product candidates seeking regulatory approval. Our headquarters are in Burlingame, California. We are subject to risks common to companies in the biotechnology and pharmaceutical industries. There can be no assurance that our research and development will be successfully completed, that adequate patent or other intellectual property protection for our technology will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. We operate in an environment of substantial competition from other animal health companies. In addition, we are dependent upon the services of our employees and consultants, as well as third-party contract research organizations and manufacturers. The accompanying unaudited interim condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2015 included in our annual report on Form 10-K as filed with the SEC on March 4, 2016. In the opinion of management, all adjustments, consisting of a normal and recurring nature, considered necessary for a fair presentation, have been included in these unaudited interim condensed financial statements.
Liquidity	Liquidity We have incurred losses and negative cash flows from operations and have not generated any revenue since our inception. We expect to continue to incur losses and negative cash flows, which will increase significantly from historical levels as we expand our product development activities, seek regulatory approvals for our product candidates, establish a biologics manufacturing capability, and begin to commercialize any approved products. To date, we have been funded primarily through sales of our former convertible preferred stock, the sale of our common stock in our initial public offering in December 2013 and the sale of our common stock in our April 2014 follow-on public offering. We believe that our cash, cash equivalents, short-term and long-term investments totaling $70,476,000 as of March 31, 2016 , are sufficient to fund our planned operations for at least the next 24 months. If we require additional funding for operations, we may seek such funding through public or private equity or debt financings or other sources, such as corporate collaborations and licensing arrangements. We may not be able to obtain financing on acceptable terms, or at all, and we may not be able to enter into corporate collaborations or licensing arrangements. The terms of any financing may result in dilution or otherwise adversely affect the holdings or the rights of our stockholders.
Use of Estimates	Use of Estimates The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed financial statements include, but are not limited to, the valuation of stock-based awards, the realization of deferred tax assets, the recoverability of long-lived assets and the accrual of research and development expenses. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from those estimates.
Comprehensive Loss	Comprehensive Loss Our comprehensive loss includes the change in unrealized gains or losses on available-for-sale securities. The cumulative amount of gains or losses are reflected as a separate component of stockholders' equity in the condensed balance sheets as accumulated other comprehensive income (loss).
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-17, "Balance Sheet Classification of Deferred Taxes", requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. The update is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities", which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments and also amends certain disclosure requirements associated with the fair value of financial instruments. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)", requiring organizations that lease assets—referred to as “lessees”—to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. Under the new guidance, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. The ASU on leases will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are currently evaluating the new guidance and have not determined the impact this standard may have on our condensed financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”, which amends ASC Topic 718, “Compensation - Stock Compensation”. The ASU includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. ASU 2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. Our early adoption of this standard in the quarter ended March 31, 2016 did not have any material impact on our condensed financial statements. We do not believe there are any other recently issued standards not yet effective that will have a material impact on our financial statements when the standards become effective.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Schedule of Financial Assets Measured at Fair Value on a Recurring Basis	Financial assets, which consist of money market funds and available-for-sale securities, are measured at fair value on a recurring basis and are summarized as follows (in thousands): Fair Value Measurements as of March 31, 2016 Description Total Quoted Prices in Significant Other Unobservable Inputs Cash equivalents: Money market funds $ 2,718 $ 2,718 $ — $ — U.S. government agency notes 5,461 — 5,461 — U.S. treasury bonds 1,002 — 1,002 — Short-term investments: U.S. treasury bills 29,457 — 29,457 — U.S. government agency notes 8,335 — 8,335 — U.S. treasury bonds 21,170 — 21,170 — Long-term investments: U.S. government agency notes 901 — 901 — U.S. treasury bonds 1,002 — 1,002 — $ 70,046 $ 2,718 $ 67,328 $ — Fair Value Measurements as of December 31, 2015 Description Total Quoted Prices in Significant Other Unobservable Inputs Cash equivalents: Money market funds $ 8,169 $ 8,169 $ — $ — U.S. government agency notes 4,385 — 4,385 — Short-term investments: U.S. treasury bills 41,282 — 41,282 — U.S. government agency notes 11,769 — 11,769 — Long-term investments: U.S. treasury bills 4,590 — 4,590 — $ 70,195 $ 8,169 $ 62,026 $ —

Investments (Tables)

Investments (Tables)	3 Months Ended
	Mar. 31, 2016
Investments, Debt and Equity Securities [Abstract]
Schedule of Fair Value of Available-for-Sale Short Term Investments	The fair value of available-for-sale investments by type of security at March 31, 2016 were as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments: U.S. treasury bills $ 29,443 $ 14 $ — $ 29,457 U.S. government agency notes 8,335 — — 8,335 U.S. treasury bonds 21,168 6 (4 ) 21,170 58,946 20 (4 ) 58,962 Long-term investments: U.S. government agency notes 900 1 — 901 U.S. treasury bonds 1,001 1 — 1,002 Total available-for-sale investments $ 60,847 $ 22 $ (4 ) $ 60,865 The fair value of available-for-sale investments by type of security at December 31, 2015 were as follows (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term investments: U.S. treasury bills $ 41,293 $ 14 $ (25 ) $ 41,282 U.S. government agency notes 11,776 — (7 ) 11,769 U.S. treasury bonds 25 9 (34 ) — 53,094 23 (66 ) 53,051 Long-term investments: U.S. treasury bills 4,597 — (7 ) 4,590 Total available-for-sale investments $ 57,691 $ 23 $ (73 ) $ 57,641

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	3 Months Ended
	Mar. 31, 2016
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities	Accrued liabilities consisted of the following (in thousands): March 31, 2016 December 31, 2015 Accrued consulting $ 33 $ 83 Accrued research and development costs 387 345 Other expenses 146 128 Deferred rent 49 53 615 609 Less current portion (582 ) (569 ) Long-term liability (deferred rent) $ 33 $ 40

Stock-Based Awards and Common19

Stock-Based Awards and Common Stock (Tables)	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Stock Option Plan valuation assumptions	The table below shows the number of shares of common stock underlying options granted to employees, directors and consultants, the assumptions used in the Black-Scholes option pricing model used to value those options and the resulting weighted-average grant date fair value per share: Stock Option Plan Three months ended March 31, 2016 2015 Shares underlying options granted 682,833 646,333 Weighted-average exercise price $3.39 $6.77 Weighted average risk- free interest rate 1.65 % 1.44 % Weighted average expected term (years) 6.1 6.1 Weighted average expected volatility 82% 97% Expected dividend yield — — Weighted-average grant date fair value per share $2.38 $5.24
Schedule of Stock Purchase Plan valuation assumptions	The following assumptions were used in the Black-Scholes option pricing model to calculate employee stock-based compensation: Stock Purchase Plan Three months ended March 31, 2016 2015 Weighted average risk-free interest rate 0.42% 0.08% Weighted average expected term (years) 0.5 0.4 Weighted average expected volatility 72.7% 58.6% Expected dividend yield — — Weighted-average grant date fair value per share $1.28 $2.06
Schedule of Stock-Based Compensation Expense	We recorded stock-based compensation expense as follows (in thousands): Three months ended March 31, 2016 2015 Research and development $ 259 $ 464 General and administrative 503 614 $ 762 $ 1,078

Commitments and Contingencies (

Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Schedule of Future Minimum Lease Payments Under Noncancelable Operating Leases	As of March 31, 2016 , we are obligated to make minimum lease payments under noncancelable operating leases as follows (in thousands): Year ending December 31, Lease Payments 2016 (remaining of year) $ 416 2017 404 2018 103 2019 80 2020 2 Total $ 1,005

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Calculation of Basic and Diluted Net Loss per Share	Basic and diluted net loss per share was calculated as follows (in thousands, except per share amounts): Three months ended March 31, 2016 2015 Basic and diluted net loss per share: Numerator: Net loss $ (6,060 ) $ (6,732 ) Denominator: Weighted-average number of common shares outstanding, basic and diluted 19,836 19,726 Net loss per share, basic and diluted $ (0.31 ) $ (0.34 )

Description of Business, Basi22

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)
Accounting Policies [Abstract]
Cash, cash equivalents, and short-term investments	$ 70,476
Substantial cash and cash equivalent, term	24 months

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets	$ 70,046	$ 70,195
Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets	2,718	8,169
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets	67,328	62,026
Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total financial assets	0	0
U.S. treasury bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	29,457	41,282
Long-term investments:		4,590
U.S. treasury bills | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments:	29,457	41,282
Long-term investments:		4,590
U.S. government agency notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	5,461	4,385
Short-term investments:	8,335	11,769
Long-term investments:	901
U.S. government agency notes | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	5,461	4,385
Short-term investments:	8,335	11,769
Long-term investments:	901
U.S. treasury bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	1,002
Short-term investments:	21,170
Long-term investments:	1,002
U.S. treasury bonds | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	1,002
Short-term investments:	21,170
Long-term investments:	1,002
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	2,718	8,169
Money market funds | Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	2,718	8,169
Money market funds | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	0	0
Money market funds | Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents:	$ 0	$ 0

Investments (Details)

Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Short-term Investments
Gain (Loss) on Investments [Line Items]
Amortized Cost	$ 58,946	$ 53,094
Gross Unrealized Gains	20	23
Gross Unrealized Losses	(4)	(66)
Fair Value	58,962	53,051
Short-term Investments | U.S. treasury bills
Gain (Loss) on Investments [Line Items]
Amortized Cost	29,443	41,293
Gross Unrealized Gains	14	14
Gross Unrealized Losses	0	(25)
Fair Value	29,457	41,282
Short-term Investments | U.S. government agency notes
Gain (Loss) on Investments [Line Items]
Amortized Cost	8,335	11,776
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	(7)
Fair Value	8,335	11,769
Short-term Investments | U.S. treasury bonds
Gain (Loss) on Investments [Line Items]
Amortized Cost	21,168	25
Gross Unrealized Gains	6	9
Gross Unrealized Losses	(4)	(34)
Fair Value	21,170	0
Long-term Investments
Gain (Loss) on Investments [Line Items]
Amortized Cost	60,847	57,691
Gross Unrealized Gains	22	23
Gross Unrealized Losses	(4)	(73)
Fair Value	60,865	57,641
Long-term Investments | U.S. treasury bills
Gain (Loss) on Investments [Line Items]
Amortized Cost		4,597
Gross Unrealized Gains		0
Gross Unrealized Losses		(7)
Fair Value		$ 4,590
Long-term Investments | U.S. government agency notes
Gain (Loss) on Investments [Line Items]
Amortized Cost	900
Gross Unrealized Gains	1
Gross Unrealized Losses	0
Fair Value	901
Long-term Investments | U.S. treasury bonds
Gain (Loss) on Investments [Line Items]
Amortized Cost	1,001
Gross Unrealized Gains	1
Gross Unrealized Losses	0
Fair Value	$ 1,002

Accrued Liabilities (Details)

Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Payables and Accruals [Abstract]
Accrued consulting	$ 33	$ 83
Accrued research and development costs	387	345
Other expenses	146	128
Deferred rent	49	53
Accrued liabilities	615	609
Less current portion	(582)	(569)
Long-term liability (deferred rent)	$ 33	$ 40

Stock-Based Awards and Common26

Stock-Based Awards and Common Stock - Stock Option Plan (Details) - Stock Option Plan - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares underlying options granted, in shares	682,833	646,333
Weighted-average exercise price, in dollars per share	$ 3.39	$ 6.77
Weighted average risk- free interest rate	1.65%	1.44%
Weighted average expected term	6 years 1 month 6 days	6 years 1 month 6 days
Weighted average expected volatility	82.00%	97.00%
Expected dividend yield	0.00%	0.00%
Weighted-average grant date fair value per share, in dollars per share	$ 2.38	$ 5.24

Stock-Based Awards and Common27

Stock-Based Awards and Common Stock - Narrative (Details) - USD ($)	Jan. 01, 2015	Mar. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding liability included in accrued compensation		$ 83,000	$ 25,000
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation		$ 7,599,000
Weighted-average period for recognition		2 years 5 months 15 days
Employee Stock Purchase Plan | Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Initial offering period		6 months
Consecutive offering period	5 months
Purchase price of common stock, percent of fair market value		85.00%
Shares reserved for future issuance (in shares)		200,000
Maximum number of shares participant may purchase during each offering period (in shares)		2,000
Maximum value of shares participant may purchase during each offering period		$ 25,000

Stock-Based Awards and Common28

Stock-Based Awards and Common Stock - Stock Purchase Plan (Details) - Employee Stock Purchase Plan - $ / shares	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average risk- free interest rate	0.42%	0.08%
Weighted average expected term	6 months	5 months
Weighted average expected volatility	72.70%	58.60%
Expected dividend yield	0.00%	0.00%
Weighted-average grant date fair value per share, in dollars per share	$ 1.28	$ 2.06

Stock-Based Awards and Common29

Stock-Based Awards and Common Stock - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 762	$ 1,078
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	259	464
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 503	$ 614

Commitments and Contingencies30

Commitments and Contingencies (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016USD ($)equipment_lease	Feb. 29, 2016ft²	Nov. 30, 2015ft²	Aug. 31, 2015ft²	Jan. 31, 2015ft²
Property, Plant and Equipment [Line Items]
Number of equipment leases | equipment_lease	3
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2016 (remaining of year)	$ 416
2,017	404
2,018	103
2,019	80
2,020	2
Total	$ 1,005
Laboratory space | Operating lease
Property, Plant and Equipment [Line Items]
Square footage of laboratory space | ft²		3,599	123	131	2,431
Office Space | Operating lease
Property, Plant and Equipment [Line Items]
Square footage of office space | ft²				3,126

Net Loss Per Share (Details)

Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Numerator:
Net loss	$ (6,060)	$ (6,732)
Denominator:
Weighted-average number of common shares outstanding, basic and diluted, in shares	19,836,000	19,726,000
Net loss per share, basic and diluted, in dollars per share	$ (0.31)	$ (0.34)
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from EPS computation (in shares)	3,543,683	2,947,748

Restructuring Plan (Details)

Restructuring Plan (Details) $ in Thousands	Jan. 11, 2016position	Mar. 31, 2016USD ($)	Mar. 31, 2015USD ($)
Restructuring and Related Activities [Abstract]
Number of positions eliminated	18
Percentage of workforce reduced	31.00%
Entity number of employees	39
Restructuring charge | $		$ 655	$ 0

Subsequent Event (Details)

Subsequent Event (Details)	Apr. 25, 2016class_of_stock$ / sharesshares	Mar. 31, 2016$ / sharesshares	Dec. 31, 2015$ / sharesshares
Subsequent Event [Line Items]
Common stock, par value, in dollar per share | $ / shares		$ 0.0001	$ 0.0001
Common stock, shares authorized | shares		100,000,000	100,000,000
KindredBio Equine, Inc | Subsequent Event
Subsequent Event [Line Items]
Number of classes of stock | class_of_stock	1
Common stock, par value, in dollar per share | $ / shares	$ 0.0001
Common stock, shares authorized | shares	1,000