Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 10, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EOLS | |
Entity Registrant Name | EVOLUS, INC. | |
Entity Central Index Key | 1,570,562 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 23,640,389 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 49,570 | $ 0 |
Prepaid expenses and other current assets | 541 | 185 |
Related party receivable | 0 | 72,639 |
Total current assets | 50,111 | 72,824 |
Intangible asset | 56,076 | 56,076 |
Goodwill | 21,208 | 21,208 |
Other assets | 0 | 2,125 |
Total assets | 127,395 | 152,233 |
Current Liabilities | ||
Accounts payable | 547 | 445 |
Related party accounts payable | 730 | 0 |
Related party borrowings | 0 | 72,639 |
Accrued expenses | 2,352 | 977 |
Note obligation | 0 | 138,687 |
Total current liabilities | 3,629 | 212,748 |
Deferred rent | 35 | 38 |
Contingent royalty obligation payable to related party | 40,600 | 0 |
Contingent promissory note payable to related party | 16,149 | 0 |
Deferred tax liability | 15,000 | 14,990 |
Total liabilities | 75,413 | 227,776 |
Commitments and contingencies (Note 5) | ||
Stockholders’ equity (deficit) | ||
Preferred Stock | 0 | 0 |
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 23,640,389 and 16,527,000 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 1 | 0 |
Additional paid-in capital | 134,301 | 0 |
Accumulated deficit | (82,320) | (75,543) |
Total stockholders’ equity (deficit) | 51,982 | (75,543) |
Total liabilities and stockholders’ equity (deficit) | 127,395 | 152,233 |
Convertible Preferred Stock | ||
Stockholders’ equity (deficit) | ||
Preferred Stock | $ 0 | $ 0 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Feb. 12, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 20,000,000 |
Common stock, shares, issued (in shares) | 23,640,389 | 16,527,000 | |
Common stock, shares, outstanding (in shares) | 23,640,389 | 16,527,000 | |
Convertible Preferred Stock | |||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | |
Preferred stock, shares authorized (in shares) | 0 | 2,500,000 | |
Preferred stock, shares issued (in shares) | 0 | 1,250,000 | |
Preferred stock, shares outstanding (in shares) | 0 | 1,250,000 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating expenses: | ||
Research and development | $ 1,678 | $ 2,651 |
General and administrative | 3,467 | 1,215 |
Revaluation of contingent royalty obligation payable to related party | 900 | 0 |
Depreciation and amortization | 0 | 111 |
Total operating expenses | 6,045 | 3,977 |
Loss from operations | (6,045) | (3,977) |
Other expense: | ||
Interest expense, net | 107 | 1 |
Loss before taxes | (6,152) | (3,978) |
Income tax expense | 10 | 20 |
Net loss and comprehensive loss | $ (6,162) | $ (3,998) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.30) | $ (0.24) |
Weighted-average shares outstanding used to compute basic and diluted net loss per share (in shares) | 20,226,460 | 16,527,000 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (6,162) | $ (3,998) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 0 | 111 |
Stock-based compensation | 1,006 | 143 |
Interest expense | 107 | 0 |
Income tax expense | 10 | 20 |
Revaluation of contingent royalty obligation payable to related party | 900 | 0 |
Changes in assets and liabilities: | ||
Prepaid expenses and other current assets | (356) | 3 |
Accounts payable | 205 | (1,991) |
Related party accounts payable | 730 | 0 |
Accrued expenses | 1,361 | 134 |
Deferred rent | (2) | 0 |
Net cash used in operating activities | (2,201) | (5,578) |
Cash flows from financing activities | ||
Proceeds from initial public offering, net of underwriters fees | 56,330 | 0 |
Related party borrowings | 1,127 | 5,391 |
Payments on related party borrowings | (5,000) | 0 |
Payments for offering costs | (686) | 0 |
Net cash provided by financing activities | 51,771 | 5,391 |
Change in cash, cash equivalents, and restricted cash | 49,570 | (187) |
Cash, cash equivalents, and restricted cash, beginning | 0 | 187 |
Cash and cash equivalents, ending | 49,570 | 0 |
Noncash financing activities: | ||
Related party receivable | 73,690 | 0 |
Related party borrowings | (68,767) | 0 |
Contingent royalty obligation payable to related party | (140,688) | 0 |
Contingent royalty obligation payable to related party | 39,700 | 0 |
Contingent promissory note payable to related party | 16,042 | 0 |
Capital contribution from parent, convertible note write-off | 67,000 | 0 |
Capital contribution from parent, forgiveness of related party borrowings | 13,200 | 0 |
Deferred IPO costs | (2,885) | 0 |
Accounts payable, paid by parent | (163) | 0 |
Deferred offering costs, unpaid | $ (74) | $ 0 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Organization and Description of Business Evolus, Inc., (“Evolus” or the “Company”) is a medical aesthetics company focused on delivering advanced aesthetic procedures and treatments to physicians and consumers. The Company’s focus is on the self-pay aesthetic market and its only product candidate, DWP-450 (the “Product”), is an injectable 900 kilodalton botulinum toxin type A complex designed to address the needs of the facial aesthetics market. The Company is headquartered in Irvine, California. In January 2018, the Company’s board of directors and its then sole stockholder approved an amendment to the Company’s amended and restated certificate of incorporation to effect a split of shares of the Company’s common stock on a 1.6527 -for-1 basis (the “Stock Split”). The Company’s outstanding shares of convertible Series A preferred stock (“Series A preferred stock”), the par value of the common stock, and the authorized shares of the common stock were not adjusted as a result of the Stock Split. All issued and outstanding shares of common stock, stock options, restricted stock units and related per share amounts contained in the financial statements have been retroactively adjusted to reflect this Stock Split for all periods presented. The Stock Split was effected on January 26, 2018. On February 12, 2018 the Company completed its initial public offering (“IPO”) and issued of 5,047,514 shares of common stock, which included the exercise by the underwriters of their option to purchase 47,514 additional shares of common stock, at an offering price to the public of $12.00 per share. The Company received net proceeds of approximately $56.3 million after deducting underwriting discounts and commissions, excluding other offering costs. In connection with the IPO, the Company’s outstanding shares of Series A preferred stock were automatically converted into 2,065,875 shares of common stock. In connection with the completion of its IPO, the Company’s amended and restated certificate of incorporation was further amended and restated to provide for 100,000,000 authorized shares of common stock with a par value of $0.00001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.00001 per share. As of May 10, 2018 , ALPHAEON, which is majority-owned by SCH-AEON, LLC, or SCH, owns 78.6% of the Company’s outstanding shares of common stock. In connection with the completion of its IPO, the Company also entered into a services agreement (“Services Agreement”) with ALPHAEON Corporation (“ALPHAEON”), its controlling stockholder. The Services Agreement sets forth certain agreements between ALPHAEON and the Company that govern the respective responsibilities and obligations between ALPHAEON and the Company as it relates to the services to be performed between the parties. Pursuant to the Services Agreement, ALPHAEON provides the Company, and the Company provides ALPHAEON, certain administrative and development support services. Prior to the IPO, the Company was dependent upon ALPHAEON for a majority of its working capital and financing requirements. Liquidity and Financial Condition The accompanying unaudited condensed financial statements have been prepared on a basis that assumes that the Company will continue as a going concern. Since inception , the Company has incurred recurring net operating losses. T he Company has recorded net loss and comprehensive losses of 6.2 million and 4.0 million for the three months ended March 31, 2018 , and 2017 . Additionally, the Company used $2.2 million and $5.6 million cash for operations in the three months ended March 31, 2018 , and 2017 , respectively. As of March 31, 2018 , the Company had 49.6 million in cash and cash equivalents and had an accumulated deficit of 82.3 million . Subsequent to December 31, 2017 , the Company completed its IPO and received net proceeds of approximately $56.3 million after deducting underwriting discounts and commissions, excluding other offering costs . The Company believes that its current capital resources will be sufficient to fund operations through at least the next twelve months from the date the financial statements are issued based on the expected cash burn rate. The Company may be required to raise additional capital to fund future operations through the sale of its equity securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of financing. Sufficient funds may not be available to the Company at all or on attractive terms when needed from equity or debt financings. If the Company is unable to obtain additional funding from these or other sources when needed, or to the extent needed, it may be necessary to significantly reduce its scope of operations and its current rate of spending through reductions in staff and delaying, scaling back, or suspending certain research and development or sales and marketing programs and other operational goals. There can be no assurance, however, that such funding efforts will be successful or that, in the event they are successful, the terms and conditions of such financing will be favorable to the company |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements for the periods prior to the Company’s IPO have been prepared on a standalone basis and are derived from ALPHAEON’s consolidated financial statements and accounting records. The Company’s financial statements included an allocation of certain assets and liabilities that have historically been held at the ALPHAEON corporate level but which were specifically identifiable or allocable to the Company. T he accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X . These results reflect amounts attributable to the Company’s business, including the costs ALPHAEON incurred for the development and commercialization of the Product and costs and expenses under the License and Supply Agreement (the “Daewoong Agreement”) entered into with Daewoong Pharmaceuticals Co., Ltd. (“Daewoong”), a South Korean pharmaceutical manufacturer, in September 2013, as further described below in Note 5 , C ommitments and Contingencies . Prior to February 12, 2018, ALPHAEON charged the Company external and internal administrative and research and development expenses ALPHAEON incurred on the Company’s behalf. External research and development expenses charged to the Company included costs for contract research organizations (“CROs”), costs to conduct nonclinical and clinical studies on the Product, costs to acquire and evaluate clinical study data such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. ALPHAEON charged these costs to the Company at the same amount that ALPHAEON incurred such cost. Internal development expenses included costs for the work that ALPHAEON development employees perform for the Company. ALPHAEON charged the Company a full-time equivalent (“FTE”) rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, depreciation, insurance and property taxes, for those research and development employees who work either directly or indirectly on the development of the Company’s drugs and certain administrative employees. ALPHAEON calculated the facility-related expenses to the Company based on a percentage of aggregate expenses incurred at ALPHAEON. ALPHAEON calculated depreciation expense of property and equipment using the straight-line method over the estimated useful lives of its assets of 3 to 5 years. As a result, the Company historically incurred related party borrowings from ALPHAEON for its share of the internal and external expenses for each of these functions based on the Company’s relative use of each function, plus an allocation of facility-related expenses. The Company’s management believes that the allocation and results were reasonable for all periods presented. However, allocations may not be indicative of actual expense Evolus would have incurred had it operated as an independent company for the periods presented. Pursuant to the Services Agreement (see Note 1 , Organization ) executed in connection with the IPO and as of March 31, 2018 , the Company incurred related party accounts payable to ALPHAEON of $0.7 million . The Company has calculated its income tax amounts using a separate return methodology and has presented these amounts as if it were a separate taxpayer from ALPHAEON in each jurisdiction for each period the Company presented. Subsequent to the IPO, the Company will prepare a stand-alone tax return. As of March 31, 2018 and December 31, 2017, the Company did not have a tax sharing agreement with ALPHAEON. The accompanying unaudited condensed financial statements and related disclosures have been prepared pursuant to Securities and Exchange Commission (the “SEC”), rules and regulations regarding interim financial reporting and should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. As permitted under those rules, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The unaudited condensed financial statements have been prepared on the same basis as the annual financial statements. In the opinion of Company management, the interim financial statements reflect all adjustments, which include normal recurring adjustments, considered necessary for a fair statement of the interim periods. The results for the period ended March 31, 2018 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2018 or for any other interim period. Acquisition The accounting for acquisitions requires extensive use of estimates and judgments to measure the fair value of the identifiable tangible and intangible assets acquired, including in-process research and development (“IPR&D”), and liabilities assumed. Additionally, the Company must determine whether an acquired entity is considered to be a business or a set of net assets, because the excess of the purchase price over the fair value of net assets acquired can only be recognized as goodwill in a business combination. Evolus was formed in November 2012 for the purposes of developing the Product for distribution and sale. In October 2013, in a Stock Purchase Agreement, SCH acquired all of the Company’s outstanding equity from certain former stockholders of the Company (the “Evolus Contributors”) in exchange for 15,000 Class AA units of SCH and 15,000 Class D units of SCH, which resulted in SCH obtaining a controlling financial interest in Evolus. Prior to the transaction with SCH, Evolus had executed the Daewoong Agreement with Daewoong and thereby secured exclusive rights to license and distribute the Product for aesthetic indications in the United States and certain other international markets, as well as non-exclusive rights to distribute in Japan (see Note 4 , Related Party Transactions ). The acquisition of the Company, which represented a business combination by SCH, was to provide SCH and ALPHAEON, access to the license held by Evolus to develop, produce and market clinical neurotoxins. In a series of related transactions in 2013, SCH, acquired all of the Company’s outstanding equity in exchange for membership interests in SCH. In 2014, SCH contributed equity that it had acquired in 2013 to ALPHAEON. As a result of these transactions, the Company became a wholly-owned subsidiary of ALPHAEON. The Company remained a wholly-owned subsidiary of ALPHAEON until the completion of the IPO. SCH elected to apply push-down accounting pursuant to the guidance in ASC 805, Business Combinations . Accordingly, the financial statements reflect the new basis of accounting established by SCH when SCH obtained control of the Company in October 2013. The assets acquired and liabilities assumed in connection with the acquisition were recognized based on their estimated fair values at the acquisition date. The determination of estimated fair values requires significant estimates and assumptions including, but not limited to, determining the timing and estimated costs to complete the in-process projects, projecting regulatory approvals, estimating future cash flows and developing appropriate discount rates. The estimated fair values assigned to the assets acquired and liabilities assumed were based on reasonable assumptions. In connection with the acquisition, SCH and ALPHAEON, entered into a stock purchase agreement (the “Stock Purchase Agreement”) pursuant to which they were obligated to make certain contingent payments to the Evolus Contributors. However, since Evolus did not have an obligation associated with the contingent consideration arrangement prior to February 12, 2018, no amounts were recognized in the Company’s financial statements for the contingent royalty obligation arrangement between SCH and ALPHAEON, and the Evolus Contributors. As described in Note 4 , Related Party Transactions , on December 14, 2017, SCH and ALPHAEON entered into an amendment to the Stock Purchase Agreement (the “Amended Purchase Agreement”), and the Company joined as a contractual party. Certain of the Evolus Contributors from whom SCH purchased its equity interests include individuals employed by the Company in operational roles, including J. Christopher Marmo, Ph.D., the Company’s Chief Operating Officer. Pursuant to the Amended Purchase Agreement, ALPHAEON’s existing payment obligations set forth in the Stock Purchase Agreement were replaced with revised payment obligations, which will be payable directly to the Evolus Contributors. As provided in the Amended Purchase Agreement, upon the closing of the IPO on February 12, 2018, ALPHAEON immediately and automatically assigned to the Company its payment obligations under the Amended Purchase Agreement. The fair value of these payment obligations are referred to as the “contingent royalty obligation” and the “contingent promissory note” in the accompanying condensed balance sheets. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes. Actual results could materially differ from those estimates, judgments, and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates . On an ongoing basis, the Company evaluates the most significant estimates, including those related to the fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets, joint and several liability obligations, and royalty obligations, among others. Although the Company bases these estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments over the carrying values of assets and liabilities, this process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements. Risk and Uncertainties The Company has not commenced principal operations in the form of commercialized product sales. The Product requires regulatory approval from the U.S. Food and Drug Administration (“FDA”), the European Medicines Agency, and other similar regulatory authorities prior to commercial sales. The Company’s current and any future product candidates may not 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 statements. The Company is subject to risks common to early stage companies in the pharmaceutical industry including, but not limited to, dependency on the clinical and commercial success of its current and any future product candidates, ability to obtain regulatory approval of its current and any future product candidates, 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 untested manufacturing capabilities. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-tiered valuation hierarchy for disclosure of fair value measurement is classified and disclosed by the Company in one of the three categories as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability; and • Level 3—Prices or valuation techniques that require inputs that are unobservable that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performs an annual qualitative assessment of its goodwill in the fourth quarter each calendar year to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required. If further testing is required, the Company performs a two-step process. The first step involves comparing the fair value of the Company’s reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step of the test is performed by comparing the carrying value of the goodwill in the reporting unit to its implied fair value. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the purpose of impairment testing, the Company has determined that it has one reporting unit. There has been no impairment of goodwill for any of the periods presented. Intangible Asset The intangible asset in the accompanying condensed balance sheets represents IPR&D projects acquired that have not yet been completed. IPR&D assets with indefinite useful lives are not amortized, but instead tested for impairment until the successful completion and commercialization or abandonment of the associated research and development efforts, at which point the IPR&D assets are either amortized over their estimated useful lives or written-off immediately. There has been no impairment of long-lived assets for any periods presented. Deferred Initial Public Offering Costs Deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO, were capitalized. During the three months ended March 31, 2018 , approximately $2.9 million of deferred offering costs were offset against IPO proceeds upon the effectiveness of the IPO in February 2018. As of December 31, 2017 , $2.1 million of deferred offering costs were capitalized and deferred in “ Other assets ” on the balance sheet. Joint and Several Liability Arrangements The Company measures obligations resulting from joint and several liability arrangements as the sum of the amount that the Company has (i) agreed to pay on the basis of its arrangement among its co-obligors, and (ii) any additional amounts that the Company expects to pay on behalf of its co-obligors. The determination of the “best estimate” from within the range of amounts that might be paid involves substantial judgment by the Company’s management. These estimates are subject to periodic revisions at each period as the joint and several liability is re-measured. Contingent Payment Obligations Payable to the Evolus Contributors The Company determined the fair value of the contingent royalty obligation payable to the Evolus Contributors under the Amended Purchase Agreement using a discounted cash flow method approach based on projected sales of the Product and an appropriate discount rate. Changes in the fair value of this contingent consideration are determined each period end and recorded in the operating expenses section of the condensed statements of operations and comprehensive loss and the non-current liabilities section of the condensed balance sheets. The fair value of the contingent royalty obligation could be impacted by changes such as: (i) changes in the discount rate assumed, or (ii) the amount and timing of sales of the Product, or (iii) a delay in FDA approval of the Product. The Company also determined the fair value of the contingent promissory note payable at present value using a discount rate for similar rated debt securities and is based on an estimated date that the Company believes the contingent promissory note will mature. Accretion related to the contingent promissory note is recorded in interest expense of the condensed statements of operations and comprehensive loss with a corresponding increase to the non-current liabilities section of the condensed balance sheets. The fair value of the contingent promissory note could be impacted by changes such as: (i) changes in the discount rate, or (ii) a delay in the first commercial sale of the Product in the United States. Stock-Based Compensation The Company recognizes stock-based compensation expense for employees and non-employee directors based on fair value at the date of grant. The fair value of equity awards that are expected to vest is amortized on a straight-line basis over the requisite service period. Stock-based compensation expense recognized is net of an estimated forfeiture rate, which is updated as appropriate. The Company uses the Black-Scholes option pricing model to value stock option grants. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected volatility of the Company’s common stock, expected risk-free interest rate, and the option’s expected life. The fair value of the Company’s restricted stock units are based on the closing market price of the Company’s common stock on the date of grant and is amortized on a straight-line basis over the requisite service period. Compensation cost related to the grant of ALPHAEON awards to the Company’s employees is recognized as a capital contribution and in the statement of operations. The Company recorded stock-based compensation expense for the three months ended March 31, 2018 , and 2017 of $1.0 million and $0.1 million , respectively. Prior to the IPO, the ALPHAEON common stock awards were valued at fair value on the date of grant and that fair value is recognized over the requisite service period. E stimates were used to determine the fair value of these awards, as shares of ALPHAEON’s common stock are not publicly traded. ALPHAEON common stock awards are subject to specified vesting schedules and requirements. The Company estimated the fair value of each ALPHAEON option on the date of grant using the Black-Scholes model. Stock-based compensation expense is allocated to the Company over the required service period over which these ALPHAEON common stock awards and options would vest and is based upon the relative percentage of time utilized by ALPHAEON employees on Company matters. Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined on the basis of differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded against deferred tax assets, to reduce the net carrying value, by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made. Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations and comprehensive loss. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”). Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning in 2018. The Company has calculated its best estimate of the impact of the TCJA in its 2017 income tax provision in accordance with its understanding of the TCJA and guidance available as of the date of this filing. In addition, the SEC Staff issued SAB 118, which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company’s accounting for the following elements of the TCJA is incomplete, but the Company was able to make reasonable estimates of certain effects and, therefore, recorded provisional adjustments. The provisional amounts described below are subject to revisions as the Company completes its analysis of the TCJA, collection of any additional data, and interpretation of any additional guidance issued by the U.S. Treasury Department, Internal Revenue Service, the Financal Accounting Standards Board (“FASB”), and other standard-setting and regulatory bodies. The Company’s accounting for the tax effects of the TCJA will be completed during the one-year measurement period. For certain of its deferred tax assets and deferred tax liabilities, the Company has recorded a provisional decrease in net deferred tax assets of $3.2 million , with a corresponding decrease in the valuation allowance of $9.6 million , and a reduction in the net deferred tax liability and a income tax benefit of $6.3 million for the year ended December 31, 2017. This provisional estimate may be affected by other analysis related to the TCJA, including, but not limited to, adjustments made to estimates of 2017 federal temporary differences and state tax conformity with respect to federal tax provisions. There were no changes for the three months ended March 31, 2018 during the measurement period. Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of convertible preferred stock and stock options outstanding. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted-average number of shares of common stock outstanding during the period plus the potential dilutive effects of convertible preferred stock and stock options outstanding during the period calculated in accordance with the treasury stock method but are excluded if their impact is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between the weighted-average number of shares used to calculate basic and diluted net loss per common share for the three months ended March 31, 2018 and 2017 . See Note 8 , Net Loss per Share for more information. Recent Accounting Pronouncements In May 2017, the FASB issued Accounting Standards Update (“ASU”), No. 2017-09, Compensation—Stock Compensation (Topic 718) (“ASU 2017-09”) which amends the scope of modification accounting for share-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted guidance effective January 1, 2018 and it did not have a material impact on its financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This standard simplifies the accounting for goodwill impairment by removing step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will be the amount by which a reporting unit's carrying amount, including goodwill, exceeds its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 will be effective for the Company beginning January 1, 2022 (or January 1, 2020 should the Company cease to be classified as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012). The standard requires prospective application. Early adoption is permitted. The Company is in the process of determining the effects the adoption will have on its financial statements as well as whether to early adopt the new guidance. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or business. The amendments were effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company adopted guidance effective January 1, 2018 and it did not have a material impact on its financial statements. However, any prospective impact to the financial statements will depend on the terms specified in any future transactions subject to the guidance in ASU 2017-01. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) which requires restricted cash to be included in the beginning-of-period and end-of-period totals with cash and cash equivalents. The guidance is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those years. The standard requires retrospective application. The Company adopted this standard on January 1, 2018. The adoption of the standard did not have a material impact on the Company’s statement of cash flows. However, prior period restricted cash was added to the beginning cash and cash equivalents in the Condensed Statements of Cash Flows to conform to the current presentation. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), that clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those years. The Company adopted this standard on January 1, 2018 using the retrospective approach. The adoption of the standard did not have a material impact on the Company’s statement of cash flows. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which amends the existing accounting standards for leases. In September 2017, the FASB issued ASU No. 2017-13, which provides additional clarifications and implementation guidance on previously issue ASU 2016-02. The new guidance requires lessees to put most leases on their balance sheet but to recognize expenses on their income statement in a manner similar to current accounting principles; this will include qualitative and quantitative disclosures in the Company’s notes to the financial statements. The new guidance also eliminates the current real estate-specific provisions for all entities. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. The Company is in the process of assessing the impact of the adoption of the standard on the Company’s financial statements. |
Goodwill and Intangible Asset
Goodwill and Intangible Asset | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Asset | Goodwill and Intangible Asset Goodwill and intangible assets were established as a result of the application of push-down accounting in connection with the acquisition by SCH in October 2013, as described in Note 2 , Summary of Significant Accounting Policies . The excess of the purchase price of $56.3 million over the fair value of net assets acquired was recognized as goodwill. Goodwill recognized in connection with the acquisition is not deductible for tax purposes. The net assets acquired as of the acquisition date comprised solely of IPR&D valued at $56.1 million and a deferred tax liability of $20.9 million , which represented the difference between the book and tax basis related to the IPR&D asset. The IPR&D asset related to the development of the Product in clinical trials in the United States as of the acquisition date. Goodwill of $21.2 million was recognized based on the excess of consideration transferred over the net assets acquired. As of March 31, 2018 and December 31, 2017 , the carrying value of the IPR&D in the accompanying condensed balance sheets was $56.1 million . The estimated fair value of the IPR&D asset on the acquisition date was determined using a discounted cash flow model using an income approach (the multiple-period excess earnings method). Significant assumptions used in the valuation included projected future cash flows, projected costs, a weighted average cost of capital and appropriate discount rates. The IPR&D recognized represents the license and associated distribution rights to develop the Product and the ability to pursue new indications and is subject to the success of clinical studies. As part of the transaction, $13.5 million in additional cash consideration is due to Daewoong based upon Evolus’ successful completion of certain technical and sales milestones. The fair value of the milestones was recorded by the Company as an element of the acquired IPR&D at the acquisition date. The IPR&D asset is classified as an indefinite-lived intangible asset until the successful completion and commercialization or abandonment of the associated research and development efforts . |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Services with ALPHAEON Prior to the Company’s IPO and since the Company’s acquisition in 2014 by ALPHAEON, the Company had funded its operations primarily through contributions and related party borrowings from ALPHAEON. ALPHAEON has historically provided Evolus certain services, including, without limitation, research and development, general and administrative support services and support services. ALPHAEON had historically allocated a certain percentage of personnel to perform the services that it provides to the Company based on its good faith estimate of the required services. These allocated costs reflect the ALPHAEON FTE rate for the applicable personnel, plus out-of-pocket expenses such as occupancy costs associated with the FTEs allocated to providing Evolus these services. Evolus historically had not paid a mark-up on the external or internal expenses ALPHAEON allocated to it. Prior to February 12, 2018, all research and development, general and administrative, and other support services expenses shown in the Company’s financial statements for 2018 and 2017 excluding stock-based compensation which is treated as a capital contribution, were treated as related party borrowings from ALPHAEON. In January 2018, the Company entered into the Services Agreement with ALPHAEON, which became effective upon the Company’s IPO. The Services Agreement sets forth certain agreements between ALPHAEON and the Company that governs the respective responsibilities and obligations between ALPHAEON and the Company as it relates to the services to be performed between them . The Services Agreement has a one year term and thereafter will renew for successive one year terms unless sooner terminated by either party. The Company or ALPHAEON may terminate the Services Agreement upon sixty days’ notice to the other party. In accordance with the Services Agreement, the Company paid ALPHAEON $5.0 million during the first quarter of 2018 , subsequent to the IPO. As of March 31, 2018 Evolus owed ALPHAEON $0.7 million in related party accounts payable. As of December 31, 2017 , Evolus owed ALPHAEON $72.6 million in related party borrowings. See Note 6 , Stockholders’ Equity (Deficit) — Deemed Distribution and Capital Contribution for information around the Company’s reorganization of its assets and liabilities immediately preceding, and in connection, with the IPO. The following table summarizes the amounts included in Evolus’ general and administrative expenses as disclosed in the accompanying condensed statements of operations and comprehensive loss that were generated by transactions with ALPHAEON for the following periods (in thousands): Three Months Ended 2018 2017 Compensation and benefits $ 184 $ 298 Third party service fees 84 319 Stock-based compensation 30 139 Facility related expenses 80 430 Other 5 140 $ 383 $ 1,326 Note Obligation In 2016, ALPHAEON entered into two separate debt transactions: (i) a convertible note with one of its shareholders, also a related party (the “Bridge Note”) with a principal amount of $2.5 million and (ii) a Secured Convertible Note Purchase Agreement (the “Purchase Agreement”) pursuant to which ALPHAEON could issue up to an aggregate of $55.0 million (“Note Facility” and together with the Bridge Note, the “Notes”). The Notes have substantially similar terms and accrue simple interest at a rate of ten percent ( 10% ) per annum, subject to adjustment pursuant to terms of the Notes. The Notes may be paid at a redemption price equal to 2.5 times the face amount of the Note less any prepayment of principal and any principal amount of the Notes that may convert into shares of ALPHAEON on (i) maturity in December 2018, (ii) a required prepayment event, or (iii) prepayment at any time at ALPHAEON’s election. Upon the occurrence of certain corporate events at ALPHAEON, at the election of the holder, the Notes will convert into a variable number of shares of ALPHAEON with an aggregate fair value equaling the principal value of the Notes or such Notes will continue to maturity as unsecured promissory notes with a reduced interest rate. ALPHAEON’s obligations under the Notes are secured by a first priority lien and security interest in substantially all of ALPHAEON’s assets, including all of the shares of the Company’s capital stock held by ALPHAEON, which as of December 31, 2017 represented all of the Company’s outstanding capital stock, as collateral for the holders of the Notes. In April 2017, ALPHAEON amended and restated the Purchase Agreement (the “Amended and Restated Secured Note Purchase Agreement”) with the Note holders to amend and restate the terms of the Purchase Agreement and the outstanding Notes and form of Notes to be issued. In addition, the Purchase Agreement was amended and restated to, among other things, set forth the terms for the issuance of up to an additional $30.0 million in principal amount of Notes. Concurrent with the Amended and Restated Secured Note Purchase Agreement, the Company also executed two substantially similar guaranty and security agreements (the “Guaranty Agreements”), with the holders of the Notes. Pursuant to the Guaranty Agreements, the Company absolutely, unconditionally and irrevocably guaranteed, as primary obligor and not merely as surety, the full and punctual payment when due, whether at stated maturity or earlier, by reason of acceleration all the obligations of the Notes. In addition, pursuant to the Guaranty Agreements, the Company agreed to a first priority lien and security interest in and to all its right, title and interest in the assets of the Company. As a result of executing the Guaranty Agreements, there was no requirement that the holders of the Notes first seek payment from ALPHAEON. Instead, they may demand payment from the Company, from ALPHAEON or from both simultaneously. The Amended and Restated Secured Note Purchase Agreement and Guaranty Agreements stipulate that any payment by the Company under their terms shall result in a dollar-for-dollar offset and reduction in the amount of related party loans owed by the Company to ALPHAEON. The Guaranty Agreements will terminate upon the earlier of (i) the date on which all secured obligations under the Guaranty Agreements have been paid and performed in full and (ii) the date on which the entire outstanding principal amount of the Notes has been either converted into equity or unsecured notes pursuant to the terms of the Notes. Concurrent with the execution of the Guaranty Agreements with the holders of the Notes in April 2017, the Company jointly and severally agreed to pay the redemption amount of 2.5 times the principal amount of the Notes upon maturity if not paid by ALPHAEON. As a co-obligor to these Notes, the Company applied the accounting guidance provided in ASC 405-40, Obligations Resulting from Joint and Several Liability Arrangements . This guidance requires companies to measure obligations resulting from joint and several liability arrangements as the sum of the amount that the entity has (a) agreed to pay on the basis of its arrangement with its co-obligors and (b) any additional amount that the entity expects to pay on behalf of its co-obligors. The Company initially recorded a liability and corresponding deemed distribution to ALPHAEON as a reduction to additional paid-in-capital in equity in April 2017 to reflect the joint and several liability. These amounts were subsequently adjusted to reflect changes in the balance of the Note obligation. As the Company and ALPHAEON had not agreed to what portion of this joint and several liability each would pay, the Company developed a range of amounts that it expected to pay under the Guaranty Agreements and selected the amount from within that range that it determined to be the best estimate, which equaled $138.7 million as of December 31, 2017 ( 2.5 times the outstanding principal amount of the Notes as of that date), representing the total principal amount due to the Note holders upon redemption of the Notes at maturity. On December 14, 2017, the Company and ALPHAEON entered into amendments with the holder of the convertible bridge note, and with the collateral agent for the holders of the convertible promissory notes. Under the terms of the amendment it was agreed that the Company’s guaranty of the Notes and the security interest in the Company’s assets would terminate effective upon the closing of the IPO. Subsequent to December 31, 2017, ALPHAEON issued $0.8 million additional convertible promissory notes, including $0.1 million convertible promissory notes to Murthy Simhambhatla, Ph.D., the Company’s former President and Chief Executive Officer and former member of the board of directors. As a result of this additional issuance, the total note obligations under all the Notes increased to $140.7 million ( 2.5 times the total outstanding principal amount of $56.3 million ) on January 16, 2018. As provided for within the Amended and Restated Secured Note Purchase Agreement and Guaranty Agreements, in conjunction with its recognition of the joint and several liability, the Company also recorded a receivable from ALPHAEON, which equals the current balance of the amounts it owed to ALPHAEON under its related party borrowing arrangements. No amounts were paid under this joint and several liability by the Company in the year ended December 31, 2017 . The difference between the amount of the joint and several liability and the related party receivable of $66.1 million in the year ended December 31, 2017 , was recorded as a deemed contribution from ALPHAEON, in stockholders’ equity (deficit) to additional paid-in capital in the period the transaction with the related party was made. Amounts in excess of additional paid-in capital were recorded into accumulated deficit. As of February 12, 2018, the Company was released of all guaranty and security obligations under the Guaranty Agreements and the security interest in Evolus’ assets was terminated. See Note 6 , S tockholders’ Equity (Deficit)-Equity Related Transactions, for more information regarding equity transactions that occurred in connection with the IPO. Evolus Contributors Certain of the Evolus Contributors from whom SCH purchased its equity interests include individuals employed by the Company in operational roles, including J. Christopher Marmo, Ph.D., the Company’s Chief Operating Officer. Payment Obligations Related to the Acquisition by ALPHAEON In connection with the acquisition by SCH and ALPHAEON, as described in Note 2 , Summary of Significant Accounting Policies , the Evolus Contributors were issued Class D units of SCH which contained certain rights and privileges that provide the Evolus Contributors with a 10% economic interest in Evolus. The original payment obligations included (i) a $10.0 million up-front payment upon obtaining FDA approval for the Product for the treatment of glabellar lines, (ii) perpetual quarterly royalties of a mid-teen percentage of net sales of the Product within the United States and (iii) a high-single digit percentages of net sales of the Product outside of the United States. As these future royalty streams were perpetual, ALPHAEON had the right under the Stock Purchase Agreement to terminate any future payments for a one-time lump sum payment to SCH of $145.0 million . On December 14, 2017, SCH and ALPHAEON entered into the Amended Purchase Agreement, whereby Evolus also joined as a contractual party. Pursuant to the Amended Purchase Agreement, ALPHAEON’s existing payment obligations were replaced with revised payment obligations, payable directly to the Evolus Contributors, to be distributed to them ratably in accordance with their previous respective percentage ownership in Series A preferred stock, and in exchange for the cancellation of the Class D units of SCH. Pursuant to the Amended Purchase Agreement, effective upon the closing of the IPO, ALPHAEON immediately and automatically assigned to Evolus and Evolus immediately and automatically accepted and assumed all of ALPHAEON’s payment obligations under the Stock Purchase Agreement, as amended by the Amended Purchase Agreement. Under the Amended Purchase Agreement, the revised payment obligations consist of (i) an approximately $9.2 million up-front payment upon obtaining FDA approval for the Product for the treatment of glabellar lines, (ii) quarterly royalty payments of a low single digit percentage of net sales of the Product within the United States, (iii) quarterly royalty payments of a low single digit percentage of net sales of the Product outside of the United States, and (iv) a $20.0 million promissory note that will mature on the 2.5 years anniversary of the first commercial sale of the Product in the United States. The revised payment obligations set forth in (ii) and (iii) above will terminate in the quarter following the 10 year anniversary of the first commercial sale of the Product in the United States. As these revised payment obligations are not perpetual, neither Evolus nor ALPHAEON will have the right to terminate any future payments for a one-time lump sum payment. Under the Amended Purchase Agreement, the Company recorded the fair value of all revised payment obligations and the promissory note owed to the Evolus Contributors of $56.7 million (comprised of $40.6 million related to the contingent royalty obligation and $16.1 million related to the contingent promissory note) as of February 12, 2018. See Note 7 , Fair Value Measurements for more information about the Company’s accounting thereof. In addition, the outstanding related party borrowings from ALPHAEON were set-off and reduced, on a dollar-for-dollar basis, taking into account the then-fair value of all payment obligations Evolus assumed from ALPHAEON, the fair value of which, as of February 12, 2018, was $56.7 million . Under the Amended Purchase Agreement, Evolus agreed to make one-time bonuses of $1.6 million to certain of its employees upon FDA approval of the Product, including a one-time bonus of $700,000 payable to Rui Avelar, M.D., Evolus’ Chief Medical Officer. Evolus will have the right to prepay the promissory note, in whole or in part, at any time and from time to time without penalty. Upon an event of default under the promissory note, all unpaid principal will become immediately due and payable at the option of the holder. An event of default will occur under the terms of the promissory note upon any of the following events: (i) Evolus fails to meet the obligations to make the required payments thereunder, (ii) Evolus makes an assignment for the benefit of creditors, (iii) Evolus commences any bankruptcy proceeding, (iv) Evolus materially breaches the Stock Purchase Agreement or Tax Indemnity Agreement (which is defined below) and such breach is not cured within 30 days, or (v) when ALPHAEON was the borrower, there occurs an event of default under the Notes that is not cured during the applicable cure period or waived by the noteholders, and such noteholders have exercised their rights to foreclose on the collateral securing the Notes under ALPHAEON’s pledge of its assets, as discussed further below. No event of default was triggered or payment by ALPHAEON was made under the promissory note prior to the closing of the IPO. In addition, upon a change-of-control of Evolus, all unpaid principal will become immediately due and payable. Under the terms of the promissory note, a change-of-control is defined as (i) the sale of all or substantially all of Evolus’ assets, (ii) the exclusive license of the Product or the business related to the Product to a third-party (other than a sublicense under the Daewoong Agreement), or (iii) any merger, consolidation, or acquisition of Evolus, except a merger, consolidation, or acquisition of Evolus in which the holders of capital stock of Evolus immediately prior to such merger, consolidation, or acquisition hold at least 50% of the voting power of the capital stock of Evolus or the surviving entity. Notwithstanding the foregoing, the promissory note expressly provides that neither the IPO or any merger with or acquisition by ALPHAEON or any of its subsidiaries or affiliates constitutes a change-of-control. Further, under the Amended Purchase Agreement, Evolus, ALPHAEON and SCH agreed to terminate the non-competition provision set forth in the contribution agreement, pursuant to which the Evolus Contributors were prohibited, subject to limited exceptions, for a period of 5 years from October 2013, from engaging in any business relating to the development, license, commercialization of, or performing any services or supervisory functions for persons or entities engaged in any business related to, a neurotoxin or neuromodulator. As of March 31, 2018 , the Company revalued the fair value of the obligations and recorded a $0.9 million charge in the condensed statements of operations and comprehensive loss. The Company will revalue the obligations at each reporting period. In connection with the Amended Purchase Agreement, Evolus entered into a tax indemnity agreement with the Evolus Contributors (“Tax Indemnity Agreement”) pursuant to which, effective upon Evolus’ assumption of the revised payment obligations under the Amended Purchase Agreement, which occurred upon the completion of the IPO, Evolus was obligated to indemnify the Evolus Contributors for any tax liability resulting from such assignment of the revised payment obligations from ALPHAEON to Evolus. Under the Stock Purchase Agreement, the payment obligations are contingent and are thus eligible for installment sale reporting under Section 453 of the Internal Revenue Code of 1986, as amended. The entry into the Amended Purchase Agreement would cause the Evolus Contributors to be treated for U.S. federal income tax purposes as receiving a distribution from SCH of the right to receive the contingent payments in a transaction in which no gain or loss is recognized such that the Evolus Contributors may continue installment sale reporting with respect to the revised payment obligations to the same extent that installment sale reporting was available to SCH with respect to the original payment obligations prior to the execution of the Amended Purchase Agreement. Under the Tax Indemnity Agreement, Evolus was obligated to indemnify the Evolus Contributors for any taxes or penalties required to be paid by the Evolus Contributors in the event the U.S. Internal Revenue Service or other taxing authority were to determine that Evolus’ assumption of the revised payment obligations under the Amended Purchase Agreement rendered continued installment sale reporting unavailable to the Evolus Contributors. Any taxes or penalties paid by us on behalf of the Evolus Contributors under the Tax Indemnity Agreement will be offset dollar-for-dollar against the promissory note and future royalties that will be payable to the Evolus Contributors under the Amended Purchase Agreement. Exclusive Distribution and Supply Agreement with Clarion Medical Technologies Inc. On November 30, 2017, the Company entered into an exclusive distribution and supply agreement (the ”Distribution Agreement”), with Clarion Medical Technologies Inc. (“Clarion”). The Distribution Agreement provides terms pursuant to which the Company will exclusively supply the Product to Clarion in Canada, if approved. Clarion was previously a wholly-owned subsidiary of ALPHAEON. However, pursuant to previous agreements among ALPHAEON, Clarion, and previous equity holders of Clarion, the previous equity holders of Clarion had the option, and have exercised such option, to unwind ALPHAEON’s acquisition of Clarion. As a result, ALPHAEON owes the equity holders of Clarion an unwinding fee of $9.6 million (the “Unwinding Fee”). The Distribution Agreement sets forth that a portion of the proceeds received by the Company from each unit of the Product purchased by Clarion shall be paid directly to the previous equity holders of Clarion, and will reduce, on a dollar-for-dollar basis, the amount of the Unwinding Fee ALPHAEON owes. In addition, ALPHAEON and SCH have agreed with Clarion to pay the unpaid amount of the Unwinding Fee on December 31, 2022, if demanded by the previous equity holders of Clarion. Under the Distribution Agreement, if the Company does not receive approval from Health Canada to promote and sell the Product in Canada prior to October 31, 2018, the Company will pay liquidated damages to Clarion in the amount of $1.0 million within 30 days of December 31, 2018, which damages will not reduce the Unwinding Fee. The Company does not consider this an existing obligation to record as a liability as of March 31, 2018 or until the measurement date of October 31, 2018. As of March 31, 2018 , no amounts have been paid towards the Unwinding Fee. Therapeutic Optio n Letter Agreement On December 18, 2017, the Company entered into a therapeutic option letter agreement with ALPHAEON relating to certain rights to the therapeutic indications of the Product under the Daewoong Agreement. The Company may exercise the therapeutic option upon thirty days’ notice to Daewoong. The therapeutic option expires December 31, 2018. The Company recorded this transaction as a reduction in the related party borrowings and a non-cash capital contribution from ALPHAEON, in stockholders’ deficit of additional paid-in capital. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease The Company leases its Santa Barbara, California offices under an operating lease. The office lease is with a third-party vendor under a non-cancelable operating lease. The office lease includes rent escalation clauses which are recorded on a straight-line basis with the difference between the rent expense accounted for over the term of the lease and actual amounts paid. Total rental expense, including allocated lease expense from ALPHAEON for the Irvine, California office, for the three months ended March 31, 2018 and 2017 was $52,000 and $41,000 , respectively. As of March 31, 2018 , future minimum payments under the operating lease agreement with non-cancelable terms greater than one year are as follows (in thousands): Remainder of 2018 $ 179 2019 175 2020 and thereafter 74 $ 428 FDA Milestone Payments In connection with the Daewoong Agreement, as described in detail below, the Company is obligated to make future milestone payments for certain confidential development and commercial milestones associated with the Product. License and Supply Agreement In October 2013, Evolus entered into the Daewoong Agreement with Daewoong. Pursuant to the Daewoong Agreement, the Company has an exclusive distribution license to the Product from Daewoong for aesthetic indications in the United States, European Union, Canada, Australia, Russia, Commonwealth of Independent States, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan. The Company also has an option to exercise a similar license in these territories for therapeutic indications by the end of 2018, which it has assigned to ALPHAEON during the fourth quarter of 2017 for a $2.5 million reduction in related party borrowings. The Product will be manufactured by Daewoong in a recently constructed facility in South Korea that is designed with the intention of complying with FDA and the European Medicines Agency’s current Good Manufacturing Practice requirements. The Company also has the option to negotiate first with Daewoong to secure a distribution license for any product that Daewoong directly or indirectly develops or commercializes that is classified as an injectable botulinum toxin (other than the Product) in a territory covered by the Daewoong Agreement. The Daewoong Agreement also includes certain minimum annual purchases the Company is required to make in order to maintain the exclusivity of the license. The Company may, however, meet these minimum purchase obligations by achieving certain market share in its covered territories. These potential minimum purchase obligations are contingent upon the occurrence of future events, including receipt of governmental approvals and the Company’s future market share in various jurisdictions. Legal Proceedings The Company, from time to time, is involved in various litigation matters or regulatory encounters arising in the ordinary course of business that could result in unasserted or asserted claims or litigation. The Company is not subject to any currently pending legal matters or claims that would have a material adverse effect on its accompanying financial position, results of operations or cash flows. In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. No amounts were accrued as of March 31, 2018 and December 31, 2017 . Medytox Litigation The Company, ALPHAEON, SCH and Daewoong are defendants to a lawsuit brought by Medytox, Inc. (“Medytox”) alleging, among other things, that Daewoong stole Medytox’s botulinum toxin bacterial strain and that Daewoong misappropriated certain trade secrets of Medytox, including the process used to manufacture the Product. The Company intends to vigorously defend Medytox’s claims. Given the early stage in the Medytox litigation, the Company is unable to determine the likelihood of success of Medytox’s claims against the Company, and an estimate of the possible loss or range of loss cannot be made. While the Company is entitled to indemnity under the Daewoong Agreement, the indemnity may not be sufficient. Citizen Petition In December 2017, Medytox filed a Citizen Petition (the “Citizen Petition”) with the FDA. The Citizen Petition seeks to delay approval of the Biologics License Application submitted by the Company to the FDA in May 2017 for the Product until the FDA determines the identity and source of the botulinum strain for the Product and validates the integrity of the data and information in the Biologics License Application. Medytox further requests that the FDA require the source and identity information in the Biologics License Application to include a single nucleotide polymorphism analysis of the whole genome sequence of the botulinum strain for the Product. |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholder's Deficit | Stockholders’ Equity (Deficit) On February 12, 2018, the Company completed its IPO of 5,047,514 shares of common stock, which included the exercise by the underwriters of their option to purchase 47,514 additional shares of common stock, for net proceeds of $56.3 million , after deducting underwriting discounts and commissions, excluding other offering costs. Convertible Series A Preferred Stock At December 31, 2017 , the Company had 2,500,000 shares of Series A preferred stock authorized, of which 1,250,000 were issued or outstanding. ALPHAEON, as the sole holder of Series A preferred stock, had certain dividends, conversion, redemption, voting, protective, and liquidation preferences. The number of shares of common stock to which a preferred stockholder was entitled was the product obtained by multiplying the Series A preferred stock conversion rate by the number of shares of preferred stock being converted, subject to adjustments as provided in the amended and restated certificate of incorporation. In connection with the IPO, all shares of Series A preferred stock were converted into 2,065,875 shares of common stock. As a result, no shares of Series A convertible preferred stock were issued or outstanding as of March 31, 2018 . Preferred Stock In connection with the completion of its IPO, the Company also amended and restated its certificate of incorporation to provide for 10,000,000 authorized shares of preferred stock with a par value of $0.00001 per share. As a result and at March 31, 2018 , the Company had 10,000,000 shares of preferred stock authorized, of which none were issued and outstanding. Common Stock At December 31, 2017 , the Company had 20,000,000 shares of common stock authorized, of which 16,527,000 were issued and outstanding. In connection with the completion of its IPO, the Company also amended and restated its certificate of incorporation to provide for 100,000,000 authorized shares of common stock with a par value of $0.00001 per share. As a result and at March 31, 2018 , the Company had 100,000,000 shares of common stock authorized, of which 23,640,389 were issued and outstanding. Equity Related Transactions As of February 12, 2018, the Company assumed from ALPHAEON the revised payment obligations under the Amended Purchase Agreement of $56.7 million (comprised of $40.6 million related to the contingent royalty obligation and $16.1 million related to the contingent promissory note). Pursuant to the Amended Purchase Agreement, ALPHAEON agreed to offset and reduce the amount of related party borrowings by the estimated value of the revised payment obligations on a dollar-for-dollar basis and pursuant to the Services Agreement, the Company paid $5.0 million to ALPHAEON in satisfaction of a portion of the outstanding related party borrowings (see Note 4 , Related Party Transactions ). The remaining balance of related party borrowings of $13.2 million was recharacterized as a capital contribution from ALPHAEON pursuant to the Services Agreement. 2017 Omnibus Incentive Plan and Stock-based Compensation Allocation On November 21, 2017, t he board of directors and the then sole stockholder of the Company approved the Company’s 2017 Omnibus Incentive Plan (the “Plan”). The Plan provides for the grant of incentive options to employees of the Company, and for the grant of nonstatutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of stock compensation to the Company’s employees, including officers, directors, consultants and employees of the Company. The maximum number of shares of common stock that may be issued under the Plan is 4,361,291 shares, plus an annual increase on each anniversary of November 21, 2017 equal to 4% of the total issued and outstanding shares of the Company’s common stock as of such anniversary (or such lesser number of shares as may be determined by the Company’s board of directors). On January 6, 2018, pursuant to the Plan, the Company granted to certain of its employees and non-employee directors 1,496,005 options to purchase shares of its common stock (“Stock Options”), with an exercise price of $9.98 per share. In addition, on January 6, 2018, pursuant to the Plan, the Company granted restricted stock units for 230,516 shares of its common stock with a per share fair value of $9.98 . The January 6, 2018 Stock Options were valued using the IPO price of the Company’s common stock of $12.00 . On February 19, 2018, the Company granted to certain of its employees 102,835 options to purchase shares of its common stock with an exercise price of $11.70 per share. The following table summarizes stock-based compensation expense (in thousands) which was allocated to Evolus by ALPHAEON and amounts recorded by Evolus pursuant to the above Plan: Three Months Ended 2018 2017 General and administrative $ 677 $ 139 Research and development 329 4 $ 1,006 $ 143 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying amounts of cash equivalents, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short term nature of those instruments. Financial Instruments Not Recorded at Fair Value on a Recurring Basis At March 31, 2018 , the Company had $49.6 million in cash and cash equivalents, a Level 1 asset; these cash and cash equivalents do not carry a maturity date. The Company believes the carrying value of cash and cash equivalents approximated its fair value. The Company did not carry a cash and cash equivalents balance at December 31, 2017 . At March 31, 2018 , the Company had a $20.0 million contingent promissory note payable, a Level 2 liability, to the representative of the Evolus Contributors, that will mature 2.5 years after the anniversary date of the first commercial sale of DWP-450 in the United States. The Company measures the fair value of this contingent promissory note at present value using a discount rate for similar rated debt securities and is based on an estimated date that the Company believes the contingent promissory note will mature. At March 31, 2018 , the fair value of this contingent promissory note was $16.1 million . Accretion related to the contingent promissory note is recorded in interest expense of the condensed statements of operations and comprehensive loss with a corresponding increase to the non-current liabilities section of the condensed balance sheets. The Company did not carry a contingent promissory note payable balance at December 31, 2017 . The fair value of the contingent promissory note could be impacted by changes such as: (i) changes in the discount rate assumed, or (ii) a delay in the first commercial sale of the Product in the United States. Financial Instruments Recorded at Fair Value on a Recurring Basis The following table (in thousands) presents the major security types the Company held at March 31, 2018 , that are measured at fair value on a recurring basis. The Company did not hold any major security types that required a fair value measurement on a recurring basis at December 31, 2017 . March 31, 2018 Fair Value Hierarchy Beginning Balance Change in Fair Value Ending Balance Contingent royalty obligation payable to related party Level 3 Liability $ 39,700 $ 900 $ 40,600 The Company determines the fair value of the contingent royalty obligation using a discounted cash flow method approach based on projected net sales of the Product and an appropriate discount rate. Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in the operating expenses section of the condensed statements of operations and comprehensive loss and the non-current liabilities section of the condensed balance sheets, increasing the value of the promissory note. The significant unobservable input assumptions included in the calculations were the contingent period payment probabilities, based on low single digit percentage of net sales, a discount rate derived from rates related development stage companies, and the timing of payments. The fair value of the expected payments considers the time at which the obligations are expected to be settled and a discount rate that reflects the risk associated with the performance payments. The fair value of the contingent royalty obligation could be impacted by changes such as: (i) changes in the discount rate assumed, or (ii) the amount and timing of sales of the Product, or (iii) a delay in FDA approval of the Product. There were no transfers between any level classifications during the three months ended March 31, 2018 . |
Net Loss per Share Attributable
Net Loss per Share Attributable to Common Stockholders | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts): Three Months Ended 2018 2017 Net loss and comprehensive loss $ (6,162 ) $ (3,998 ) Net loss per share, basic and diluted $ (0.30 ) $ (0.24 ) Weighted-average shares outstanding used to compute basic and diluted net loss per share 20,226,460 16,527,000 The Company incurred a net loss for the three months ended March 31, 2018 and 2017 , accordingly, the Company did not include the following dilutive common equivalent shares (in thousands): Three Months Ended 2018 2017 Common stock options 1,599 — Unvested restricted stock units 231 — 1,830 — |
Summary of Significant Accoun14
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements for the periods prior to the Company’s IPO have been prepared on a standalone basis and are derived from ALPHAEON’s consolidated financial statements and accounting records. The Company’s financial statements included an allocation of certain assets and liabilities that have historically been held at the ALPHAEON corporate level but which were specifically identifiable or allocable to the Company. T he accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X . These results reflect amounts attributable to the Company’s business, including the costs ALPHAEON incurred for the development and commercialization of the Product and costs and expenses under the License and Supply Agreement (the “Daewoong Agreement”) entered into with Daewoong Pharmaceuticals Co., Ltd. (“Daewoong”), a South Korean pharmaceutical manufacturer, in September 2013, as further described below in Note 5 , C ommitments and Contingencies . |
Consolidation activities with ALPHAEON | ALPHAEON charged the Company external and internal administrative and research and development expenses ALPHAEON incurred on the Company’s behalf. External research and development expenses charged to the Company included costs for contract research organizations (“CROs”), costs to conduct nonclinical and clinical studies on the Product, costs to acquire and evaluate clinical study data such as investigator grants, patient screening fees and laboratory work, and fees paid to consultants. ALPHAEON charged these costs to the Company at the same amount that ALPHAEON incurred such cost. Internal development expenses included costs for the work that ALPHAEON development employees perform for the Company. ALPHAEON charged the Company a full-time equivalent (“FTE”) rate that covers personnel-related expenses, including salaries and benefits, plus an allocation of facility-related expenses, including rent, utilities, depreciation, insurance and property taxes, for those research and development employees who work either directly or indirectly on the development of the Company’s drugs and certain administrative employees. ALPHAEON calculated the facility-related expenses to the Company based on a percentage of aggregate expenses incurred at ALPHAEON. ALPHAEON calculated depreciation expense of property and equipment using the straight-line method over the estimated useful lives of its assets of 3 to 5 years. As a result, the Company historically incurred related party borrowings from ALPHAEON for its share of the internal and external expenses for each of these functions based on the Company’s relative use of each function, plus an allocation of facility-related expenses. The Company’s management believes that the allocation and results were reasonable for all periods presented. However, allocations may not be indicative of actual expense Evolus would have incurred had it operated as an independent company for the periods presented. Pursuant to the Services Agreement (see Note 1 , Organization ) executed in connection with the IPO and as of March 31, 2018 , the Company incurred related party accounts payable to ALPHAEON of $0.7 million . The Company has calculated its income tax amounts using a separate return methodology and has presented these amounts as if it were a separate taxpayer from ALPHAEON in each jurisdiction for each period the Company presented. Subsequent to the IPO, the Company will prepare a stand-alone tax return. As of March 31, 2018 and December 31, 2017, the Company did not have a tax sharing agreement with ALPHAEON. |
Acquisition | Acquisition The accounting for acquisitions requires extensive use of estimates and judgments to measure the fair value of the identifiable tangible and intangible assets acquired, including in-process research and development (“IPR&D”), and liabilities assumed. Additionally, the Company must determine whether an acquired entity is considered to be a business or a set of net assets, because the excess of the purchase price over the fair value of net assets acquired can only be recognized as goodwill in a business combination. Evolus was formed in November 2012 for the purposes of developing the Product for distribution and sale. In October 2013, in a Stock Purchase Agreement, SCH acquired all of the Company’s outstanding equity from certain former stockholders of the Company (the “Evolus Contributors”) in exchange for 15,000 Class AA units of SCH and 15,000 Class D units of SCH, which resulted in SCH obtaining a controlling financial interest in Evolus. Prior to the transaction with SCH, Evolus had executed the Daewoong Agreement with Daewoong and thereby secured exclusive rights to license and distribute the Product for aesthetic indications in the United States and certain other international markets, as well as non-exclusive rights to distribute in Japan (see Note 4 , Related Party Transactions ). The acquisition of the Company, which represented a business combination by SCH, was to provide SCH and ALPHAEON, access to the license held by Evolus to develop, produce and market clinical neurotoxins. In a series of related transactions in 2013, SCH, acquired all of the Company’s outstanding equity in exchange for membership interests in SCH. In 2014, SCH contributed equity that it had acquired in 2013 to ALPHAEON. As a result of these transactions, the Company became a wholly-owned subsidiary of ALPHAEON. The Company remained a wholly-owned subsidiary of ALPHAEON until the completion of the IPO. SCH elected to apply push-down accounting pursuant to the guidance in ASC 805, Business Combinations . Accordingly, the financial statements reflect the new basis of accounting established by SCH when SCH obtained control of the Company in October 2013. The assets acquired and liabilities assumed in connection with the acquisition were recognized based on their estimated fair values at the acquisition date. The determination of estimated fair values requires significant estimates and assumptions including, but not limited to, determining the timing and estimated costs to complete the in-process projects, projecting regulatory approvals, estimating future cash flows and developing appropriate discount rates. The estimated fair values assigned to the assets acquired and liabilities assumed were based on reasonable assumptions. In connection with the acquisition, SCH and ALPHAEON, entered into a stock purchase agreement (the “Stock Purchase Agreement”) pursuant to which they were obligated to make certain contingent payments to the Evolus Contributors. However, since Evolus did not have an obligation associated with the contingent consideration arrangement prior to February 12, 2018, no amounts were recognized in the Company’s financial statements for the contingent royalty obligation arrangement between SCH and ALPHAEON, and the Evolus Contributors. As described in Note 4 , Related Party Transactions , on December 14, 2017, SCH and ALPHAEON entered into an amendment to the Stock Purchase Agreement (the “Amended Purchase Agreement”), and the Company joined as a contractual party. Certain of the Evolus Contributors from whom SCH purchased its equity interests include individuals employed by the Company in operational roles, including J. Christopher Marmo, Ph.D., the Company’s Chief Operating Officer. Pursuant to the Amended Purchase Agreement, ALPHAEON’s existing payment obligations set forth in the Stock Purchase Agreement were replaced with revised payment obligations, which will be payable directly to the Evolus Contributors. As provided in the Amended Purchase Agreement, upon the closing of the IPO on February 12, 2018, ALPHAEON immediately and automatically assigned to the Company its payment obligations under the Amended Purchase Agreement. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes. Actual results could materially differ from those estimates, judgments, and assumptions. Management considers many factors in selecting appropriate financial accounting policies and controls and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates . On an ongoing basis, the Company evaluates the most significant estimates, including those related to the fair values of financial instruments, intangible assets and goodwill, useful lives of intangible assets, joint and several liability obligations, and royalty obligations, among others. Although the Company bases these estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments over the carrying values of assets and liabilities, this process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements. |
Risk and Uncertainties | Risk and Uncertainties The Company has not commenced principal operations in the form of commercialized product sales. The Product requires regulatory approval from the U.S. Food and Drug Administration (“FDA”), the European Medicines Agency, and other similar regulatory authorities prior to commercial sales. The Company’s current and any future product candidates may not 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 statements. The Company is subject to risks common to early stage companies in the pharmaceutical industry including, but not limited to, dependency on the clinical and commercial success of its current and any future product candidates, ability to obtain regulatory approval of its current and any future product candidates, 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 untested manufacturing capabilities. |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-tiered valuation hierarchy for disclosure of fair value measurement is classified and disclosed by the Company in one of the three categories as follows: • Level 1—Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, or can be corroborated by observable market data for substantially the full term of the asset or liability; and • Level 3—Prices or valuation techniques that require inputs that are unobservable that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
Deferred Rent and Initial Public Offering Costs | Deferred offering costs, which primarily consist of direct incremental legal and accounting fees relating to the IPO, were capitalized. During the three months ended March 31, 2018 , approximately $2.9 million of deferred offering costs were offset against IPO proceeds upon the effectiveness of the IPO in February 2018. |
Goodwill | Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired in a business combination. The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. The Company performs an annual qualitative assessment of its goodwill in the fourth quarter each calendar year to determine if any events or circumstances exist, such as an adverse change in business climate or a decline in the overall industry demand, that would indicate that it would more likely than not reduce the fair value of a reporting unit below its carrying amount, including goodwill. If events or circumstances do not indicate that the fair value of a reporting unit is below its carrying amount, then goodwill is not considered to be impaired and no further testing is required. If further testing is required, the Company performs a two-step process. The first step involves comparing the fair value of the Company’s reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, the second step of the test is performed by comparing the carrying value of the goodwill in the reporting unit to its implied fair value. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the purpose of impairment testing, the Company has determined that it has one reporting unit. There has been no impairment of goodwill for any of the periods presented. |
Intangible Asset | Intangible Asset The intangible asset in the accompanying condensed balance sheets represents IPR&D projects acquired that have not yet been completed. IPR&D assets with indefinite useful lives are not amortized, but instead tested for impairment until the successful completion and commercialization or abandonment of the associated research and development efforts, at which point the IPR&D assets are either amortized over their estimated useful lives or written-off immediately. There has been no impairment of long-lived assets for any periods presented. |
Joint and Several Liability Assessment | Joint and Several Liability Arrangements The Company measures obligations resulting from joint and several liability arrangements as the sum of the amount that the Company has (i) agreed to pay on the basis of its arrangement among its co-obligors, and (ii) any additional amounts that the Company expects to pay on behalf of its co-obligors. The determination of the “best estimate” from within the range of amounts that might be paid involves substantial judgment by the Company’s management. These estimates are subject to periodic revisions at each period as the joint and several liability is re-measured. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expense for employees and non-employee directors based on fair value at the date of grant. The fair value of equity awards that are expected to vest is amortized on a straight-line basis over the requisite service period. Stock-based compensation expense recognized is net of an estimated forfeiture rate, which is updated as appropriate. The Company uses the Black-Scholes option pricing model to value stock option grants. The Black-Scholes option pricing model requires the input of subjective assumptions, including the expected volatility of the Company’s common stock, expected risk-free interest rate, and the option’s expected life. The fair value of the Company’s restricted stock units are based on the closing market price of the Company’s common stock on the date of grant and is amortized on a straight-line basis over the requisite service period. Compensation cost related to the grant of ALPHAEON awards to the Company’s employees is recognized as a capital contribution and in the statement of operations. The Company recorded stock-based compensation expense for the three months ended March 31, 2018 , and 2017 of $1.0 million and $0.1 million , respectively. Prior to the IPO, the ALPHAEON common stock awards were valued at fair value on the date of grant and that fair value is recognized over the requisite service period. E stimates were used to determine the fair value of these awards, as shares of ALPHAEON’s common stock are not publicly traded. ALPHAEON common stock awards are subject to specified vesting schedules and requirements. The Company estimated the fair value of each ALPHAEON option on the date of grant using the Black-Scholes model. Stock-based compensation expense is allocated to the Company over the required service period over which these ALPHAEON common stock awards and options would vest and is based upon the relative percentage of time utilized by ALPHAEON employees on Company matters. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined on the basis of differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded against deferred tax assets, to reduce the net carrying value, by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made. Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations and comprehensive loss. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, excluding the effects of convertible preferred stock and stock options outstanding. Diluted net loss per share is computed by dividing the net loss by the sum of the weighted-average number of shares of common stock outstanding during the period plus the potential dilutive effects of convertible preferred stock and stock options outstanding during the period calculated in accordance with the treasury stock method but are excluded if their impact is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between the weighted-average number of shares used to calculate basic and diluted net loss per common share for the three months ended March 31, 2018 and 2017 . |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2017, the FASB issued Accounting Standards Update (“ASU”), No. 2017-09, Compensation—Stock Compensation (Topic 718) (“ASU 2017-09”) which amends the scope of modification accounting for share-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted guidance effective January 1, 2018 and it did not have a material impact on its financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). This standard simplifies the accounting for goodwill impairment by removing step two of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will be the amount by which a reporting unit's carrying amount, including goodwill, exceeds its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. ASU 2017-04 will be effective for the Company beginning January 1, 2022 (or January 1, 2020 should the Company cease to be classified as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012). The standard requires prospective application. Early adoption is permitted. The Company is in the process of determining the effects the adoption will have on its financial statements as well as whether to early adopt the new guidance. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies when transactions should be accounted for as acquisitions (or disposals) of assets or business. The amendments were effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company adopted guidance effective January 1, 2018 and it did not have a material impact on its financial statements. However, any prospective impact to the financial statements will depend on the terms specified in any future transactions subject to the guidance in ASU 2017-01. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”) which requires restricted cash to be included in the beginning-of-period and end-of-period totals with cash and cash equivalents. The guidance is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those years. The standard requires retrospective application. The Company adopted this standard on January 1, 2018. The adoption of the standard did not have a material impact on the Company’s statement of cash flows. However, prior period restricted cash was added to the beginning cash and cash equivalents in the Condensed Statements of Cash Flows to conform to the current presentation. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), that clarifies how entities should classify certain cash receipts and cash payments on the statement of cash flows. The guidance also clarifies how the predominance principle should be applied when cash receipts and cash payments have aspects of more than one class of cash flows. The guidance is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those years. The Company adopted this standard on January 1, 2018 using the retrospective approach. The adoption of the standard did not have a material impact on the Company’s statement of cash flows. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) , which amends the existing accounting standards for leases. In September 2017, the FASB issued ASU No. 2017-13, which provides additional clarifications and implementation guidance on previously issue ASU 2016-02. The new guidance requires lessees to put most leases on their balance sheet but to recognize expenses on their income statement in a manner similar to current accounting principles; this will include qualitative and quantitative disclosures in the Company’s notes to the financial statements. The new guidance also eliminates the current real estate-specific provisions for all entities. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those years. Early adoption is permitted. The Company is in the process of assessing the impact of the adoption of the standard on the Company’s financial statements. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | The following table summarizes the amounts included in Evolus’ general and administrative expenses as disclosed in the accompanying condensed statements of operations and comprehensive loss that were generated by transactions with ALPHAEON for the following periods (in thousands): Three Months Ended 2018 2017 Compensation and benefits $ 184 $ 298 Third party service fees 84 319 Stock-based compensation 30 139 Facility related expenses 80 430 Other 5 140 $ 383 $ 1,326 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments for operating leases | As of March 31, 2018 , future minimum payments under the operating lease agreement with non-cancelable terms greater than one year are as follows (in thousands): Remainder of 2018 $ 179 2019 175 2020 and thereafter 74 $ 428 |
Stockholder's Equity (Deficit)
Stockholder's Equity (Deficit) (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Schedule of stock-based compensation expense allocation | The following table summarizes stock-based compensation expense (in thousands) which was allocated to Evolus by ALPHAEON and amounts recorded by Evolus pursuant to the above Plan: Three Months Ended 2018 2017 General and administrative $ 677 $ 139 Research and development 329 4 $ 1,006 $ 143 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial instruments recorded at fair value on a recurring basis | The following table (in thousands) presents the major security types the Company held at March 31, 2018 , that are measured at fair value on a recurring basis. The Company did not hold any major security types that required a fair value measurement on a recurring basis at December 31, 2017 . March 31, 2018 Fair Value Hierarchy Beginning Balance Change in Fair Value Ending Balance Contingent royalty obligation payable to related party Level 3 Liability $ 39,700 $ 900 $ 40,600 |
Net Loss per Share Attributab19
Net Loss per Share Attributable to Common Stockholders (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net loss per share | The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts): Three Months Ended 2018 2017 Net loss and comprehensive loss $ (6,162 ) $ (3,998 ) Net loss per share, basic and diluted $ (0.30 ) $ (0.24 ) Weighted-average shares outstanding used to compute basic and diluted net loss per share 20,226,460 16,527,000 |
Schedule of securities excluded from computation of diluted net loss per share | The Company incurred a net loss for the three months ended March 31, 2018 and 2017 , accordingly, the Company did not include the following dilutive common equivalent shares (in thousands): Three Months Ended 2018 2017 Common stock options 1,599 — Unvested restricted stock units 231 — 1,830 — |
Organization - Narrative (Detai
Organization - Narrative (Details) $ / shares in Units, $ in Thousands | Feb. 12, 2018USD ($)$ / sharesshares | Jan. 31, 2018 | Mar. 31, 2018USD ($)$ / sharesshares | Mar. 31, 2017USD ($) | May 10, 2018 | Dec. 31, 2017USD ($)$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | ||||||
Stock split, conversion ratio | 1.6527 | |||||
Sale of stock, offering price (in usd per share) | $ / shares | $ 12 | |||||
Proceeds from initial public offering, net of underwriters fees | $ | $ 56,300 | $ 56,330 | $ 0 | |||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 20,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Net loss and comprehensive loss | $ | $ (6,162) | (3,998) | ||||
Net cash provided by (used in) operations | $ | (2,201) | (5,578) | ||||
Cash and cash equivalents | $ | 49,570 | $ 0 | $ 0 | |||
Accumulated deficit | $ | $ (82,320) | $ (75,543) | ||||
IPO | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 5,047,514 | |||||
Underwriters Option | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares issued in transaction (in shares) | 47,514 | |||||
Convertible Preferred Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | 0 | 2,500,000 | ||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.00001 | $ 0.00001 | ||||
Common Stock | Convertible Preferred Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares of convertible preferred stock converted (in shares) | 2,065,875 | |||||
Subsequent Event | ALPHAEON | Evolus, Inc. | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership percentage | 78.60% |
Summary of Significant Accoun21
Summary of Significant Accounting Policies - Narrative (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2013shares | Mar. 31, 2018USD ($)unit | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Feb. 28, 2018USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Related party accounts payable | $ 730,000 | $ 0 | |||
Number of reporting units | unit | 1 | ||||
Impairment of goodwill | $ 0 | ||||
Impairment of intangible assets | 0 | ||||
Deferred costs offset against IPO proceeds | $ 2,900,000 | ||||
Deferred offering costs | 0 | 2,125,000 | |||
Stock-based compensation expense | 1,006,000 | $ 143,000 | |||
Provisional decrease in net deferred tax assets | 3,200,000 | ||||
Provisional decrease in valuation allowance | 9,600,000 | ||||
Provisional income tax benefit | 6,300,000 | ||||
ALPHAEON | |||||
Property, Plant and Equipment [Line Items] | |||||
Related party accounts payable | $ 730,000 | $ 72,600,000 | |||
ALPHAEON | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Useful lives of property and equipment | 3 years | ||||
ALPHAEON | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Useful lives of property and equipment | 5 years | ||||
SCH | Evolus, Inc. | Class AA | |||||
Property, Plant and Equipment [Line Items] | |||||
Number of shares issued as part of business acquisition (in shares) | shares | 15,000 | ||||
SCH | Evolus, Inc. | Class D | |||||
Property, Plant and Equipment [Line Items] | |||||
Number of shares issued as part of business acquisition (in shares) | shares | 15,000 |
Goodwill and Intangible Asset -
Goodwill and Intangible Asset - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Oct. 31, 2013 | Mar. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 21,200 | $ 21,208 | $ 21,208 |
Indefinite-lived intangible assets (IPR&D) | 56,100 | $ 56,100 | |
SCH | Evolus, Inc. | |||
Business Acquisition [Line Items] | |||
Goodwill acquired | 56,300 | ||
Assets acquired, indefinite-lived intangible assets (IPR&D) | 56,100 | ||
Liabilities assumed in acquisition, deferred tax liabilities | $ 20,900 | ||
Contingent consideration upon successful completion of certain technical and sales milestones | $ 13,500 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | Feb. 12, 2018USD ($) | Dec. 14, 2017USD ($) | Nov. 30, 2017USD ($) | Apr. 30, 2017USD ($) | Oct. 31, 2013USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)transaction | Mar. 31, 2018USD ($) |
Related Party Transaction [Line Items] | ||||||||||
Payments on related party borrowings | $ 5,000,000 | $ 0 | ||||||||
Related party accounts payable | 730,000 | $ 0 | $ 730,000 | |||||||
Note obligation | 0 | 138,687,000 | 0 | |||||||
Related party receivable | 0 | 72,639,000 | 0 | |||||||
Deemed distribution to parent | (66,100,000) | |||||||||
Contingent promissory note payable to related party | $ 16,149,000 | 16,149,000 | 0 | 16,149,000 | ||||||
Contingent royalty obligation payable to related party | 40,600,000 | 40,600,000 | 0 | 40,600,000 | ||||||
Revaluation of contingent royalty obligation payable to related party | 900,000 | $ 0 | ||||||||
Liquidated damages | $ 1,000,000 | |||||||||
Period in which liquidated damages will be awarded | 30 days | |||||||||
ALPHAEON | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party accounts payable | $ 730,000 | $ 72,600,000 | 730,000 | |||||||
Redemption price on debt | 2.50% | |||||||||
Total amounts of transaction | $ 140,700,000 | |||||||||
Notes receivable from related parties | 56,300,000 | 56,300,000 | ||||||||
Period available to cure breach | 30 days | |||||||||
Unwinding fee | $ 9,600,000 | |||||||||
ALPHAEON | Chief Executive Officer | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party transaction amount in period | 800,000 | |||||||||
Related party receivable | 100,000 | $ 100,000 | ||||||||
ALPHAEON | Convertible Note | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Debt instrument, number of debt transactions | transaction | 2 | |||||||||
Interest rate on debt | 10.00% | |||||||||
Redemption price on debt | 2.50% | 2.50% | 2.50% | |||||||
ALPHAEON | Convertible Note | Bridge Note | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Face amount of debt | $ 2,500,000 | |||||||||
ALPHAEON | Convertible Note | Purchase Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Face amount of debt | $ 55,000,000 | |||||||||
Additional amount authorized for issuance | $ 30,000,000 | |||||||||
Evolus, Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Due to related parties | $ 1,600,000 | |||||||||
Percentage of voting interests acquired | 50.00% | |||||||||
Period during which contributors are prohibited from engaging in any business activities | 5 years | |||||||||
Evolus, Inc. | Chief Medical Officer | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Due to related parties | $ 700,000 | |||||||||
Evolus, Inc. | SCH | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party transaction amount in period | $ 56,700,000 | 20,000,000 | ||||||||
Up-front payment upon obtaining FDA approval | $ 9,200,000 | |||||||||
Period of anniversary | 2 years 6 months | |||||||||
Class D | Evolus, Inc. | SCH | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage | 10.00% | |||||||||
Up-front payment upon obtaining FDA approval | $ 10,000,000 | |||||||||
One-time lump sum payment | $ 145,000,000 | |||||||||
IPO | ALPHAEON | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Payments on related party borrowings | $ 5,000,000 |
Related Party Transactions - Re
Related Party Transactions - Related Party Expenses (Details) - ALPHAEON - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | $ 383 | $ 1,326 |
Compensation and benefits | ||
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | 184 | 298 |
Third party service fees | ||
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | 84 | 319 |
Stock-based compensation | ||
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | 30 | 139 |
Facility related expenses | ||
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | 80 | 430 |
Other | ||
Related Party Transaction [Line Items] | ||
Related party transactions, general and administrative expenses | $ 5 | $ 140 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating leases, rent expense | $ 52,000 | $ 41,000 | |
Loss contingency accrual | $ 0 | $ 0 |
Commitments and Contingencies-
Commitments and Contingencies- Future Minimum Payments (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2018 | $ 179 |
2,019 | 175 |
2020 and thereafter | 74 |
Operating leases, future minimum payments due | $ 428 |
Stockholder's Equity (Deficit27
Stockholder's Equity (Deficit) - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 19, 2018 | Feb. 12, 2018 | Jan. 06, 2018 | Dec. 14, 2017 | Nov. 21, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Subsidiary, Sale of Stock [Line Items] | ||||||||
Proceeds from initial public offering, net of underwriters fees | $ 56,300 | $ 56,330 | $ 0 | |||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock, shares issued (in shares) | 0 | 0 | ||||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 20,000,000 | |||||
Common stock, shares, issued (in shares) | 23,640,389 | 16,527,000 | ||||||
Common stock, shares, outstanding (in shares) | 23,640,389 | 16,527,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Contingent royalty obligation payable to related party | $ 40,600 | $ 40,600 | $ 0 | |||||
Contingent promissory note payable to related party | $ 16,149 | 16,149 | $ 0 | |||||
Payments on related party borrowings | (5,000) | 0 | ||||||
Capital contribution from parent, forgiveness of related party borrowings | $ 13,200 | $ 0 | ||||||
Sale of stock, offering price (in usd per share) | $ 12 | |||||||
2017 Omnibus Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Maximum number of shares authorized under the plan (in shares) | 4,361,291 | |||||||
Annual increase percentage of maximum shares outstanding (equal to) | 4.00% | |||||||
Options granted (in shares) | 1,496,005 | |||||||
Exercise price of options granted (in dollars per share) | $ 11.70 | $ 9.98 | ||||||
Sale of stock, offering price (in usd per share) | 12 | |||||||
Fair value of equity instruments other than options granted (in dollars per share) | $ 102,835 | |||||||
2017 Omnibus Incentive Plan | Restricted stock units | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Exercise price of options granted (in dollars per share) | $ 9.98 | |||||||
Equity instruments other than options granted (in shares) | 230,516 | |||||||
Convertible Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized (in shares) | 0 | 2,500,000 | ||||||
Preferred stock, shares issued (in shares) | 0 | 1,250,000 | ||||||
Preferred stock, shares outstanding (in shares) | 0 | 1,250,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | ||||||
IPO | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of shares issued in transaction (in shares) | 5,047,514 | |||||||
IPO | ALPHAEON | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Payments on related party borrowings | $ (5,000) | |||||||
Underwriters Option | ||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||
Number of shares issued in transaction (in shares) | 47,514 | |||||||
Common Stock | Convertible Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares of convertible preferred stock converted (in shares) | 2,065,875 | |||||||
Evolus, Inc. | SCH | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Related party transaction amount in period | $ 56,700 | $ 20,000 |
Stockholder's Equity (Deficit28
Stockholder's Equity (Deficit) - Stock-based Compensation Expense Allocation (Details) - 2017 Omnibus Incentive Plan - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | $ 1,006 | $ 143 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | 677 | 139 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | $ 329 | $ 4 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Feb. 12, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | $ 49,570 | $ 0 | $ 0 | |
Contingent promissory note payable to related party | $ 16,149 | $ 16,149 | $ 0 | |
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Maturity term of debt | 2 years 6 months | |||
Level 2 | Contingent promissory note payable | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Contingent promissory note payable | $ 20,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value on a Recurring Basis (Details) - Level 3 - Contingent royalty obligation payable to related party $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning Balance | $ 39,700 |
Change in Fair Value | 900 |
Ending Balance | $ 40,600 |
Net Loss per Share Attributab31
Net Loss per Share Attributable to Common Stockholders - Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss and comprehensive loss | $ (6,162) | $ (3,998) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.30) | $ (0.24) |
Weighted-average shares outstanding used to compute basic and diluted net loss per share (in shares) | 20,226,460 | 16,527,000 |
Net Loss per Share Attributab32
Net Loss per Share Attributable to Common Stockholders - Anti-dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net loss per share (in shares) | 1,830,000 | 0 |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net loss per share (in shares) | 1,599,000 | 0 |
Unvested restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net loss per share (in shares) | 231,000 | 0 |