Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 26, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | EOLS | |
Entity Registrant Name | EVOLUS, INC. | |
Entity Central Index Key | 0001570562 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding (in shares) | 27,333,004 | |
Entity Emerging Growth Company | true | |
Entity Smaller Reporting Company | true | |
Entity Transition Period | true |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 54,367 | $ 93,162 |
Short-term investments | 79,313 | 0 |
Inventories | 2,578 | 0 |
Prepaid expenses and other current assets | 2,826 | 1,177 |
Total current assets | 139,084 | 94,339 |
Intangible assets, net | 58,782 | 56,076 |
Goodwill | 21,208 | 21,208 |
Operating lease right-of-use assets | 810 | 0 |
Other assets | 1,045 | 221 |
Total assets | 220,929 | 171,844 |
Current Liabilities | ||
Accounts payable | 1,863 | 1,558 |
Accrued expenses | 6,735 | 3,718 |
Operating lease liabilities | 802 | 0 |
Total current liabilities | 9,400 | 5,276 |
Operating lease liabilities | 29 | 25 |
Contingent royalty obligation payable to Evolus Founders, a related party | 45,900 | 50,200 |
Contingent promissory note payable to Evolus Founders, a related party | 17,153 | 16,904 |
Long-term debt, net of discounts and issuance costs | 72,557 | 0 |
Deferred tax liability | 533 | 15,055 |
Total liabilities | 145,572 | 87,460 |
Commitments and contingencies (Note 7) | ||
Stockholders’ equity | ||
Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; no shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 0 | 0 |
Common Stock, $0.00001 par value; 100,000,000 shares authorized; 27,285,363 and 27,274,991 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 1 | 1 |
Additional paid-in capital | 209,365 | 207,408 |
Accumulated other comprehensive loss | (9) | 0 |
Accumulated deficit | (134,000) | (123,025) |
Total stockholders’ equity | 75,357 | 84,384 |
Total liabilities and stockholders’ equity | $ 220,929 | $ 171,844 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 | Feb. 12, 2018 |
Statement of Financial Position [Abstract] | |||
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 | 100,000,000 |
Common stock, shares, issued (in shares) | 27,285,363 | 27,274,991 | |
Common stock, shares, outstanding (in shares) | 27,285,363 | 27,274,991 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating expenses: | ||
Research and development | $ 2,353 | $ 1,678 |
General and administrative | 17,519 | 3,467 |
Revaluation of contingent royalty obligation payable to Evolus Founders, a related party | 4,913 | 900 |
Depreciation and amortization | 484 | 0 |
Total operating expenses | 25,269 | 6,045 |
Loss from operations | (25,269) | (6,045) |
Other income (expense): | ||
Interest income | 389 | 0 |
Interest expense | (618) | (107) |
Loss before income taxes | (25,498) | (6,152) |
Income tax (benefit) expense | (14,523) | 10 |
Net loss | (10,975) | (6,162) |
Other comprehensive loss: | ||
Unrealized loss on available-for-sale securities, net of tax | (9) | 0 |
Comprehensive loss | $ (10,984) | $ (6,162) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.40) | $ (0.30) |
Weighted-average shares outstanding used to compute basic and diluted net loss per share (in shares) | 27,330,174 | 20,226,460 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Preferred StockSeries A Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | IPOCommon Stock | IPOAdditional Paid In Capital |
Beginning balance (in shares) at Dec. 31, 2017 | 1,250,000 | 16,527,000 | ||||||
Beginning balance at Dec. 31, 2017 | $ (75,543) | $ 0 | $ 0 | $ 0 | $ 0 | $ (75,543) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Deemed contribution from Parent, increase of related-party receivable | 1,051 | 1,051 | ||||||
Deemed distribution to Parent, increase of convertible note obligation | (2,002) | (1,387) | (615) | |||||
Capital contribution from Parent, convertible note write-off | 66,998 | 66,998 | ||||||
Capital contribution from Parent, forgiveness of related party borrowings | 13,188 | 13,188 | ||||||
Preferred stock conversion upon initial public offering (in shares) | (1,250,000) | (2,065,875) | ||||||
Issuance of common stock upon initial public offering, net of issuance costs (in shares) | 5,047,514 | |||||||
Issuance of common stock upon initial public offering, net of issuance costs | 53,446 | $ 1 | $ 53,445 | |||||
Stock-based compensation | 1,006 | 1,006 | ||||||
Net loss | (6,162) | (6,162) | ||||||
Other comprehensive loss | (6,162) | |||||||
Ending balance (in shares) at Mar. 31, 2018 | 0 | 23,640,389 | ||||||
Ending balance at Mar. 31, 2018 | 51,982 | $ 0 | $ 1 | 134,301 | 0 | (82,320) | ||
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 27,274,991 | ||||||
Beginning balance at Dec. 31, 2018 | 84,384 | $ 0 | $ 1 | 207,408 | 0 | (123,025) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock-based compensation | 2,015 | 2,015 | ||||||
Net loss | (10,975) | (10,975) | ||||||
Issuance of common stock in connection with the incentive equity plan (in shares) | 10,372 | |||||||
Issuance of common stock in connection with the incentive equity plan | (58) | (58) | ||||||
Other comprehensive loss | (10,984) | (9) | ||||||
Other comprehensive loss, adjustment | (9) | |||||||
Ending balance (in shares) at Mar. 31, 2019 | 0 | 27,285,363 | ||||||
Ending balance at Mar. 31, 2019 | $ 75,357 | $ 0 | $ 1 | $ 209,365 | $ (9) | $ (134,000) |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (10,975) | $ (6,162) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 484 | 0 |
Amortization of discount on short-term investments | (120) | 0 |
Stock-based compensation | 1,998 | 1,006 |
Amortization of operating lease right-of-use assets | 219 | 0 |
Amortization of debt discount and issuance costs | 281 | 107 |
Deferred income taxes | (14,523) | 10 |
Revaluation of contingent royalty obligation payable to Evolus Founders, a related party | 4,913 | 900 |
Changes in assets and liabilities: | ||
Inventories | (2,578) | 0 |
Prepaid expenses and other current assets | (1,649) | (356) |
Accounts payable | (305) | (205) |
Related party accounts payable | 0 | 730 |
Accrued expenses | 2,667 | 1,361 |
Operating lease liabilities | (222) | (2) |
Net cash used in operating activities | (19,200) | (2,201) |
Cash flows from investing activities | ||
Additions to capitalized software | (823) | 0 |
Purchases of short-term investments | (79,202) | 0 |
Net cash used in investing activities | (80,025) | 0 |
Cash flows from financing activities | ||
Payment of contingent royalty obligation to Evolus Founders, a related party | (9,213) | 0 |
Milestone payment for intangible assets | (2,000) | 0 |
Proceeds from issuance of long-term debt, net of discounts | 73,906 | 0 |
Payments for debt issuance costs | (2,205) | 0 |
Proceeds from initial public offering, net of underwriters fees | 0 | 56,330 |
Payments for offering costs | 0 | (686) |
Related party borrowings | 0 | 1,127 |
Payments on related party borrowings | 0 | (5,000) |
Tax withholding paid on behalf of employees for stock-based awards | (58) | 0 |
Net cash provided by financing activities | 60,430 | 51,771 |
Change in cash and cash equivalents | (38,795) | 49,570 |
Cash and cash equivalents, beginning of period | 93,162 | 0 |
Cash and cash equivalents, end of period | 54,367 | 49,570 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 336 | 0 |
Cash paid for amounts included in the measurement of operating lease liabilities | 238 | 0 |
Non-cash investing and financing information: | ||
Related party receivable | 0 | 73,690 |
Related party borrowings | 0 | (68,767) |
Note obligation | 0 | (140,688) |
Contingent royalty obligation payable to Evolus Founders, a related party | 0 | 39,700 |
Contingent promissory note payable to Evolus Founders, a related party | 0 | 16,042 |
Capital contribution from Parent, convertible note write-off | 0 | 66,998 |
Capital contribution from Parent, forgiveness of related party borrowings | 0 | 13,188 |
Deferred offering costs | 0 | (2,885) |
Deferred offering costs, unpaid | 0 | (74) |
Accounts payable, paid by Parent | 0 | (163) |
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | 1,029 | 0 |
Capitalized software recorded in accounts payable and accrued expenses | $ 350 | $ 0 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Organization and Description of Business Evolus, Inc., (“Evolus” or the “Company”) is a performance beauty company focused on delivering products in the self-pay aesthetic market. On February 1, 2019, the U.S. Food and Drug Administration (the “FDA”) approved the Company’s first product Jeuveau™ (prabotulinumtoxinA-xvfs) (“Product”). The Product is a proprietary 900 kDa purified botulinum toxin type A formulation indicated for the temporary improvement in the appearance of moderate to severe glabellar lines, also known as “frown lines,” in adults. The Company is headquartered in Newport Beach, California. On February 12, 2018, the Company completed its initial public offering (“IPO”) and issued 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 then-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. In July 2018, the Company completed a follow-on public offering (the “Follow-On Offering”) in which the Company sold 3,600,000 shares of its common stock, which included the exercise in full by the underwriters of their option to purchase an additional 600,000 shares of common stock in August 2018, at a price to the public of $20.00 per share. The Company received net proceeds of approximately $67.7 million from the Follow-On Offering, after deducting underwriting discounts and commissions, excluding other offering expenses. In connection with the completion of its IPO, the Company also entered into a services agreement (the “Services Agreement”) with ALPHAEON Corporation (“ALPHAEON” or “Parent”), 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 its working capital and financing requirements. As of March 31, 2019 , ALPHAEON, which is majority-owned by SCH-AEON, LLC (“SCH”), owned 56.0% of the Company’s outstanding shares of common stock. 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 a net loss and comprehensive loss of $11.0 million and $6.2 million for the three months ended March 31, 2019 and 2018, respectively. Additionally, the Company used cash of $19.2 million and $2.2 million in operations during the three months ended March 31, 2019 and 2018 , respectively. As of March 31, 2019 , the Company had $54.4 million in cash and cash equivalents, $79.3 million in short-term investments, and an accumulated deficit of $134.0 million . The Company’s ability to execute on its business strategy, meet its future liquidity requirements, and achieve profitable operations, is dependent on a number of factors, including its ability to gain market acceptance of its Product and achieve a level of revenues adequate to support its cost structure, and operate its business and sell products without infringing third party intellectual property rights. The Company believes that its current capital resources are sufficient to fund operations through at least the next twelve months from the date the accompanying 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 to the extent as allowed under existing debt arrangement , 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 current rate of spending through reductions in staff and delaying, scaling back, or suspending certain research and development and sales and marketing programs and other operational goals. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation T he accompanying unaudited condensed financial statements have been prepared on a consistent basis with the annual financial statements and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting . Pursuant to these SEC rules and regulations, the Company has condensed or omitted certain financial information and footnotes disclosures normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the interim financial statements reflect all adjustments, which include normal recurring adjustments, considered necessary for a fair statement of the interim periods. The interim results presented herein are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2019 or for any other interim period. The accompanying unaudited condensed financial statements and related disclosures 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, 2018, as filed with the SEC on March 20, 2019. 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, inventory valuation, lease liabilities, 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, 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 received regulatory approval from the FDA and Health Canada to commercialize the Product, however, it has not made any product sales. The Product also requires regulatory approval from the European Medicines Agency (“EMA”) and other similar regulatory authorities prior to commercial sales in the related jurisdictions. The Company submitted a Marketing Authorization Application to the EMA, and it was accepted for review in July 2017. In April 2019, the Committee for Medicinal Products for Human Use (“CHMP”), adopted a positive opinion, recommending marketing authorization for the product. The CHMP recommendation will be reviewed by the European Commission, which has the authority to approve medicines for the European Union. The Product and any future product candidates of the Company may not receive necessary approvals in the jurisdictions where approval is sought. 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 the Product and any future product candidates, ability to obtain regulatory approval of the Product and any future product candidates in the jurisdictions where approval is sought, 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. In 2013, Evolus and Daewoong Pharmaceuticals Co., Ltd. (“Daewoong”) entered into an agreement (the “Daewoong Agreement”), pursuant to which, 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 Product is manufactured by Daewoong in a facility in South Korea. 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 Company relies on Daewoong, its exclusive and sole supplier, to manufacture the Product. Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect the Company’s commercialization of the Product. 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. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer who manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities at purchase of three months or less and that can be liquidated without prior notice or penalty. Cash and cash equivalents may include deposits, money market funds, and debt securities. Short-Term Investments Short-term investments as of March 31, 2019 consisted of available-for-sale U.S. Treasury securities with original maturities greater than three months and remaining maturities of less than twelve months. These investments are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses excluded from earnings and reported in other comprehensive loss in the Company’s condensed statements of operations and comprehensive loss. Purchase premiums and discounts are recognized in interest expense using the effective interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed statements of operations and comprehensive loss using the specific-identification method. The Company periodically reviews all available-for-sale securities for other than temporary declines in fair value below the cost basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company also evaluates whether it has plans or is required to sell short-term investments before recovery of their amortized cost bases. To date, the Company has not identified any other than temporary declines in fair value of its short-term investments. Inventories As of March 31, 2019, inventories consist of finished goods held for sale and distribution. Inventory valuation reserves are established based on a number of factors including, but not limited to finished goods not meeting product specifications, product obsolescence, or application of the lower of cost (first-in, first-out method) or net realizable value concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. No material inventory valuation reserves have been recorded for the periods presented. Adverse changes in assumptions utilized in the Company’s inventory reserve calculations could result in an increase to its inventory valuation reserves. 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 an orderly transaction between market participants in a principal market 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 Assets Upon FDA approval of the Product on February 1, 2019, in process research and development (“IPR&D”) related to the Product was evaluated as completed and reclassified to a definite-lived distribution right intangible asset, which is amortized over the period the asset is expected to contribute to the future cash flows of the Company. The Company determined the pattern of this intangible asset’s future cash flows could not be readily determined with a high level of precision. As a result, the Company concluded it will be amortized on a straight-line basis over the estimated useful life of 20 years. The Company capitalizes certain internal-use software costs associated with the development of its mobile and web-based customer platforms. These costs include personnel expenses and external costs that are directly associated with the software projects. These costs are included as intangible assets in the accompanying condensed balance sheets. The capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful life upon placing in service. The Company reviews long-term and identifiable definite-lived intangible assets or asset groups for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset or an asset group, further impairment analysis is performed. An impairment loss is measured as the amount by which the carrying amount of the asset or asset groups exceeds the fair value (assets to be held and used) or fair value less cost to sell (assets to be disposed of). The Company also reviews the useful lives of its assets periodically to determine whether events and circumstances warrant a revision to the remaining useful life. Changes in the useful life are adjusted prospectively by revising the remaining period over which the asset is amortized. There has been no impairment of long-lived assets for any periods presented. Contingent Royalty Obligation Payable to the Evolus Founders, a Related Party The Company determines the fair value of the contingent royalty obligation payable to a related party at each reporting period based on Level 3 inputs using a discounted cash flows method. Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in operating expenses in the accompanying statements of operations and comprehensive loss and in noncurrent liabilities in the balance sheets. Contingent Promissory Note Payable to Evolus Founders, a Related Party On February 12, 2018, the Company recognized a contingent promissory note payable at present value using a discount rate for similar rated debt securities based on an estimated date that the Company believed the contingent promissory note will mature. Accretion related to the contingent promissory note is recorded in interest expense in the statements of operations and comprehensive loss with a corresponding increase to the non-current liabilities in the balance sheets. Long-Term Debt The Company recorded borrowings classified as long-term debt in the accompanying condensed balance sheets. Debt discounts and issuance costs have been allocated pro rata between the funded and unfunded portions. Debt issuance costs represent legal, lender, and consulting costs or fees associated with debt financing. Debt discounts and issuance costs related to the outstanding borrowings are presented as a deduction to the debt balance and are accreted to interest expense using the effective interest method. Stock-Based Compensation The Company recognizes stock-based compensation expense for employees, consultants, and members of the Board of Directors based on the fair value at the date of grant. 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 (“RSUs”) are based on the fair value on the grant date of the Company’s common stock. The Company also evaluates the impact of modifications made to the original terms of equity awards when they occur. 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 is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital in the balance sheets and in the general and administrative or research and development expenses in the statements of operations and comprehensive loss. Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision or benefit for interim periods, as required under GAAP. The Company recorded a benefit for income taxes of $14.5 million for the three months ended March 31, 2019 and did not record significant tax provision or benefit for the three months ended March 31, 2018. The Company’s ETR differs from the U.S. federal statutory tax rate of 21% primarily as a result of the impact of a valuation allowance on its deferred tax assets. The Company accounts for income taxes using 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, 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. As of each reporting date, the Company considers evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2018, the deferred tax assets were primarily the result of U.S. net operating loss and tax credit carryforwards, and a valuation allowance of $34.5 million was recorded against the gross deferred tax asset balance. As of March 31, 2019, management determined there is sufficient positive evidence to conclude that it is more likely than not that deferred taxes of $14.5 million are realizable as a result of future reversals of existing taxable temporary differences associated with the Company’s amortizable distribution right intangible asset which was reclassified from an IPR&D intangible asset upon FDA approval of the Product in February 2019. Therefore, for the three months ended March 31, 2019, the Company released $14.5 million of its valuation allowance. 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. In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 118, the Company’s accounting for the elements of the Tax Cuts and Jobs Act was complete as of December 31, 2018 and no adjustments were made to the original provisional estimate recorded in 2017. 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 including contingently issuable shares. Diluted earnings per share is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and restricted stock units. Because the impact of the options and non-vested RSUs are 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, 2019 and 2018 . Recently Adopted Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018. The Company adopted the guidance on January 1, 2019, and such adoption did not have a material impact on its financial statements. In July 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-09, Codification Improvements , which clarifies certain amendments to guidance that may have been incorrectly or inconsistently applied by certain entities and includes Amendments to Subtopic 718-740, Compensation - Stock Compensation - Income Taxes . The guidance in paragraph 718-740-35-2, as amended by the amendments in ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in this update clarifies that an entity should recognize excess tax benefits in the period in which the amount of deduction is determined. The Company adopted the guidance on January 1, 2019, and such adoption did not have a material impact on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting, which amends the financial reporting for stock-based payments issued to nonemployees and also expands the scope of ASC 718, Compensation - Stock Compensation , to also include stock-based payments issued to nonemployees for goods and services. The amendment substantially aligns accounting for stock-based payments to employees and nonemployees. The Company early adopted the guidance in the quarter ended December 31, 2018. The adoption did not have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718), which amends the scope of modification accounting for stock-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a stock-based payment award require an entity to apply modification accounting. The Company adopted this guidance effective January 1, 2018 and this guidance did not have a material impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02 and its related amendments which introduced Leases (Topic 842, or “ASC 842”) , a new comprehensive lease accounting model that supersedes the current lease guidance under Leases (Topic 840) . The new accounting standard requires lessees to recognize right-of-use (“ROU”) assets and corresponding lease liabilities for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. In July 2018, the FASB added a transition option for implementation that allows companies to continue to use the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company adopted the guidance effective January 1, 2019. The Company elected the transition package of three practical expedients permitted under the transition guidance and elected the optional transition method that allows for a cumulative-effect adjustment in the period of adoption, without a restatement of prior periods. Further, the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. As a result of the adoption, the Company adjusted its beginning balance for the quarter ended March 31, 2019 by recording operating lease ROU assets and liabilities through a cumulative-effect adjustment. The adoption impacted the accompanying condensed balance sheet, but did not have an impact on the condensed statements of operations and comprehensive loss. At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding ROU assets upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current or noncurrent liabilities based upon the length of time associated with the lease payments. The operating lease ROU assets includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any, and are recorded as noncurrent assets. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. There are no significant finance leases as of March 31, 2019 . Leases with an initial term of 12 months or less are not recorded on the accompanying condensed balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The impact of the adoption of ASC 842 on the accompanying condensed balance sheet as of January 1, 2019 was as follows (in thousands): December 31, 2018 Adjustments Due to the Adoption of ASC 842 January 1, 2019 Right-of-use assets* Operating lease right-of-use assets $ — $ 1,029 $ 1,029 Operating lease liabilities Current $ — $ 916 $ 916 Noncurrent $ — $ 138 $ 138 __________________ * Operating lease right-of-use assets includes deferred rent of $25,000. Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-18, Clarifying the Interaction between Topic 808 and Topic 606 , which requires transactions in collaborative arrangements to be accounted for under ASC 606, Revenue from Contracts with Customers , if the counter-party is a customer for a good or service that is a distinct unit of account. The amendments also preclude entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted, including in any interim period. The Company is currently evaluating the impact that the adoption of this guidance will have on its financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract . ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2021. 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 August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement . The update is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company is currently evaluating the impact this change will have on its financial statements as well as whether to early adopt the new guidance. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The update 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. The update is effective for the Company beginning January 1, 2020. The standard requires prospective application. Early adoption is permitted. The Company is evaluating the effect of this standard on its financial statements and related disclosures as well as whether to early adopt the new guidance. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The new standard requires the use of forward-looking expected credit loss models based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments -Credit Losses. This ASU does not change the core principle of the guidance in ASU 2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and interim periods within those periods, and early adoption is permitted. This will be effective for the Company during the year ending December 31, 2020. The Company is in the process of determining the effects th |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Services with ALPHAEON Prior to the Company’s IPO, the Company had funded its operations primarily through contributions and related party borrowings from ALPHAEON. For the quarter ended March 31, 2018, $0.4 million was included in Evolus’ general and administrative expenses that were generated by transactions with ALPHAEON. After completion of the Company’s IPO on February 12, 2018, ALPHAEON did not incur any administrative or research and development expenses on the Company’s behalf. As of December 31, 2018 and March 31, 2019 , there were no related party accounts receivable, payable, or debt with ALPHAEON, respectively. Note Obligation In 2016, ALPHAEON entered into two separate debt transactions: (i) a convertible note with one of its stockholders, 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. In April 2017, ALPHAEON amended and restated the Purchase Agreement (the “Amended and Restated Secured Note Purchase Agreement”). Concurrently, the Company also executed two substantially similar guaranty and security agreements (the “Guaranty Agreements”), with the holders of the Notes, pursuant to which, 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 . 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. During the first quarter of 2018, 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 by $2.0 million from $138.7 million as of December 31, 2017 to $140.7 million ( 2.5 times the total outstanding principal amount of $56.3 million ) immediately prior to the IPO. Approximately $0.6 million in excess of the then balance of additional paid-in capital was recorded in accumulated deficit. 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 equaled the current balance of the amounts owed to ALPHAEON under its related party borrowing arrangements. In January 2018 immediately prior to its IPO, the Company recorded an increase of $1.1 million in the receivable from ALPHAEON with a corresponding increase in additional paid-in capital. The related party receivable balance increased to $73.7 million immediately prior to the IPO. As of February 12, 2018, the Company was released of the $140.7 million note obligation for all guaranty and security obligations under the Guaranty Agreements, and the related party receivable from ALPHAEON of $73.7 million was settled, resulting in a capital contribution of $67.0 million . ALPHAEON’s security interest in Evolus’ assets was also terminated. Evolus Founders Certain of the Evolus Founders from whom SCH purchased its equity interests include individuals who were previously employed by the Company in operational roles, including J. Christopher Marmo, Ph.D., the Company’s former Chief Operating Officer. Payment Obligations Related to the Acquisition by ALPHAEON The Company was acquired by SCH-AEON, LLC (“SCH”), in 2013 and subsequently by ALPHAEON by means of a stock purchase agreement (“Stock Purchase Agreement”), pursuant to which ALPHAEON took on certain payment obligations related to the acquisition. On December 14, 2017, the Stock Purchase Agreement was amended (“Amended Stock Purchase Agreement”), and, as a result, effective upon the closing of the Company’s initial public offering, the Company assumed all of ALPHAEON’s payment obligations under the acquisition. Refer to the notes to the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for details of the acquisition of the Company. Under the Amended Stock 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 which was paid in full during the first quarter of 2019, (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. Under the Amended Stock Purchase Agreement, the Company recorded the fair value of all revised payment obligations and the promissory note owed to the Evolus Founders of $55.7 million (comprised of $39.7 million related to the contingent royalty obligation and $16.0 million related to the contingent promissory note) as of February 12, 2018. See Note 6 , Fair Value Measurements and Short-Term Investments 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 the Company assumed from ALPHAEON, the fair value of which, as of February 12, 2018, was $55.7 million . Under the Amended Stock Purchase Agreement, Evolus paid one-time bonuses of $1.6 million to certain current and former employees upon FDA approval of the Product in February 2019, including a one-time bonus of $700,000 payable to Rui Avelar, M.D., Evolus’ Chief Medical Officer and Head of Research & Development. The payment is included in research and development expenses in the accompanying condensed statements of operations and comprehensive loss for the three months ended March 31, 2019 . The Company has 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, or (iv) Evolus materially breaches the Amended Stock Purchase Agreement or Tax Indemnity Agreement (which is defined below) and such breach is not cured within 30 days. 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. In connection with the Amended Stock Purchase Agreement, Evolus entered into a tax indemnity agreement with the Evolus Founders (“Tax Indemnity Agreement”) pursuant to which, effective upon Evolus’ assumption of the revised payment obligations under the Amended Stock Purchase Agreement, which occurred upon the completion of the IPO, Evolus was obligated to indemnify the Evolus Founders for any tax liability resulting from such assignment of the revised payment obligations from ALPHAEON to Evolus. Under the Amended 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 Stock Purchase Agreement would cause the Evolus Founders 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 Founders 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 Stock Purchase Agreement. Under the Tax Indemnity Agreement, Evolus was obligated to indemnify the Evolus Founders for any taxes or penalties required to be paid by the Evolus Founders 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 Stock Purchase Agreement rendered continued installment sale reporting unavailable to the Evolus Founders. Any taxes or penalties paid by us on behalf of the Evolus Founders 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 Founders under the Amended Stock 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. 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. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The table below shows the weighted-average life, original cost, accumulated amortization, and net book value by major intangible asset classification (in thousands): Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 58,076 $ (484 ) $ 57,592 Capitalized software 2 1,190 — 1,190 Intangible assets, net 59,266 (484 ) 58,782 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of March 31, 2019 $ 80,474 $ (484 ) $ 79,990 Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Indefinite-lived intangible assets IPR&D** * $ 56,076 $ — $ 56,076 Goodwill * 21,208 — 21,208 Total as of December 31, 2018 $ 77,284 $ — $ 77,284 ________________________ * Intangible assets with indefinite lives have an indeterminable average life. ** IPR&D is presented as “intangible asset, net” in the accompanying condensed balance sheets. The following table outlines the estimated future amortization expense related to intangible assets held as of March 31, 2019 that are subject to amortization: Fiscal year (in thousands) Remaining in 2019 $ 2,178 2020 2,904 2021 2,904 2022 2,904 2023 2,904 Thereafter 43,798 $ 57,592 In connection with the acquisition of the Company by SCH in 2013, the Company recorded goodwill of $21.2 million and IPR&D of $56.1 million . The IPR&D recognized represents the license and associated distribution right to develop the Product, the initial term of which will expire in September 2023 and which will be automatically extended for unlimited additional three -year terms provided that the Company meets certain performance requirements. Additionally, pursuant to the Daewoong Agreement, $13.5 million in additional cash consideration is due to Daewoong based upon the Company’s successful completion of certain technical and sales milestones. Upon FDA approval of the Product on February 1, 2019, the Company paid Daewoong a $2.0 million milestone payment which increased the cost basis of the IPR&D, and the IPR&D project was completed and reclassified as an definite-lived distribution right intangible asset, which is amortized on a straight-line basis over the estimated useful life of 20 years and is recorded within depreciation and amortization on the accompanying condensed statements of operations and comprehensive loss. During the three months ended March 31, 2019 , the Company capitalized $1.2 million related to costs of computer software developed or obtained for internal use and expects to amortize this software over a two -year period using the straight-line method once placed in service. |
Oxford Term Loans
Oxford Term Loans | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Oxford Term Loans | Oxford Term Loans On March 15, 2019, the Company entered into a credit facility of up to $100.0 million with Oxford Finance (“Oxford”). Pursuant to the terms of the credit facility the lender extended term loans (the “Term Loans”) to the Company that were available in two advances. The first tranche of $75.0 million was funded on the closing date. The second tranche of $25.0 million may be drawn, at the request of the Company, no later than September 30, 2020, upon achieving specified minimum net sales milestones based on a trailing six month basis and no event of default. The credit facility bears an annual interest rate equal to the greater of 9.5% , or the 30-day U.S. Dollar LIBOR rate plus 7.0% . The Company has agreed to pay interest-only on each tranche funded for the first 36 months until May 2022, which will be followed by a 23 -month amortization period. Notwithstanding the foregoing, if the Company maintains compliance with the specified minimum net sales covenant and meets other conditions during the initial interest-only period, upon the Company’s request, the interest-only period may be extended by an additional 12 months to a total of 48 months followed by an 11 -month amortization period. Upon the earliest to occur of the maturity date, the acceleration of the term loans, or the prepayment of the term loans, the Company will be required to pay to Oxford a final payment of 5.5% of the full principal amount of the term loans funded (“Final Payment”). The Company may elect to prepay all amounts owed prior to the maturity date, provided that a prepayment fee is also paid, which shall be equal to 3.0% of the amount prepaid if the prepayment occurs on or prior to March 15, 2020, 2.0% of the amount prepaid if the prepayment occurs after March 15, 2020 and on or prior to March 15, 2021, or 1.0% of the amount prepaid if the prepayment occurs thereafter (“Prepayment Fee”). If the Term Loans are accelerated following the occurrence of an event of default, the Company will be required to immediately pay to Oxford an amount equal to the sum of all outstanding principal of the term loans plus accrued and unpaid interest thereon through the prepayment date, the Final Payment, the Prepayment Fee, and all other obligations that are due and payable, including payment of Oxford’s expenses and interest at the default rate with respect to any past due amounts. The credit facility is secured by substantially all of the Company’s assets. The credit facility includes affirmative and negative covenants applicable to the Company and any subsidiaries it may create in the future. The affirmative covenants include, among others, covenants requiring us to maintain the Company’s legal corporate existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. The negative covenants include, among others, restrictions on us transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, selling assets and suffering a change in control, in each case subject to certain exceptions. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at a default interest rate equal to the applicable rate plus 5.0% and Oxford, as collateral agent, with the right to exercise remedies against us and the collateral securing the credit facility, including foreclosure against the property securing the credit facility, including the Company’s cash. These events of default include, among other things, any failure by the Company to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, the occurrence of any default under certain other indebtedness and one or more judgments against the Company, the institution of certain temporary or permanent relief in connection with pending litigation, or the breach, termination or other adverse events under the Daewoong Agreement. As of March 31, 2019, the Company was in compliance with its debt covenants. At the closing date, the Company incurred $1.1 million and $2.2 million in debt discounts and issuance costs related to the Term Loans, respectively. Debt discounts and issuance costs related to the entire Term Loans have been allocated pro rata between the funded and unfunded portions. Debt discounts and issuance costs allocated to the first tranche of $75.0 million have been presented as a deduction to the debt balance and are accreted to interest expense using the effective interest method. As of March 31, 2019 , the borrowings outstanding under the Term Loans were classified as long-term debt in the accompanying condensed financial statements. Debt discounts and issuance costs associated with the unfunded tranche are deferred as assets until the tranche is drawn. The overall effective interest rate was approximately 11.6% as of March 31, 2019 . As of March 31, 2019 , the principal amounts of long-term debt maturities during each of the next five fiscal years, and the Final Payment in 2024 which is accreted through interest expense over the life of the Term Loans are as follows (in thousands): Principal Final Payment Total 2022 $ 26,087 $ — $ 26,087 2023 39,130 — 39,130 2024 9,783 4,125 13,908 $ 75,000 $ 4,125 $ 79,125 |
Fair Value Measurements and Sho
Fair Value Measurements and Short-Term Investments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements and Short-Term Investments | Fair Value Measurements and Short-Term Investments The Company’s financial instruments consist primarily of cash and cash equivalents, short-term available-for-sale securities, accounts payable, accrued expenses, lease liabilities, and long-term debt. The carrying amount of cash and cash equivalents, accounts payable and accrued expenses approximates their fair value because of the short-term maturity of such instruments, which are considered Level 1 assets under the fair value hierarchy. The Company did not have any short-term investments for the year ended December 31, 2018. As of March 31, 2019, all of the Company’s investments had remaining maturities less than 12 months. The following is a summary of the Company’s short-term investments, considered available-for-sale, as of March 31, 2019 (in thousands): Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Available-for-sale securities U.S treasury securities $ 79,321 $ — $ (8 ) $ 79,313 Unrealized gains or losses on short-term investments are included in accumulated other comprehensive loss. As of March 31, 2019 , no investments had been in continuous unrealized loss position for more than 12 months, and the Company had no other-than-temporary impairments on these securities. The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The fair value of these instruments was as follows (in thousands): As of March 31, 2019 Fair Value Level 1 Level 2 Level 3 Available-for-sale securities U.S treasury securities $ 79,313 $ 79,313 $ — $ — Liabilities Contingent royalty obligation payable to Evolus Founders, a related party $ 45,900 $ — $ — $ 45,900 As of December 31, 2018 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent royalty obligation payable to Evolus Founders, a related party $ 50,200 $ — $ — $ 50,200 The Company did not transfer any assets or liabilities measured at fair value on a recurring basis between levels during the three months ended March 31, 2019 . The Company determines the fair value of the contingent royalty obligation payable to a related party based on Level 3 inputs using a discounted cash flow method. Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in the operating expenses in the accompanying statements of operations and comprehensive loss and in non-current liabilities in the balance sheets. The significant unobservable input assumptions that can significantly change the fair value include (i) timing of regulatory approvals of the Product, (ii) projected and timing of net revenues during the payment period, which will terminate for the quarter following the 10 year anniversary of the first commercial sale of the Product in the United States, (iii) the discount rate, and (iv) the timing of payments. During the three months ended March 31, 2019 and 2018, the Company utilized discount rates of 16.0% and 25.0% , respectively, reflecting changes in the Company’s risk profile. Net revenue projections were also updated to reflect changes in the timing of regulatory approval and expected commercialization. The following table (in thousands) shows a reconciliation of the beginning and ending fair value measurements of the contingent royalty obligation payable to a related party for the three months ended March 31, 2019 : March 31, 2019 Fair value, beginning of period $ 50,200 FDA milestone payment (9,213 ) Change in fair value recorded in operating expenses 4,913 Fair value, end of period $ 45,900 In addition, the Company measures the fair value of the contingent promissory note payable to Evolus Founders at present value based on Level 2 inputs, using a discount rate for similar rated debt securities and based on an estimated date that the Company believes the contingent promissory note will mature. 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. As of March 31, 2019 , the fair value of the promissory note was estimated to be $14.8 million . The carrying amount for the Oxford Term Loans as of March 31, 2019 approximated fair value based on market activity for other debt instruments with similar characteristics and comparable risk, which were considered Level 2 liabilities under the fair value hierarchy. The Company believes the fair value of its operating lease liabilities at March 31, 2019 approximated its carrying value, based on the borrowing rates that were available for loans with similar terms. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company leases office facilities under various operating lease agreements. The Company’s corporate headquarters is located in Newport Beach, California, in a facility that it subleases under a non-cancelable operating lease for a fixed amount each month. The sublease for this facility expires on January 20, 2020. The Company also leases an office facility in Santa Barbara, California, under a non-cancelable operating lease, the payments of which include a three percent annual rent escalation clause that occurs on each June 1 anniversary . The lease for this facility expires on May 31, 2020. The Company’s lease agreements do not contain any residual value guarantees or material restrictive covenants. For the three-month period ended March 31, 2019 , the components of operating lease expense and other quantitative information were as follows (in thousands, except years and discount rate data): Three Months Ended Fixed operating lease expense $ 234 Variable operating lease expense 18 Short-term operating lease expense 21 $ 273 Weighted-average remaining lease term in years - operating leases 0.9 Weighted-average discount rate 7.0% Operating lease expenses were included in the general and administration expenses in the accompanying condensed statements of operations and comprehensive loss. Operating lease right-of-use assets and related current and noncurrent operating lease liabilities are presented in the accompanying condensed balance sheets. The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2019 , future minimum payments under the operating lease agreements with non-cancelable terms as follows (in thousands): Remainder of 2019 $ 717 2020 139 Total operating lease payments 856 Less: Imputed interest (25 ) Present value of operating lease liabilities $ 831 Purchase Commitments As of March 31, 2019 , the Company has entered into commitments to purchase services and products for an aggregate amount of approximately $20.5 million . Certain minimum purchase commitments related to purchase of the Product are described below. License and Supply Agreement In connection with the Daewoong Agreement, the Company is obligated to make future milestone payments to Daewoong for certain confidential development and commercial milestones associated with the Product. Upon the FDA approval of the Product on February 1, 2019, the Company paid Daewoong a $2.0 million milestone payment. As of March 31, 2019 , Daewoong is eligible to receive contingent milestone payments of up to approximately $11.5 million . 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 were 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, 2019 and December 31, 2018 . 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 “Medytox Litigation”). The Company believes it has meritorious defenses and 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. In connection with the FDA approval of the Product, on February 1, 2019 the Citizen Petition was dismissed. ITC Case On January 30, 2019, Allergan, plc and Allergan, Inc. (collectively, “Allergan”) and Medytox filed a complaint against us and Daewoong in the U.S. International Trade Commission (the “ITC”), containing substantially similar allegations to the Medytox Litigation, specifically that the Product is manufactured based on misappropriated trade secrets of Medytox and therefore the importation of the Product is an unfair act. The ITC matter is entitled In the Matter of Certain Botulinum Toxin Products (the “ITC Complaint”). The ITC instituted an investigation as ITC Inv. No. 337-TA-1145. The ITC complaint calls for an investigation by the ITC under Section 337 of the Tariff Act of 1930. The ITC complaint seeks (i) an investigation pursuant to Section 337 of the Tariff Act of 1930, (ii) a hearing with the ITC on permanent relief, (iii) issuance of a limited exclusion order forbidding entry of the Product into the United States, (iv) a cease and desist order prohibiting Daewoong and us from engaging in the importations, sale for importation, marketing, distribution, offering for sale, the sale after the importation of, or otherwise transferring the Product within the United States, (v) a bond issued during the presidential review period, (vi) the return of Medytox’s trade secrets and other confidential information including the alleged stolen botulinum toxin bacterial strain , and (vii) exclusion and cease and desist orders. The Company intends to defend itself vigorously in the proceedings. An adverse ruling by the ITC against either us or Daewoong could result in the imposition of an exclusion order which would bar imports of the Product into the United States and a cease and desist order which would bar sales and marketing of the Product within the United Sates either of which would adversely affect our ability to carry out the Company’s business and which would have an adverse effect on our business, financial position, results of operations, or cash flows and could also result in reputational harm. Any of these consequences could adversely affect the Company’s business and results of operations. |
Stockholders_ Equity
Stockholders’ Equity | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stockholder's Equity | Stockholders’ Equity Preferred Stock The Company has 10,000,000 authorized shares of preferred stock with a par value of $0.00001 per share. As of March 31, 2019 , none were issued and outstanding. Common Stock The Company has 100,000,000 authorized shares of common stock with a par value of $0.00001 per share. As of March 31, 2019 , 27,285,363 shares were issued and outstanding. 2017 Omnibus Incentive Plan and Stock-based Compensation Allocation The Company’s 2017 Omnibus Incentive 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 November 21, 2018, an additional 1,091,000 were reserved under the evergreen provision of the Plan. As of March 31, 2019 , the Company has available an aggregate of 1,283,193 shares of common stock for future issuance under the Plan. Stock-Based Award Activity and Balances Options are granted at exercise prices based on the Company’s common stock price on the date of grant. The Options and RSU grants generally vest over a 2 - to 4 -year period. There have been no awards granted with performance conditions and no awards with market conditions for the periods presented. The options generally have a contractual term of 10 years. The fair value of options is estimated using the Black‑Scholes option pricing model, which has various inputs, including the grant date common share price, exercise price, risk‑free interest rate, volatility, expected life and dividend yield. The change of any of these inputs could significantly impact the determination of the fair value of the Company’s options as well as significantly impact its results of operations. The fair value of RSU grants is determined at the grant date based on the common share price. The Company records stock‑based compensation expense net of actual forfeitures when they occur. The weighted-averages for key assumptions used in determining the fair value of stock options granted were as follows: Three Months Ended 2019 2018 Volatility 59.2% 56.0% Risk-free interest rate 2.62% 2.40% Expected life in years 6.17 6.23 Dividend yield rate —% —% A summary of stock option activity under the Plan for the three months ended March 31, 2019 , is presented below: Weighted Weighted Average Aggregate Average Remaining Intrinsic Stock Exercise Contractual Value Options Per Share Terms (Years) (in thousands) Outstanding, December 31, 2018 3,257,801 $ 11.99 9.26 $ 7,119 Granted 822,975 18.09 Exercised (20,544) 9.98 Cancelled/forfeited (192,978) 12.15 Outstanding, March 31, 2019 3,867,254 $ 13.29 8.78 $ 37,345 Exercisable, March 31, 2019 438,023 $ 10.15 4.85 $ 5,440 The intrinsic values of outstanding and exercisable options were determined by multiplying the number of shares by the difference in exercise price of the options and the fair value of the common stock as of December 31, 2018 and March 31, 2019 . A summary of the status of the Company’s nonvested options as of and changes during the three months ended March 31, 2019 , are presented below: Weighted-Average Stock Grant Date Options Fair Value Outstanding, December 31, 2018 3,257,801 $ 7.32 Granted 822,975 10.38 Vested (458,567) 6.96 Cancelled/forfeited (192,978) 8.10 Outstanding, March 31, 2019 3,429,231 $ 8.06 A summary of RSUs activity under the Plan for the three months ended March 31, 2019 , is presented below: Weighted Restricted Average Stock Grant Date Units Fair Value Outstanding, December 31, 2018 271,404 $ 16.53 Granted 3,000 18.33 Forfeited (17,534) 13.08 Outstanding, March 31, 2019 256,870 $ 16.79 The following table summarizes stock-based compensation expense (in thousands) arising from the above Plan: Three Months Ended 2019 2018 General and administrative $ 1,744 $ 677 Research and development 254 329 $ 1,998 $ 1,006 In addition, during the three months ended March 31, 2019 , the Company capitalized $17,000 of stock-based compensation expense in capitalized software. Capitalized software is a component of intangible assets and is presented in the accompanying condensed balance sheets. See Note 4 , Goodwill and Intangible Assets for capitalized software information. |
Net Loss per Share Attributable
Net Loss per Share Attributable to Common Stockholders | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Net loss $ (10,975 ) $ (6,162 ) Net loss per share, basic and diluted $ (0.40 ) $ (0.30 ) Weighted-average shares outstanding used to compute basic and diluted net loss per share 27,330,174 20,226,460 The Company incurred a net loss for the three months ended March 31, 2019 and 2018 , accordingly, the Company did not include the following dilutive common equivalent (in thousands) shares because inclusion would be anti-dilutive: Three Months Ended 2019 2018 Common stock options 3,867 1,599 Unvested restricted stock units 207 231 4,074 1,830 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation T he accompanying unaudited condensed financial statements have been prepared on a consistent basis with the annual financial statements and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting . Pursuant to these SEC rules and regulations, the Company has condensed or omitted certain financial information and footnotes disclosures normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the interim financial statements reflect all adjustments, which include normal recurring adjustments, considered necessary for a fair statement of the interim periods. The interim results presented herein are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2019 or for any other interim period. |
Consolidation activities with ALPHAEON | The accompanying unaudited condensed financial statements and related disclosures 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, 2018, as filed with the SEC on March 20, 2019. |
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, inventory valuation, lease liabilities, 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, 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 received regulatory approval from the FDA and Health Canada to commercialize the Product, however, it has not made any product sales. The Product also requires regulatory approval from the European Medicines Agency (“EMA”) and other similar regulatory authorities prior to commercial sales in the related jurisdictions. The Company submitted a Marketing Authorization Application to the EMA, and it was accepted for review in July 2017. In April 2019, the Committee for Medicinal Products for Human Use (“CHMP”), adopted a positive opinion, recommending marketing authorization for the product. The CHMP recommendation will be reviewed by the European Commission, which has the authority to approve medicines for the European Union. The Product and any future product candidates of the Company may not receive necessary approvals in the jurisdictions where approval is sought. 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 the Product and any future product candidates, ability to obtain regulatory approval of the Product and any future product candidates in the jurisdictions where approval is sought, 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. In 2013, Evolus and Daewoong Pharmaceuticals Co., Ltd. (“Daewoong”) entered into an agreement (the “Daewoong Agreement”), pursuant to which, 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 Product is manufactured by Daewoong in a facility in South Korea. 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 Company relies on Daewoong, its exclusive and sole supplier, to manufacture the Product. Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect the Company’s commercialization of the Product. |
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. The Company has determined that it operates in a single operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer who manages operations and reviews the financial information as a single operating segment for purposes of allocating resources and evaluating its financial performance. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities at purchase of three months or less and that can be liquidated without prior notice or penalty. Cash and cash equivalents may include deposits, money market funds, and debt securities. |
Short-Term Investments | Short-Term Investments Short-term investments as of March 31, 2019 consisted of available-for-sale U.S. Treasury securities with original maturities greater than three months and remaining maturities of less than twelve months. These investments are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses excluded from earnings and reported in other comprehensive loss in the Company’s condensed statements of operations and comprehensive loss. Purchase premiums and discounts are recognized in interest expense using the effective interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed statements of operations and comprehensive loss using the specific-identification method. The Company periodically reviews all available-for-sale securities for other than temporary declines in fair value below the cost basis whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company also evaluates whether it has plans or is required to sell short-term investments before recovery of their amortized cost bases. To date, the Company has not identified any other than temporary declines in fair value of its short-term investments. |
Inventories | Inventories As of March 31, 2019, inventories consist of finished goods held for sale and distribution. Inventory valuation reserves are established based on a number of factors including, but not limited to finished goods not meeting product specifications, product obsolescence, or application of the lower of cost (first-in, first-out method) or net realizable value concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. No material inventory valuation reserves have been recorded for the periods presented. Adverse changes in assumptions utilized in the Company’s inventory reserve calculations could result in an increase to its inventory valuation reserves. |
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 an orderly transaction between market participants in a principal market 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 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. |
Intangible Asset | Intangible Assets Upon FDA approval of the Product on February 1, 2019, in process research and development (“IPR&D”) related to the Product was evaluated as completed and reclassified to a definite-lived distribution right intangible asset, which is amortized over the period the asset is expected to contribute to the future cash flows of the Company. The Company determined the pattern of this intangible asset’s future cash flows could not be readily determined with a high level of precision. As a result, the Company concluded it will be amortized on a straight-line basis over the estimated useful life of 20 years. The Company capitalizes certain internal-use software costs associated with the development of its mobile and web-based customer platforms. These costs include personnel expenses and external costs that are directly associated with the software projects. These costs are included as intangible assets in the accompanying condensed balance sheets. The capitalized internal-use software costs are amortized on a straight-line basis over the estimated useful life upon placing in service. The Company reviews long-term and identifiable definite-lived intangible assets or asset groups for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset or an asset group, further impairment analysis is performed. An impairment loss is measured as the amount by which the carrying amount of the asset or asset groups exceeds the fair value (assets to be held and used) or fair value less cost to sell (assets to be disposed of). The Company also reviews the useful lives of its assets periodically to determine whether events and circumstances warrant a revision to the remaining useful life. Changes in the useful life are adjusted prospectively by revising the remaining period over which the asset is amortized. There has been no impairment of long-lived assets for any periods presented. |
Contingent Royalty Obligation Payable to the Evolus Founders | Contingent Royalty Obligation Payable to the Evolus Founders, a Related Party The Company determines the fair value of the contingent royalty obligation payable to a related party at each reporting period based on Level 3 inputs using a discounted cash flows method. Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in operating expenses in the accompanying statements of operations and comprehensive loss and in noncurrent liabilities in the balance sheets. Contingent Promissory Note Payable to Evolus Founders, a Related Party On February 12, 2018, the Company recognized a contingent promissory note payable at present value using a discount rate for similar rated debt securities based on an estimated date that the Company believed the contingent promissory note will mature. Accretion related to the contingent promissory note is recorded in interest expense in the statements of operations and comprehensive loss with a corresponding increase to the non-current liabilities in the balance sheets. |
Long-Term Debt | Long-Term Debt The Company recorded borrowings classified as long-term debt in the accompanying condensed balance sheets. Debt discounts and issuance costs have been allocated pro rata between the funded and unfunded portions. Debt issuance costs represent legal, lender, and consulting costs or fees associated with debt financing. Debt discounts and issuance costs related to the outstanding borrowings are presented as a deduction to the debt balance and are accreted to interest expense using the effective interest method. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expense for employees, consultants, and members of the Board of Directors based on the fair value at the date of grant. 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 (“RSUs”) are based on the fair value on the grant date of the Company’s common stock. The Company also evaluates the impact of modifications made to the original terms of equity awards when they occur. 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 is recognized net of actual forfeitures when they occur, as an increase to additional paid-in capital in the balance sheets and in the general and administrative or research and development expenses in the statements of operations and comprehensive loss. |
Income Taxes | Income Taxes The Company applies an estimated annual effective tax rate (“ETR”) approach for calculating a tax provision or benefit for interim periods, as required under GAAP. The Company recorded a benefit for income taxes of $14.5 million for the three months ended March 31, 2019 and did not record significant tax provision or benefit for the three months ended March 31, 2018. The Company’s ETR differs from the U.S. federal statutory tax rate of 21% primarily as a result of the impact of a valuation allowance on its deferred tax assets. The Company accounts for income taxes using 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, 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. As of each reporting date, the Company considers evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2018, the deferred tax assets were primarily the result of U.S. net operating loss and tax credit carryforwards, and a valuation allowance of $34.5 million was recorded against the gross deferred tax asset balance. As of March 31, 2019, management determined there is sufficient positive evidence to conclude that it is more likely than not that deferred taxes of $14.5 million are realizable as a result of future reversals of existing taxable temporary differences associated with the Company’s amortizable distribution right intangible asset which was reclassified from an IPR&D intangible asset upon FDA approval of the Product in February 2019. Therefore, for the three months ended March 31, 2019, the Company released $14.5 million of its valuation allowance. 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. In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 118, the Company’s accounting for the elements of the Tax Cuts and Jobs Act was complete as of December 31, 2018 and no adjustments were made to the original provisional estimate recorded in 2017. |
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 including contingently issuable shares. Diluted earnings per share is based on the treasury stock method and includes the effect from potential issuance of ordinary shares, such as shares issuable pursuant to the exercise of stock options and restricted stock units. Because the impact of the options and non-vested RSUs are 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, 2019 and 2018 . |
Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification , amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule was effective on November 5, 2018. The Company adopted the guidance on January 1, 2019, and such adoption did not have a material impact on its financial statements. In July 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-09, Codification Improvements , which clarifies certain amendments to guidance that may have been incorrectly or inconsistently applied by certain entities and includes Amendments to Subtopic 718-740, Compensation - Stock Compensation - Income Taxes . The guidance in paragraph 718-740-35-2, as amended by the amendments in ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , is unclear on whether an entity should recognize excess tax benefits (or tax deficiencies) for compensation expense that is taken on the entity’s tax return. The amendment to paragraph 718-740-35-2 in this update clarifies that an entity should recognize excess tax benefits in the period in which the amount of deduction is determined. The Company adopted the guidance on January 1, 2019, and such adoption did not have a material impact on its financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting, which amends the financial reporting for stock-based payments issued to nonemployees and also expands the scope of ASC 718, Compensation - Stock Compensation , to also include stock-based payments issued to nonemployees for goods and services. The amendment substantially aligns accounting for stock-based payments to employees and nonemployees. The Company early adopted the guidance in the quarter ended December 31, 2018. The adoption did not have a material impact on the Company’s financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718), which amends the scope of modification accounting for stock-based payment arrangements. The amendment provides guidance about which changes to the terms or conditions of a stock-based payment award require an entity to apply modification accounting. The Company adopted this guidance effective January 1, 2018 and this guidance did not have a material impact on its financial statements. In February 2016, the FASB issued ASU No. 2016-02 and its related amendments which introduced Leases (Topic 842, or “ASC 842”) , a new comprehensive lease accounting model that supersedes the current lease guidance under Leases (Topic 840) . The new accounting standard requires lessees to recognize right-of-use (“ROU”) assets and corresponding lease liabilities for all leases with lease terms of greater than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease arrangements. In July 2018, the FASB added a transition option for implementation that allows companies to continue to use the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative periods presented in the year of adoption. The Company adopted the guidance effective January 1, 2019. The Company elected the transition package of three practical expedients permitted under the transition guidance and elected the optional transition method that allows for a cumulative-effect adjustment in the period of adoption, without a restatement of prior periods. Further, the Company elected a short-term lease exception policy, permitting the Company to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. As a result of the adoption, the Company adjusted its beginning balance for the quarter ended March 31, 2019 by recording operating lease ROU assets and liabilities through a cumulative-effect adjustment. The adoption impacted the accompanying condensed balance sheet, but did not have an impact on the condensed statements of operations and comprehensive loss. At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, the Company calculates the associated lease liability and corresponding ROU assets upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The Company records lease liabilities within current or noncurrent liabilities based upon the length of time associated with the lease payments. The operating lease ROU assets includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any, and are recorded as noncurrent assets. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. There are no significant finance leases as of March 31, 2019 . Leases with an initial term of 12 months or less are not recorded on the accompanying condensed balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The impact of the adoption of ASC 842 on the accompanying condensed balance sheet as of January 1, 2019 was as follows (in thousands): December 31, 2018 Adjustments Due to the Adoption of ASC 842 January 1, 2019 Right-of-use assets* Operating lease right-of-use assets $ — $ 1,029 $ 1,029 Operating lease liabilities Current $ — $ 916 $ 916 Noncurrent $ — $ 138 $ 138 __________________ * Operating lease right-of-use assets includes deferred rent of $25,000. Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-18, Clarifying the Interaction between Topic 808 and Topic 606 , which requires transactions in collaborative arrangements to be accounted for under ASC 606, Revenue from Contracts with Customers , if the counter-party is a customer for a good or service that is a distinct unit of account. The amendments also preclude entities from presenting consideration from transactions with a collaborator that is not a customer together with revenue recognized from contracts with customers. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted, including in any interim period. The Company is currently evaluating the impact that the adoption of this guidance will have on its financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract . ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2021. 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 August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement . The update is part of the disclosure framework project and eliminates certain disclosure requirements for fair value measurements, requires entities to disclose new information, and modifies existing disclosure requirements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. The guidance is effective for interim and annual reporting periods during the year ending December 31, 2020. Early adoption is permitted. The Company is currently evaluating the impact this change will have on its financial statements as well as whether to early adopt the new guidance. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The update 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. The update is effective for the Company beginning January 1, 2020. The standard requires prospective application. Early adoption is permitted. The Company is evaluating the effect of this standard on its financial statements and related disclosures as well as whether to early adopt the new guidance. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The new standard requires the use of forward-looking expected credit loss models based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount, which may result in earlier recognition of credit losses under the new standard. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments -Credit Losses. This ASU does not change the core principle of the guidance in ASU 2016-13, instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard. The guidance is effective for interim and annual reporting periods beginning after December 15, 2019 and interim periods within those periods, and early adoption is permitted. This will be effective for the Company during the year ending December 31, 2020. The Company is in the process of determining the effects the adoption will have on its financial Statements and reviewing credit loss models to assess the impact of the adoption of the standard on the financial statements. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future financial position, results of operations or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The impact of the adoption of ASC 842 on the accompanying condensed balance sheet as of January 1, 2019 was as follows (in thousands): December 31, 2018 Adjustments Due to the Adoption of ASC 842 January 1, 2019 Right-of-use assets* Operating lease right-of-use assets $ — $ 1,029 $ 1,029 Operating lease liabilities Current $ — $ 916 $ 916 Noncurrent $ — $ 138 $ 138 __________________ * Operating lease right-of-use assets includes deferred rent of $25,000. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The table below shows the weighted-average life, original cost, accumulated amortization, and net book value by major intangible asset classification (in thousands): Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Definite-lived intangible assets Distribution right 20 $ 58,076 $ (484 ) $ 57,592 Capitalized software 2 1,190 — 1,190 Intangible assets, net 59,266 (484 ) 58,782 Indefinite-lived intangible asset Goodwill * 21,208 — 21,208 Total as of March 31, 2019 $ 80,474 $ (484 ) $ 79,990 Weighted-Average Life (Years) Original Cost Accumulated Amortization Net Book Value Indefinite-lived intangible assets IPR&D** * $ 56,076 $ — $ 56,076 Goodwill * 21,208 — 21,208 Total as of December 31, 2018 $ 77,284 $ — $ 77,284 ________________________ * Intangible assets with indefinite lives have an indeterminable average life. ** IPR&D is presented as “intangible asset, net” in the accompanying condensed balance sheets. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table outlines the estimated future amortization expense related to intangible assets held as of March 31, 2019 that are subject to amortization: Fiscal year (in thousands) Remaining in 2019 $ 2,178 2020 2,904 2021 2,904 2022 2,904 2023 2,904 Thereafter 43,798 $ 57,592 |
Oxford Term Loans (Tables)
Oxford Term Loans (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | As of March 31, 2019 , the principal amounts of long-term debt maturities during each of the next five fiscal years, and the Final Payment in 2024 which is accreted through interest expense over the life of the Term Loans are as follows (in thousands): Principal Final Payment Total 2022 $ 26,087 $ — $ 26,087 2023 39,130 — 39,130 2024 9,783 4,125 13,908 $ 75,000 $ 4,125 $ 79,125 |
Fair Value Measurements and S_2
Fair Value Measurements and Short-Term Investments (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Debt Securities, Available-for-sale | The following is a summary of the Company’s short-term investments, considered available-for-sale, as of March 31, 2019 (in thousands): Amortized Gross Unrealized Estimated Cost Gains Losses Fair Value Available-for-sale securities U.S treasury securities $ 79,321 $ — $ (8 ) $ 79,313 |
Schedule of financial instruments recorded at fair value on a recurring basis | The following table (in thousands) shows a reconciliation of the beginning and ending fair value measurements of the contingent royalty obligation payable to a related party for the three months ended March 31, 2019 : March 31, 2019 Fair value, beginning of period $ 50,200 FDA milestone payment (9,213 ) Change in fair value recorded in operating expenses 4,913 Fair value, end of period $ 45,900 |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The fair value of these instruments was as follows (in thousands): As of March 31, 2019 Fair Value Level 1 Level 2 Level 3 Available-for-sale securities U.S treasury securities $ 79,313 $ 79,313 $ — $ — Liabilities Contingent royalty obligation payable to Evolus Founders, a related party $ 45,900 $ — $ — $ 45,900 As of December 31, 2018 Fair Value Level 1 Level 2 Level 3 Liabilities Contingent royalty obligation payable to Evolus Founders, a related party $ 50,200 $ — $ — $ 50,200 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | For the three-month period ended March 31, 2019 , the components of operating lease expense and other quantitative information were as follows (in thousands, except years and discount rate data): Three Months Ended Fixed operating lease expense $ 234 Variable operating lease expense 18 Short-term operating lease expense 21 $ 273 Weighted-average remaining lease term in years - operating leases 0.9 Weighted-average discount rate 7.0% |
Lessee, Operating Lease, Liability, Maturity | The following table presents the maturity of the Company’s operating lease liabilities as of March 31, 2019 , future minimum payments under the operating lease agreements with non-cancelable terms as follows (in thousands): Remainder of 2019 $ 717 2020 139 Total operating lease payments 856 Less: Imputed interest (25 ) Present value of operating lease liabilities $ 831 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-averages for key assumptions used in determining the fair value of stock options granted were as follows: Three Months Ended 2019 2018 Volatility 59.2% 56.0% Risk-free interest rate 2.62% 2.40% Expected life in years 6.17 6.23 Dividend yield rate —% —% |
Share-based Compensation, Stock Options, Activity | A summary of the status of the Company’s nonvested options as of and changes during the three months ended March 31, 2019 , are presented below: Weighted-Average Stock Grant Date Options Fair Value Outstanding, December 31, 2018 3,257,801 $ 7.32 Granted 822,975 10.38 Vested (458,567) 6.96 Cancelled/forfeited (192,978) 8.10 Outstanding, March 31, 2019 3,429,231 $ 8.06 A summary of stock option activity under the Plan for the three months ended March 31, 2019 , is presented below: Weighted Weighted Average Aggregate Average Remaining Intrinsic Stock Exercise Contractual Value Options Per Share Terms (Years) (in thousands) Outstanding, December 31, 2018 3,257,801 $ 11.99 9.26 $ 7,119 Granted 822,975 18.09 Exercised (20,544) 9.98 Cancelled/forfeited (192,978) 12.15 Outstanding, March 31, 2019 3,867,254 $ 13.29 8.78 $ 37,345 Exercisable, March 31, 2019 438,023 $ 10.15 4.85 $ 5,440 |
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | A summary of RSUs activity under the Plan for the three months ended March 31, 2019 , is presented below: Weighted Restricted Average Stock Grant Date Units Fair Value Outstanding, December 31, 2018 271,404 $ 16.53 Granted 3,000 18.33 Forfeited (17,534) 13.08 Outstanding, March 31, 2019 256,870 $ 16.79 |
Schedule of stock-based compensation expense allocation | The following table summarizes stock-based compensation expense (in thousands) arising from the above Plan: Three Months Ended 2019 2018 General and administrative $ 1,744 $ 677 Research and development 254 329 $ 1,998 $ 1,006 |
Net Loss per Share Attributab_2
Net Loss per Share Attributable to Common Stockholders (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 2019 2018 Net loss $ (10,975 ) $ (6,162 ) Net loss per share, basic and diluted $ (0.40 ) $ (0.30 ) Weighted-average shares outstanding used to compute basic and diluted net loss per share 27,330,174 20,226,460 |
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, 2019 and 2018 , accordingly, the Company did not include the following dilutive common equivalent (in thousands) shares because inclusion would be anti-dilutive: Three Months Ended 2019 2018 Common stock options 3,867 1,599 Unvested restricted stock units 207 231 4,074 1,830 |
Organization (Details)
Organization (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 12, 2018 | Aug. 31, 2018 | Jul. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Subsidiary, Sale of Stock [Line Items] | ||||||
Sale of stock, offering price (in usd per share) | $ 12 | $ 20 | ||||
Proceeds from initial public offering, net of underwriters fees | $ 56,300 | $ 67,700 | ||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | |||
Common 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, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Number of shares sold upon completion of follow-on public offering (in shares) | 3,600,000 | |||||
Net loss | $ (10,975) | $ (6,162) | ||||
Cash used in operations | (19,200) | $ (2,201) | ||||
Cash and cash equivalents | 54,367 | $ 93,162 | ||||
Short-term investments | 79,313 | 0 | ||||
Accumulated deficit | $ 134,000 | $ 123,025 | ||||
ALPHAEON | Evolus, Inc. | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Ownership percentage | 56.00% | |||||
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 | |||||
Number of shares sold upon completion of follow-on public offering (in shares) | 600,000 | |||||
Common Stock | IPO | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares sold upon completion of follow-on public offering (in shares) | 5,047,514 | |||||
Common Stock | Convertible Preferred Stock | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Number of shares of convertible preferred stock converted (in shares) | 2,065,875 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)unit | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Accounting Policies [Abstract] | |||
Number of reporting units | unit | 1 | ||
Impairment of goodwill | $ 0 | ||
Impairment of intangible assets | 0 | ||
Income tax benefit | 14,523,000 | $ (10,000) | |
Valuation allowance recorded against gross deferred tax asset | (14,500,000) | $ 34,500,000 | |
Deferred taxes realizable | $ 14,500,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred Rent | $ 25,000 | $ 25,000 | |
Right-of-use assets | |||
Operating lease right-of-use assets | $ 810 | 1,029 | 0 |
Operating lease liabilities | |||
Current | 802 | 916 | 0 |
Noncurrent | 29 | 138 | 25 |
Deferred rent | $ 0 | ||
Adjustments Due to the Adoption of ASC 842 | |||
Right-of-use assets | |||
Operating lease right-of-use assets | $ 1,029 | ||
Operating lease liabilities | |||
Current | 916 | ||
Noncurrent | $ 138 |
Related Party Transactions (Det
Related Party Transactions (Details) | Feb. 12, 2018USD ($) | Feb. 11, 2018USD ($) | Dec. 14, 2017USD ($) | Nov. 30, 2017USD ($) | Jan. 31, 2018USD ($) | Apr. 30, 2017agreement | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)transaction | Dec. 31, 2018USD ($) |
Related Party Transaction [Line Items] | |||||||||||
Accumulated deficit | $ 134,000,000 | $ 123,025,000 | |||||||||
Related party receivable | 0 | $ 73,690,000 | |||||||||
Contingent royalty obligation payable to Evolus Founders, a related party | $ 39,700,000 | 45,900,000 | 50,200,000 | ||||||||
Contingent promissory note payable to Evolus Founders, a related party | 16,000,000 | 17,153,000 | $ 16,904,000 | ||||||||
ALPHAEON | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Redemption price on debt | 250.00% | ||||||||||
Total amounts of transaction | $ 140,700,000 | ||||||||||
Notes receivable from related parties | 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 | ||||||||||
ALPHAEON | Convertible Note | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Debt instrument, number of debt transactions | transaction | 2 | ||||||||||
Interest rate on debt | 10.00% | ||||||||||
Number of guaranty and security agreements | agreement | 2 | ||||||||||
Redemption price on debt | 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 | ||||||||||
Evolus, Inc. | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Due to related parties | $ 1,600,000 | ||||||||||
Percentage of voting interests acquired | 50.00% | ||||||||||
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 | 55,700,000 | 20,000,000 | |||||||||
Up-front payment upon obtaining FDA approval | $ 9,200,000 | ||||||||||
Period of anniversary | 2 years 6 months | ||||||||||
Period of termination of first commercial sale | 10 years | ||||||||||
General and administrative | ALPHAEON | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Related party transaction amount in period | 400,000 | ||||||||||
ALPHAEON | Majority Shareholder | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Total amounts of transaction | 140,700,000 | $ 2,000,000 | $ 138,700,000 | ||||||||
Accumulated deficit | $ 600,000 | ||||||||||
Related party receivable | 73,700,000 | $ 1,100,000 | $ 73,700,000 | ||||||||
Due from related parties | $ 67,000,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Definite and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Definite-lived intangible assets | ||
Original Cost | $ 59,266 | |
Accumulated Amortization | (484) | |
Net Book Value | 57,592 | |
Intangible assets, net | 58,782 | $ 56,076 |
Indefinite-lived intangible asset | ||
Goodwill | 21,208 | 21,208 |
Intangible Assets, Gross (Including Goodwill) | 80,474 | |
Total Net Book Value | 79,990 | 77,284 |
Distribution right | ||
Definite-lived intangible assets | ||
Original Cost | 58,076 | |
Accumulated Amortization | (484) | |
Net Book Value | $ 57,592 | |
Useful life | 20 years | |
Capitalized software | ||
Definite-lived intangible assets | ||
Original Cost | $ 1,190 | |
Accumulated Amortization | 0 | |
Net Book Value | $ 1,190 | |
Useful life | 2 years | |
IPR&D | ||
Indefinite-lived intangible asset | ||
Indefinite-lived intangible assets (IPR&D) | $ 56,076 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remaining in 2019 | $ 2,178 |
2020 | 2,904 |
2021 | 2,904 |
2022 | 2,904 |
2023 | 2,904 |
Thereafter | 43,798 |
Net Book Value | $ 57,592 |
Goodwill and Intangible Asset -
Goodwill and Intangible Asset - Narrative (Details) - USD ($) $ in Thousands | Feb. 01, 2019 | Oct. 31, 2013 | Mar. 31, 2019 | Mar. 31, 2018 |
Business Acquisition [Line Items] | ||||
Milestone payment for intangible assets | $ 2,000 | $ 0 | ||
Finite-Lived Intangible Assets, Net | 57,592 | |||
Capitalized computer software | $ 1,200 | |||
SCH | Evolus, Inc. | ||||
Business Acquisition [Line Items] | ||||
Goodwill acquired | $ 21,200 | |||
Assets acquired, indefinite-lived intangible assets (IPR&D) | $ 56,100 | |||
Extension period | 3 years | |||
Contingent consideration upon successful completion of certain technical and sales milestones | $ 13,500 | |||
Milestone payment for intangible assets | $ 2,000 | |||
Distribution right | ||||
Business Acquisition [Line Items] | ||||
Useful life | 20 years | |||
Finite-Lived Intangible Assets, Net | $ 57,592 | |||
Capitalized software | ||||
Business Acquisition [Line Items] | ||||
Useful life | 2 years | |||
Finite-Lived Intangible Assets, Net | $ 1,190 | |||
Amortization period | 2 years |
Oxford Term Loans - Narrative (
Oxford Term Loans - Narrative (Details) - USD ($) | Mar. 15, 2019 | Mar. 31, 2019 |
Term Loan Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 75,000,000 | |
Interest rate on debt | 11.60% | |
Percentage of final payment of full principal amount | 5.50% | |
Prepayment fee percentage, next twelve months | 3.00% | |
Prepayment fee percentage, year two | 2.00% | |
Prepayment fee percentage, thereafter | 1.00% | |
Debt discount | $ 1,100,000 | |
Debt issuance costs | $ 2,200,000 | |
Term Loan Facility | Applicable Rate | ||
Debt Instrument [Line Items] | ||
Default interest rate | 5.00% | |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 100,000,000 | |
Interest rate on debt | 9.50% | |
Period of interest only payments | 36 months | |
Amortization period | 23 months | |
Additional period of agreement of interest payment | 12 months | |
Aggregate period | 48 months | |
Additional amortization period | 11 months | |
Secured Debt | London Interbank Offered Rate (LIBOR) | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 7.00% | |
Secured Debt | Term Loan Facility, Tranche One | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 75,000,000 | |
Secured Debt | Term Loan Facility, Tranche Two | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 25,000,000 |
Oxford Term Loans - Maturities
Oxford Term Loans - Maturities of Debt (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Principal | |
2022 | $ 26,087 |
2023 | 39,130 |
2024 | 9,783 |
Principal payment excluding final payment | 75,000 |
Final Payment | |
2022 | 0 |
2023 | 0 |
2024 | 4,125 |
Final payments | 4,125 |
Total | |
2022 | 26,087 |
2023 | 39,130 |
2024 | 13,908 |
Total long-term debt | $ 79,125 |
Fair Value Measurements and S_3
Fair Value Measurements and Short-Term Investments - Schedule of Short-term Investments (Details) - U.S treasury securities $ in Thousands | Mar. 31, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Amortized Cost | $ 79,321 |
Gross Unrealized | |
Gains | 0 |
Losses | (8) |
Estimated Fair Value | $ 79,313 |
Fair Value Measurements and S_4
Fair Value Measurements and Short-Term Investments - Assets and Liabilities on a Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | $ 45,900 | $ 50,200 |
U.S treasury securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 79,313 | |
U.S treasury securities | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 79,313 | |
U.S treasury securities | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | |
U.S treasury securities | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Available-for-sale securities | 0 | |
Notes Payable, Other Payables | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 45,900 | 50,200 |
Notes Payable, Other Payables | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | 0 |
Notes Payable, Other Payables | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | 0 | 0 |
Notes Payable, Other Payables | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities | $ 45,900 | $ 50,200 |
Fair Value Measurements and S_5
Fair Value Measurements and Short-Term Investments - Narrative (Details) $ in Millions | Mar. 31, 2019USD ($)year |
Contingent Royalty Obligation | Measurement Input, Expected Term | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | year | 10 |
Contingent Royalty Obligation | Measurement Input, Discount Rate | Minimum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.160 |
Contingent Royalty Obligation | Measurement Input, Discount Rate | Maximum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.250 |
Estimate of Fair Value Measurement | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Contingent promissory note payable | $ | $ 14.8 |
Fair Value Measurements and S_6
Fair Value Measurements and Short-Term Investments - Contingent Royalty Obligation (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 50,200 |
FDA milestone payment | (9,213) |
Change in fair value recorded in operating expenses | 4,913 |
Ending balance | $ 45,900 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - USD ($) | Feb. 01, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Loss Contingencies [Line Items] | ||||
Percentage of annual rent escalation | 3.00% | |||
Purchase obligation | $ 20,500,000 | |||
Related party borrowings | 0 | $ 5,000,000 | ||
Loss contingency accrual | 0 | $ 0 | ||
Daewoong | ||||
Loss Contingencies [Line Items] | ||||
Milestone payment in connection with license and supply agreement | $ 2,000,000 | $ 11,500,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Cost (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Fixed operating lease expense | $ 234 |
Variable operating lease expense | 18 |
Short-term operating lease expense | 21 |
Lease, cost | $ 273 |
Weighted-average remaining lease term in years - operating leases | 10 months 25 days |
Weighted-average discount rate | 7.00% |
Commitments and Contingencies_3
Commitments and Contingencies - Operating Lease Maturity (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remainder of 2019 | $ 717 |
2020 | 139 |
Total operating lease payments | 856 |
Less: Imputed interest | (25) |
Present value of operating lease liabilities | $ 831 |
Stockholder's Equity - Narrativ
Stockholder's Equity - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 21, 2017 | Mar. 31, 2019 | Dec. 31, 2018 | Nov. 21, 2018 | Feb. 12, 2018 |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.00001 | $ 0.00001 | $ 0.00001 | ||
Common stock, shares, issued (in shares) | 27,285,363 | 27,274,991 | |||
Common stock, shares, outstanding (in shares) | 27,285,363 | 27,274,991 | |||
Maximum number of shares authorized under the plan (in shares) | 4,361,291 | ||||
Annual increase percentage of maximum shares outstanding (equal to) | 4.00% | ||||
Additional capital shares reserved for future issuance (in shares) | 1,091,000 | ||||
Capital shares reserved for future issuance (in shares) | 1,283,193 | ||||
Contractual term | 10 years | ||||
Capitalized compensation expense | $ 17,000 | ||||
Minimum | |||||
Class of Stock [Line Items] | |||||
Award vesting period | 2 years | ||||
Maximum | |||||
Class of Stock [Line Items] | |||||
Award vesting period | 4 years |
Stockholders_ Equity - Schedule
Stockholders’ Equity - Schedule of Valuation Assumptions (Details) - Common stock options | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Class of Stock [Line Items] | ||
Volatility | 59.20% | 56.00% |
Risk-free interest rate | 2.62% | 2.40% |
Expected life in years | 6 years 2 months 1 day | 6 years 2 months 23 days |
Dividend yield rate | 0.00% | 0.00% |
Stockholders_ Equity - Schedu_2
Stockholders’ Equity - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Stock Options | ||
Granted (in shares) | 822,975 | |
Weighted Average Contractual Term | ||
Contractual term | 10 years | |
Common stock options | ||
Stock Options | ||
Beginning balance (in shares) | 3,257,801 | |
Granted (in shares) | 822,975 | |
Exercised (in shares) | (20,544) | |
Cancelled/forfeited (in shares) | (192,978) | |
Ending balance (in shares) | 3,867,254 | 3,257,801 |
Exercisable (in shares) | 438,023 | |
Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 11.99 | |
Granted (in dollars per share) | 18.09 | |
Exercised (in dollars per share) | 9.98 | |
Cancelled/forfeited (in dollars per share) | 12.15 | |
Ending balance (in dollars per share) | 13.29 | $ 11.99 |
Exercisable (in dollars per share) | $ 10.15 | |
Weighted Average Contractual Term | ||
Contractual term | 8 years 285 days | 9 years 3 months 4 days |
Exercisable | 4 years 310 days | |
Aggregate Intrinsic Value | ||
Beginning balance | $ 7,119 | |
Granted | ||
Exercised | ||
Cancelled/forfeited | ||
Ending balance | 37,345 | $ 7,119 |
Exercisable | $ 5,440 |
Stockholders_ Equity - Nonveste
Stockholders’ Equity - Nonvested Stock (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Stock Options | |
Beginning balance (in shares) | shares | 3,257,801 |
Granted (in shares) | shares | 822,975 |
Vested (in shares) | shares | (458,567) |
Cancelled/forfeited (in shares) | shares | (192,978) |
Ending balance (in shares) | shares | 3,429,231 |
Weighted Average Grant Date | |
Beginning balance (in dollars per share) | $ / shares | $ 7.32 |
Granted (in dollars per share) | $ / shares | 10.38 |
Vested (in dollars per share) | $ / shares | 6.96 |
Cancelled/forfeited (in dollars per share) | $ / shares | 8.10 |
Ending balance (in dollars per share) | $ / shares | $ 8.06 |
Stockholders_ Equity - Restrict
Stockholders’ Equity - Restricted Stock Unit (Details) - Restricted stock units | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Restricted Stock Unit | |
Beginning balance (in shares) | shares | 271,404 |
Granted (in shares) | shares | 3,000 |
Forfeited (in shares) | shares | (17,534) |
Ending balance (in shares) | shares | 256,870 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Beginning balance (in dollars per share) | $ / shares | $ 16.53 |
Granted (in dollars per share) | $ / shares | 18.33 |
Forfeited (in dollars per share) | $ / shares | 13.08 |
Ending balance (in dollars per share) | $ / shares | $ 16.79 |
Stockholder's Equity - Stock-ba
Stockholder's Equity - Stock-based Compensation Expense Allocation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | $ 1,998 | $ 1,006 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | 1,744 | 677 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Allocated stock-based compensation expense | $ 254 | $ 329 |
Net Loss per Share Attributab_3
Net Loss per Share Attributable to Common Stockholders - Computation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (10,975) | $ (6,162) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.40) | $ (0.30) |
Weighted-average shares outstanding used to compute basic and diluted net loss per share (in shares) | 27,330,174 | 20,226,460 |
Net Loss per Share Attributab_4
Net Loss per Share Attributable to Common Stockholders - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities excluded from the computation of diluted net loss per share (in shares) | 4,074 | 1,830 |
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) | 3,867 | 1,599 |
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) | 207 | 231 |