Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 04, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Xenon Pharmaceuticals Inc. | |
Document Type | 10-Q | |
Trading Symbol | XENE | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Entity Central Index Key | 1,582,313 | |
Entity Filer Category | Smaller Reporting Company | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Common Stock, Shares Outstanding | 14,172,188 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 17,200 | $ 20,486 |
Marketable securities | 17,878 | 23,181 |
Accounts receivable | 432 | 438 |
Prepaid expenses and other current assets | 1,151 | 716 |
Total current assets | 36,661 | 44,821 |
Prepaid expenses, long term | 230 | |
Property, plant and equipment, net | 1,101 | 1,070 |
Total assets | 37,762 | 46,121 |
Current liabilities: | ||
Accounts payable and accrued expenses (note 7) | 2,388 | 3,383 |
Loan payable, current portion (note 8) | 1,400 | 700 |
Total current liabilities | 3,788 | 4,083 |
Loan payable, long-term (note 8) | 5,476 | 6,104 |
Total liabilities | 9,264 | 10,187 |
Shareholders’ equity: | ||
Preferred shares, without par value; unlimited shares authorized; issued and outstanding: 2,868,000 (December 31, 2017 - nil) (note 9a) | 21,825 | |
Common shares, without par value; unlimited shares authorized; issued and outstanding: 14,171,301 (December 31, 2017 - 17,998,420) (notes 9a and b) | 147,887 | 173,841 |
Additional paid-in capital | 36,919 | 36,471 |
Accumulated deficit | (177,143) | (173,388) |
Accumulated other comprehensive loss | (990) | (990) |
Shareholders' equity | 28,498 | 35,934 |
Total liabilities and shareholders’ equity | 37,762 | 46,121 |
Commitments and contingencies (note 10) |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Statement Of Financial Position [Abstract] | ||
Preferred shares, without par value | ||
Preferred shares, shares authorized | Unlimited | Unlimited |
Preferred shares, issued | 2,868,000 | 0 |
Preferred shares, outstanding | 2,868,000 | 0 |
Common shares, without par value | ||
Common shares, shares authorized | Unlimited | Unlimited |
Common shares, Issued | 14,171,301 | 17,998,420 |
Common shares, Outstanding | 14,171,301 | 17,998,420 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue: | ||
Collaboration revenue | $ 16 | |
Operating expenses: | ||
Research and development | $ 5,580 | 5,903 |
General and administrative | 2,238 | 2,100 |
Total operating expenses | 7,818 | 8,003 |
Loss from operations | (7,818) | (7,987) |
Other income (expense): | ||
Interest income | 108 | 149 |
Interest expense | (159) | |
Foreign exchange gain (loss) | (284) | 321 |
Gain on termination of collaboration agreement (note 9b) | 4,398 | |
Net loss and comprehensive loss | (3,755) | (7,517) |
Net loss attributable to preferred shareholders | (33) | |
Net loss attributable to common shareholders | $ (3,722) | $ (7,517) |
Net loss per common share (note 5): | ||
Basic | $ (0.21) | $ (0.42) |
Diluted | $ (0.21) | $ (0.43) |
Weighted-average common shares outstanding (note 5): | ||
Basic | 17,804,421 | 17,946,209 |
Diluted | 17,804,421 | 17,974,469 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Convertible Preferred Shares [Member] | Common Shares [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | [1] | |
Balance at Dec. 31, 2016 | $ 63,901 | $ 173,246 | $ 34,326 | $ (142,681) | $ (990) | |||
Balance (in Shares) at Dec. 31, 2016 | 17,930,590 | |||||||
Net loss | (30,704) | (30,704) | ||||||
Stock-based compensation expense | 2,460 | 2,460 | ||||||
Issued pursuant to exercise of stock options | 177 | $ 595 | (415) | (3) | ||||
Issued pursuant to exercise of stock options (in Shares) | 67,830 | |||||||
Issuance of warrants | 100 | 100 | ||||||
Balance at Dec. 31, 2017 | 35,934 | $ 173,841 | 36,471 | (173,388) | (990) | |||
Balance (in Shares) at Dec. 31, 2017 | 17,998,420 | |||||||
Net loss | (3,755) | (3,755) | ||||||
Issued (cancelled) pursuant to exchange agreement (note 9a) | $ 21,825 | $ (21,825) | ||||||
Issued (cancelled) pursuant to exchange agreement (note 9a) (in Shares) | 2,868,000 | (2,868,000) | ||||||
Cancelled pursuant to termination of collaboration agreement (note 9b) | (4,470) | $ (4,470) | ||||||
Cancelled pursuant to termination of collaboration agreement (note 9b) (in Shares) | (1,000,000) | |||||||
Stock-based compensation expense | 670 | 670 | ||||||
Issued pursuant to exercise of stock options | $ 119 | $ 341 | (222) | |||||
Issued pursuant to exercise of stock options (in Shares) | 84,668 | [2] | 40,881 | |||||
Balance at Mar. 31, 2018 | $ 28,498 | $ 21,825 | $ 147,887 | $ 36,919 | $ (177,143) | $ (990) | ||
Balance (in Shares) at Mar. 31, 2018 | 2,868,000 | 14,171,301 | ||||||
[1] | Our accumulated other comprehensive loss is entirely related to historical cumulative translation adjustments from the application of U.S. dollar reporting when the functional currency of the Company was the Canadian dollar. | |||||||
[2] | During the three months ended March 31, 2018, 13,374 stock options were exercised for the same number of common shares for cash (three months ended March 31, 2017 – 62,397). In the same period, the Company issued 27,507 common shares (three months ended March 31, 2017 – 3,693) for the cashless exercise of 71,294 stock options (three months ended March 31, 2017 – 5,524). |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating activities: | ||
Net loss | $ (3,755) | $ (7,517) |
Items not involving cash: | ||
Depreciation | 150 | 165 |
Amortization of discount on term loan | 72 | |
Stock-based compensation | 663 | 478 |
Unrealized foreign exchange (gain) loss | 267 | (326) |
Gain on termination of collaboration agreement (note 9b) | (4,398) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3 | 11 |
Prepaid expenses, and other current assets | (435) | 404 |
Prepaid expenses, long term | 230 | 139 |
Accounts payable and accrued expenses | (1,016) | 186 |
Net cash used in operating activities | (8,219) | (6,460) |
Investing activities: | ||
Purchases of property, plant and equipment | (181) | (137) |
Purchase of marketable securities | (8,148) | |
Proceeds from marketable securities | 13,306 | 9,384 |
Net cash provided by investing activities | 4,977 | 9,247 |
Financing activities: | ||
Issuance of common shares pursuant to exercise of stock options | 119 | 174 |
Net cash provided by financing activities | 119 | 174 |
Effect of exchange rate changes on cash and cash equivalents | (163) | 104 |
Increase (decrease) in cash and cash equivalents | (3,286) | 3,065 |
Cash and cash equivalents, beginning of period | 20,486 | 17,095 |
Cash and cash equivalents, end of period | 17,200 | 20,160 |
Supplemental disclosures: | ||
Interest paid | 71 | |
Interest received | 141 | 55 |
Supplemental disclosures of non-cash transactions: | ||
Fair value of stock options exercised on a cashless basis | 176 | $ 19 |
Issuance of preferred shares in exchange for common shares (note 9a) | 21,825 | |
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member] | ||
Supplemental disclosures of non-cash transactions: | ||
Termination of Teva agreement through cancellation of common shares (note 9b) | $ 4,470 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Mar. 31, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Nature of the business | 1. Nature of the business: Xenon Pharmaceuticals Inc. (the “Company”), incorporated in 1996 under the British Columbia Business Corporations Act and continued federally in 2000 under the Canada Business Corporation Act, is a clinical stage biopharmaceutical company focused on developing innovative therapeutics to improve the lives of patients with neurological disorders. Building upon its extensive knowledge of human genetics and diseases caused by mutations in ion channels, known as channelopathies, the Company is advancing a novel product pipeline of central nervous system therapies to address areas of high unmet medical need, such as epilepsy and pain. The Company has incurred significant operating losses since inception. As of March 31, 2018, the Company had an accumulated deficit of $177,143 and a $3,755 net loss for the three months ended March 31, 2018. Management expects to continue to incur significant expenses in excess of revenue and to incur operating losses for the foreseeable future. To date, the Company has financed its operations primarily through funding received from collaboration and license agreements, private placements of common and preferred shares, public offerings of common shares, debt financing, and government funding. Until such time as the Company can generate substantial product revenue, if ever, management expects to finance the Company’s cash needs through a combination of collaboration agreements and equity or debt financings. The continuation of the research and development activities and the future commercialization of its products are dependent on the Company’s ability to successfully raise additional funds when needed. It is not possible to predict either the outcome of future research and development programs or the Company’s ability to continue to fund these programs in the future. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | 2. Basis of presentation: These consolidated financial statements are presented in U.S. dollars. The Company has one wholly-owned subsidiary as at March 31, 2018, Xenon Pharmaceuticals USA Inc., which was incorporated in Delaware on December 2, 2016. These unaudited interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany transactions and balances have been eliminated on consolidation. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, these consolidated financial statements do not include all of the information and footnotes required for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2017 and included in the Company’s 2017 Annual Report on Form 10-K filed with the SEC and with the securities commissions in British Columbia, Alberta and Ontario on March 7, 2018. These unaudited interim consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three months ended March 31, 2018 and 2017 are not necessarily indicative of results that can be expected for a full year. These unaudited interim consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017, with the exception of the policy described in note 3 below. |
Changes in Significant Accounti
Changes in Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Changes in significant accounting policies | 3. Changes in significant accounting policies: The new revenue standard (Accounting Standards Codification “ASC" 606) became effective for the Company on January 1, 2018, and was adopted using the modified retrospective method under which previously presented financial statements are not restated and the cumulative effect of adopting the new revenue standard on contracts in process is recognized by an adjustment to retained earnings at the effective date. The adoption of the new revenue standard did not change the Company’s recognized revenue under its one ongoing significant collaborative research and license agreement with Genentech, a member of the Roche Group, described in note 11b to the audited consolidated financial statements of the Company included in the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017 and no cumulative effect adjustment was required. The new guidance in ASC 606 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers under a five-step model: (1) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied. The Company generates revenue primarily through collaboration agreements. Such agreements may require the Company to deliver various rights and/or services, including intellectual property rights or licenses and research and development services. Under such collaboration agreements, the Company is generally eligible to receive non-refundable upfront payments, funding for research and development services, milestone payments, and royalties. In contracts where the Company has more than one performance obligation to provide its customer with goods or services, each performance obligation is evaluated to determine whether it is distinct based on whether (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available and (ii) the good or service is separately identifiable from other promises in the contract. The consideration under the contract is then allocated between the distinct performance obligations based on their respective relative stand-alone selling prices. The estimated stand-alone selling price of each deliverable reflects the Company’s best estimate of what the selling price would be if the deliverable was regularly sold on a stand-alone basis and is determined by reference to market rates for the good or service when sold to others or by using an adjusted market assessment approach if selling price on a stand-alone basis is not available. The consideration allocated to each distinct performance obligation is recognized as revenue when control is transferred to the customer for the related goods or services. Consideration associated with at-risk substantive performance milestones, including sales-based milestones, is recognized as revenue when it is probable that a significant reversal of the cumulative revenue recognized will not occur. Sales-based royalties received in connection with licenses of intellectual property are subject to a specific exception in the revenue standards, whereby the consideration is not included in the transaction price and recognized in revenue until the customer’s subsequent sales or usages occur. |
Future Changes in Accounting Po
Future Changes in Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Future changes in accounting policies | 4. Future changes in accounting policies: In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842): Recognition and Measurement of Financial Assets and Financial Liabilities. The update requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. The new guidance retains a distinction between finance leases and operating leases, with cash payments from operating leases classified within operating activities in the statement of cash flows. These amendments will be effective for public entities for fiscal years and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the new guidance to determine the impact it will have on the Company’s consolidated financial statements. |
Net Income (Loss) Per Common an
Net Income (Loss) Per Common and Preferred Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net income (loss) per common and preferred share | 5. Net income (loss) per common and preferred share: Basic net income (loss) per common share is calculated using the two-class method required for participating securities which includes the convertible preferred shares as a separate class. The preferred shares entitle the holders to participate in dividends and in earnings and losses of the Company on an equivalent basis as common shares. Accordingly, undistributed earnings (losses) are allocated to common shares and participating preferred shares based on the weighted-average shares of each class outstanding during the period. The treasury stock method is used to compute the dilutive effect of the Company’s stock options and warrants. Under this method, the incremental number of common shares used in computing diluted net income (loss) per common share is the difference between the number of common shares assumed issued and purchased using assumed proceeds. The if-converted method is used to compute the dilutive effect of the Company’s convertible preferred shares. Under the if-converted method, dividends on the preferred shares, if applicable, are added back to earnings attributable to common shareholders, and the preferred shares and paid-in kind dividends are assumed to have been converted at the share price applicable at the end of the period. The if-converted method is applied only if the effect is dilutive. For the three months ended March 31, 2018, all stock options, warrants and convertible preferred shares were anti-dilutive and were excluded from the diluted weighted average common shares outstanding for the period. For the three months ended March 31, 2017, 1,943,508 stock options were excluded from the calculation of diluted net loss per common share as their inclusion would be anti-dilutive. The following table sets out the computation of basic and diluted net loss per common and preferred share: Three Months Ended March 31, 2018 2017 Numerator: Commo n Preferred Shares Common Shares Preferred Shares Allocation of loss attributed to shareholders Basic $ (3,722 ) $ (33 ) $ (7,517 ) $ — Adjustment for change in fair value of liability classified stock options — — (133 ) — Diluted $ (3,722 ) $ (33 ) $ (7,650 ) $ — Denominator: Weighted average number of shares: Basic 17,804,421 159,333 17,946,209 — Adjustment for dilutive effect of stock options — — 28,260 — Diluted 17,804,421 159,333 17,974,469 — Net loss attributable to shareholders per share - basic $ (0.21 ) $ (0.21 ) $ (0.42 ) $ — Net loss attributable to shareholders per share - diluted $ (0.21 ) $ (0.21 ) $ (0.43 ) $ — |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | 6. Fair value of financial instruments: Certain financial instruments and other items are measured at fair value. To determine the fair value, the Company uses the fair value hierarchy for inputs used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority). • Level 1 - Unadjusted quoted prices in active markets for identical instruments. • Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). • Level 3 - Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s Level 1 assets include cash and cash equivalents and marketable securities with quoted prices in active markets. The carrying amount of accounts receivables, accounts payable and accrued expenses approximates fair value due to the nature and short-term of those instruments. The Company’s term loan bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the loan approximates fair value. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 3 Months Ended |
Mar. 31, 2018 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | 7. Accounts payable and accrued expenses: Accounts payable and accrued expenses consisted of the following: March 31, December 31, 2018 2017 Trade payables $ 473 $ 1,253 Employee compensation, benefits, and related accruals 573 1,017 Consulting and contracted research 1,026 817 Professional fees 253 252 Other 63 44 Total $ 2,388 $ 3,383 |
Term Loan
Term Loan | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Term Loan | 8. Term Loan: At March 31, 2018, the Company determined the effective interest rate on the initial tranche of its loan with Silicon Valley Bank (the “Bank”) Interest expense was $159 for the three months ended March 31, 2018. The outstanding loan and unamortized debt discount balances are as follows: March 31, 2018 Term loan $ 7,000 Less: unamortized discount on loan (177 ) Less: current portion (1,400 ) Accrued portion of final payment fee 53 Loan payable, long-term $ 5,476 Scheduled principal payments on outstanding debt, excluding the final payment fee of $455, as of March 31, 2018, are as follows: 2018 $ 700 2019 2,800 2020 2,800 2021 700 Total $ 7,000 The loan agreement contains affirmative and negative covenants, including, among others, covenants that limit or restrict the Company’s ability to incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, engage in any new line of business, pay dividends or make distributions, or repurchase stock, in each case subject to certain exceptions. The Company is in compliance with these covenants at March 31, 2018. At March 31, 2018, the Company has a warrant outstanding to the Bank to purchase 50,411 of the Company’s common shares at a price per share of $2.43. |
Share Capital
Share Capital | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders Equity Note [Abstract] | |
Share Capital | 9. Share Capital: (a) Exchange agreement with certain funds affiliated with BVF Partners L.P. (collectively, “BVF”): On March 23, 2018, the Company and BVF entered into an exchange agreement pursuant to which the Company issued to BVF 2,868,000 Series 1 Preferred Shares in exchange for 2,868,000 common shares which were subsequently cancelled by the Company on the closing date of March 27, 2018. The Company filed articles of amendment creating an unlimited number of Series 1 Preferred Shares. The Series 1 Preferred Shares are convertible into common shares on a one-for-one basis subject to the holder, together with its affiliates, beneficially owning no more than 9.99% of the total number of common shares issued and outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”). The holder may reset the Beneficial Ownership Limitation to a higher or lower number, not to exceed 19.99% of the total number of common shares issued and outstanding immediately after giving effect to such conversion, upon providing written notice to the Company which will be effective 61 days after delivery of such notice. Each Series 1 Preferred Share is also convertible into one common share at any time at the Company’s option without payment of additional consideration, provided that prior to any such conversion, the holder, together with its affiliates, beneficially owns less than 5.00% of the total number of common shares issued and outstanding and such conversion will not result in the holder, together with its affiliates, beneficially holding more than 5.00% of the total number of common shares issued and outstanding immediately after giving effect to such conversion. In the event of a change of control, holders of Series 1 Preferred Shares shall be issued one common share for each outstanding Series 1 Preferred Share held immediately prior to the change of control (without regard to the Beneficial Ownership Limitation), and following such conversion, will be entitled to receive the same kind and amount of securities, cash or property that a holder of common shares is entitled to receive in connection with such change of control. The Series 1 Preferred Shares rank equally to the common shares in the event of liquidation, dissolution or winding up or other distribution of the assets of the Company among its shareholders and the holders of the Series 1 Preferred Shares are entitled to vote together with the common shares on an as-converted basis and as a single class, subject in the case of each holder of the Series 1 Preferred Shares to the Beneficial Ownership Limitation. Any Series 1 Preferred Shares that are ineligible to be converted into common shares due to the Beneficial Ownership Limitation, measured as of a given record date that applies for a shareholder meeting or ability to act by written consent, shall be deemed to be non-voting securities of the Company. Holders of Series 1 Preferred Shares are entitled to receive dividends (without regard to the Beneficial Ownership Limitation) on the same basis as the holders of common shares. The Company may not redeem the Series 1 Preferred Shares. The Company recorded the issuance of Series 1 Preferred Shares and corresponding cancellation of common shares at $7.61 per share, the estimated weighted average cost at which BVF acquired the common shares. The Series 1 Preferred Shares are recorded wholly as equity under ASC 480, with no bifurcation of conversion feature from the host contract, given that the Series 1 Preferred Shares cannot be cash settled and have no redemption features. (b) Termination of collaboration agreement with Teva Pharmaceuticals International GmbH and Teva Canada Limited (together, “Teva”): On March 7, 2018, the Company and Teva, entered into a termination agreement terminating by mutual agreement the collaborative development and license agreement dated December 7, 2012, as amended, which subsequently closed on March 27, 2018. In connection with the termination, Teva returned and the Company cancelled 1,000,000 common shares that were owned by Teva. Pursuant to the terms of the termination agreement, Teva also agreed to return, license or assign to the Company certain intellectual property, including certain patent rights and will transfer regulatory filings related to TV-45070 to the Company. The termination agreement requires the Company to pay a low single-digit percentage royalty to Teva based on net sales of approved products, if any, resulting from any continued development and commercialization of TV-45070 by the Company during the period that assigned or licensed patents cover such products. To date, no such sales have occurred. The Company recorded a gain on the termination of the collaboration agreement of $4,398, net of direct costs incurred in connection with the termination and cancellation of 1,000,000 common shares, based on the estimated fair value represented by the market price of the common shares prior to the closing of the transaction. (c) Stock-based compensation: The following table presents stock option activity for the period: Three Months Ended March 31, 2018 2017 Outstanding, beginning of period 2,339,905 1,910,823 Granted 563,700 416,750 Exercised (1) (84,668 ) (67,921 ) Forfeited, cancelled or expired (22,996 ) (1,415 ) Outstanding, end of period 2,795,941 2,258,237 Exercisable, end of period 1,505,459 1,293,367 (1) The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended March 31, 2018 2017 Average risk-free interest rate 2.77 % 2.44 % Expected volatility 75 % 81 % Average expected term (in years) 7.36 7.47 Expected dividend yield 0 % 0 % Weighted average fair value of stock options granted $ 3.41 $ 6.34 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and contingencies: (a) Priority access agreement with Medpace Inc. (“Medpace”): In August 2015, the Company entered into a priority access agreement with Medpace for the provision of certain clinical development services. Under the terms of the agreement, the Company has committed to using Medpace non-exclusively for clinical development services over the five year term of the agreement. In consideration for priority access to Medpace resources and preferred service rates, the Company has committed to $7,000 of services over the term of the agreement, $3,000 of which was paid in the year ended December 31, 2015. (b) License, manufacture and supply agreement: In March 2017, the Company entered into a license, manufacture and supply agreement with a pharmaceutical contract manufacturing organization for the access and use of certain regulatory documents as well as for the manufacture and supply of clinical and commercial drug product to support the development of XEN007. Under the terms of the agreement, the Company paid an upfront fee of $500 CAD and will be required to pay a low single-digit percentage royalty on net sales of any products developed and commercialized under the agreement. (c) Asset purchase agreement with 1st Order Pharmaceuticals, Inc. (“1st Order”): In April 2017, the Company acquired XEN1101 (previously known as 1OP2198) from 1st Order pursuant to an asset purchase agreement. 1st Order previously acquired 1OP2198 from an affiliate of Valeant Pharmaceuticals International, Inc. (“Valeant”), and the Company has assumed certain financial responsibilities under that agreement. Under the terms of the agreement, the Company paid an upfront fee of $350 and milestone payments in 2017 totaling $700, which were expensed as research and development. Future potential payments to both 1st Order and Valeant include $1,000 in clinical development milestones, up to $13,000 in regulatory milestones, and up to approximately $33,600 in sales-based and other milestones, which includes a $1,500 milestone that may be payable pre-commercially, plus a mid-to-high single-digit percentage royalty on commercial sales. (d) License agreement In July 2017, the Company entered into a license agreement with a pharmaceutical company for the access and use of certain regulatory documents to support the development of XEN007. Under the terms of the agreement, the Company paid an upfront fee of $1,000, which was expensed as research and development. Future potential payments include $2,000 in clinical development milestones, up to $7,000 in regulatory milestones, plus a low-to-mid single-digit percentage royalty on net sales of any products developed and commercialized under the agreement. (e) Guarantees and indemnifications: The Company has entered into license and research agreements with third parties that include indemnification provisions that are customary in the industry. These indemnification provisions generally require the Company to compensate the other party for certain damages and costs incurred as a result of third party claims or damages arising from these transactions. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial and product liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements and the Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented. |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | 11. Related Parties: (a) Exchange agreement with BVF: On March 23, 2018, the Company and BVF entered into an exchange agreement pursuant to which the Company issued 2,868,000 Series 1 Preferred Shares in exchange for 2,868,000 common shares which were subsequently cancelled by the Company . Prior to the closing of the transactions contemplated in the exchange agreement on March 27, 2018, BVF held a number of common shares representing approximately 19.9% of the Company’s then outstanding common shares. For additional information regarding the Series 1 Preferred Shares, refer to note 9a. (b) Termination of collaboration agreement with Teva: On March 7, 2018, the Company and Teva, entered into a termination agreement terminating by mutual agreement the collaborative development and license agreement dated December 7, 2012, as amended, which subsequently closed on March 27, 2018. In connection with the closing, the Company cancelled 1,000,000 common shares that were owned by Teva. Prior to the share cancellation, Teva owned more than 5% of the Company’s outstanding common shares. For additional information regarding the termination agreement and the share cancellation, refer to note 9b. |
Net Income (Loss) Per Common 18
Net Income (Loss) Per Common and Preferred Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Loss Per Common and Preferred Share | The following table sets out the computation of basic and diluted net loss per common and preferred share: Three Months Ended March 31, 2018 2017 Numerator: Commo n Preferred Shares Common Shares Preferred Shares Allocation of loss attributed to shareholders Basic $ (3,722 ) $ (33 ) $ (7,517 ) $ — Adjustment for change in fair value of liability classified stock options — — (133 ) — Diluted $ (3,722 ) $ (33 ) $ (7,650 ) $ — Denominator: Weighted average number of shares: Basic 17,804,421 159,333 17,946,209 — Adjustment for dilutive effect of stock options — — 28,260 — Diluted 17,804,421 159,333 17,974,469 — Net loss attributable to shareholders per share - basic $ (0.21 ) $ (0.21 ) $ (0.42 ) $ — Net loss attributable to shareholders per share - diluted $ (0.21 ) $ (0.21 ) $ (0.43 ) $ — |
Accounts Payable and Accrued 19
Accounts Payable and Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following: March 31, December 31, 2018 2017 Trade payables $ 473 $ 1,253 Employee compensation, benefits, and related accruals 573 1,017 Consulting and contracted research 1,026 817 Professional fees 253 252 Other 63 44 Total $ 2,388 $ 3,383 |
Term Loan (Tables)
Term Loan (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Loan and Unamortized Debt Discount Balances | The outstanding loan and unamortized debt discount balances are as follows: March 31, 2018 Term loan $ 7,000 Less: unamortized discount on loan (177 ) Less: current portion (1,400 ) Accrued portion of final payment fee 53 Loan payable, long-term $ 5,476 |
Schedule of Principal Payments on Outstanding Debt | Scheduled principal payments on outstanding debt, excluding the final payment fee of $455, as of March 31, 2018, are as follows: 2018 $ 700 2019 2,800 2020 2,800 2021 700 Total $ 7,000 |
Share Capital (Tables)
Share Capital (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Option Activity | The following table presents stock option activity for the period: Three Months Ended March 31, 2018 2017 Outstanding, beginning of period 2,339,905 1,910,823 Granted 563,700 416,750 Exercised (1) (84,668 ) (67,921 ) Forfeited, cancelled or expired (22,996 ) (1,415 ) Outstanding, end of period 2,795,941 2,258,237 Exercisable, end of period 1,505,459 1,293,367 During the three months ended March 31, 2018, 13,374 stock options were exercised for the same number of common shares for cash (three months ended March 31, 2017 – 62,397). In the same period, the Company issued 27,507 common shares (three months ended March 31, 2017 – 3,693) for the cashless exercise of 71,294 stock options (three months ended March 31, 2017 – 5,524). |
Fair Value Assumptions for Stock Options | The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: Three Months Ended March 31, 2018 2017 Average risk-free interest rate 2.77 % 2.44 % Expected volatility 75 % 81 % Average expected term (in years) 7.36 7.47 Expected dividend yield 0 % 0 % Weighted average fair value of stock options granted $ 3.41 $ 6.34 |
Nature of the business (Details
Nature of the business (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Accumulated deficit | $ 177,143 | $ 173,388 | |
Net loss | $ 3,755 | $ 7,517 | $ 30,704 |
Basis of presentation (Details)
Basis of presentation (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Xenon Pharmaceuticals USA Inc. [Member] | |
Basis Of Presentation [Line Items] | |
Date of incorporation | Dec. 2, 2016 |
Net Income (Loss) Per Common 24
Net Income (Loss) Per Common and Preferred Share (Details) | 3 Months Ended |
Mar. 31, 2017shares | |
Stock Options [Member] | |
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |
Anti-dilutive shares excluded from the calculation of loss per common share | 1,943,508 |
Net Income (Loss) Per Common 25
Net Income (Loss) Per Common and Preferred Share - Computation of Basic and Diluted Net Loss Per Common and Preferred Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Allocation of loss attributed to shareholders | ||
Basic | $ (3,722) | $ (7,517) |
Basic | $ (33) | |
Weighted average number of shares: | ||
Basic | 17,804,421 | 17,946,209 |
Diluted | 17,804,421 | 17,974,469 |
Net loss attributable to shareholders per share - basic | $ (0.21) | $ (0.42) |
Net loss attributable to shareholders per share - diluted | $ (0.21) | $ (0.43) |
Common Shares [Member] | ||
Allocation of loss attributed to shareholders | ||
Basic | $ (3,722) | $ (7,517) |
Adjustment for change in fair value of liability classified stock options | (133) | |
Diluted | $ (3,722) | $ (7,650) |
Weighted average number of shares: | ||
Basic | 17,804,421 | 17,946,209 |
Adjustment for dilutive effect of stock options | 28,260 | |
Diluted | 17,804,421 | 17,974,469 |
Net loss attributable to shareholders per share - basic | $ (0.21) | $ (0.42) |
Net loss attributable to shareholders per share - diluted | $ (0.21) | $ (0.43) |
Preferred Shares [Member] | ||
Allocation of loss attributed to shareholders | ||
Basic | $ (33) | |
Diluted | $ (33) | |
Weighted average number of shares: | ||
Basic | 159,333 | |
Diluted | 159,333 | |
Net loss attributable to shareholders per share - basic | $ (0.21) | |
Net loss attributable to shareholders per share - diluted | $ (0.21) |
Accounts Payable and Accrued 26
Accounts Payable and Accrued Expenses - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables And Accruals [Abstract] | ||
Trade payables | $ 473 | $ 1,253 |
Employee compensation, benefits, and related accruals | 573 | 1,017 |
Consulting and contracted research | 1,026 | 817 |
Professional fees | 253 | 252 |
Other | 63 | 44 |
Total | $ 2,388 | $ 3,383 |
Term Loan (Details)
Term Loan (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Amortization of the debt discount | $ 72 | |
Interest expense | $ 159 | |
Silicon Valley Bank [Member] | ||
Debt Instrument [Line Items] | ||
Warrants outstanding to purchase common stock | 50,411 | |
Warrants exercise price per share | $ 2.43 | |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Interest expense | $ 159 | |
Final payment fee | 455 | |
Term Loan [Member] | Silicon Valley Bank [Member] | ||
Debt Instrument [Line Items] | ||
Amortization of the debt discount | $ 72 | |
Debt instrument, frequency periodic payment, interest | monthly | |
Initial Tranche [Member] | Term Loan [Member] | Silicon Valley Bank [Member] | ||
Debt Instrument [Line Items] | ||
Effective interest rate on initial tranche of debt instrument | 9.48% | 9.25% |
Term Loan - Schedule of Outstan
Term Loan - Schedule of Outstanding Loan and Unamortized Debt Discount Balances (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Term loan | $ 7,000 | |
Less: current portion | (1,400) | $ (700) |
Loan payable, long-term | 5,476 | $ 6,104 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Term loan | 7,000 | |
Less: unamortized discount on loan | (177) | |
Less: current portion | (1,400) | |
Accrued portion of final payment fee | 53 | |
Loan payable, long-term | $ 5,476 |
Term Loan - Schedule of Princip
Term Loan - Schedule of Principal Payments on Outstanding Debt (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 700 |
2,019 | 2,800 |
2,020 | 2,800 |
2,021 | 700 |
Term loan | $ 7,000 |
Share Capital (Details)
Share Capital (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 23, 2018 | Mar. 07, 2018 | Mar. 31, 2018 |
Share Capital [Line Items] | |||
Gain on termination of collaboration agreement | $ 4,398 | $ 4,398 | |
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member] | |||
Share Capital [Line Items] | |||
Collaborative development and license agreement termination date | Mar. 7, 2018 | ||
Teva Canada Limited [Member] | |||
Share Capital [Line Items] | |||
Number of common shares agreed to transfer and assign for cancellation | 1,000,000 | ||
BVF Partners L.P [Member] | Exchange Agreement [Member] | |||
Share Capital [Line Items] | |||
Estimated weighted average cancellation price per share of common stock | $ 7.61 | ||
BVF Partners L.P [Member] | Exchange Agreement [Member] | Series1 Preferred Shares | |||
Share Capital [Line Items] | |||
Issued (cancelled) pursuant to exchange agreement | 2,868,000 | ||
Preferred shares convertible into common shares | one-for-one | ||
Common shares issued on conversion of preferred stock | 1 | ||
Maximum beneficial ownership limitation percentage for conversion of common stock issued and outstanding | 9.99% | ||
Maximum beneficial ownership limitation upon notice, percentage for conversion of common stock issued and outstanding | 19.99% | ||
Maximum beneficial percentage hold for conversion of number Of common stock issued and outstanding | 5.00% | ||
Minimum beneficial percentage hold for conversion of number Of common stock issued and outstanding. | 5.00% | ||
BVF Partners L.P [Member] | Exchange Agreement [Member] | Common Shares [Member] | |||
Share Capital [Line Items] | |||
Issued (cancelled) pursuant to exchange agreement | 2,868,000 |
Share Capital - Stock Option Ac
Share Capital - Stock Option Activity (Details) - shares | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | ||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||||
Number of Options Outstanding, Beginning balance | 2,339,905 | 1,910,823 | 1,910,823 | |
Number of Options, Granted | 563,700 | 416,750 | ||
Number of Options, Exercised | [1] | (84,668) | (67,921) | |
Number of Options, Forfeited, cancelled or expired | (22,996) | (1,415) | ||
Number of Options Outstanding, Ending balance | 2,795,941 | 2,258,237 | 2,339,905 | |
Number of Options Exercisable | 1,505,459 | 1,293,367 | ||
[1] | During the three months ended March 31, 2018, 13,374 stock options were exercised for the same number of common shares for cash (three months ended March 31, 2017 – 62,397). In the same period, the Company issued 27,507 common shares (three months ended March 31, 2017 – 3,693) for the cashless exercise of 71,294 stock options (three months ended March 31, 2017 – 5,524). |
Share Capital - Stock Option 32
Share Capital - Stock Option Activity (Parenthetical) (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ||
Stock Options exercised for Number of Common Shares for cash | 13,374 | 62,397 |
Common stock issued for cashless exercise | 27,507 | 3,693 |
Cashless exercise of stock options | 71,294 | 5,524 |
Share Capital - Fair Value Assu
Share Capital - Fair Value Assumptions for Stock Options (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Fair Value Assumptions For Stock Options [Abstract] | ||
Average risk-free interest rate | 2.77% | 2.44% |
Expected volatility | 75.00% | 81.00% |
Average expected term (in years) | 7 years 4 months 9 days | 7 years 5 months 19 days |
Expected dividend yield | 0.00% | 0.00% |
Weighted average fair value of stock options granted | $ 3.41 | $ 6.34 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jul. 31, 2017USD ($) | Apr. 30, 2017USD ($) | Mar. 31, 2017CAD ($) | Mar. 31, 2018 | Dec. 31, 2017USD ($) | Dec. 31, 2015USD ($) | Aug. 31, 2015USD ($) | |
Asset Purchase Agreement [Member] | 1st Order Pharmaceuticals, Inc. [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Upfront fee paid | $ 350 | ||||||
Milestone payments paid | $ 700 | ||||||
Asset Purchase Agreement [Member] | 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] | Clinical Development Milestones [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | 1,000 | ||||||
Asset Purchase Agreement [Member] | 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] | Regulatory Milestone [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | 13,000 | ||||||
Asset Purchase Agreement [Member] | 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] | Sales-based and Other Milestones [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | 33,600 | ||||||
Asset Purchase Agreement [Member] | 1st Order Pharmaceuticals, Inc. and Valeant Pharmaceuticals International, Inc. [Member] | Pre-commercial and Single Digit Percentage Royalty on Commercial Sales Milestone [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | $ 1,500 | ||||||
License Agreement [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Upfront fee paid | $ 1,000 | ||||||
License Agreement [Member] | Clinical Development Milestones [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | 2,000 | ||||||
License Agreement [Member] | Regulatory Milestone [Member] | Maximum [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Future potential payments | $ 7,000 | ||||||
Medpace Clinical Development Service Agreement [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Service agreement, term | 5 years | ||||||
Committed service obligation | $ 7,000 | ||||||
Contractual obligation paid | $ 3,000 | ||||||
License, Manufacture and Supply Agreement [Member] | |||||||
Commitments and Contingencies [Line Items] | |||||||
Upfront fee paid | $ 500 |
Related Parties (Details)
Related Parties (Details) - shares | Mar. 23, 2018 | Mar. 07, 2018 |
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Collaborative development and license agreement termination date | Mar. 7, 2018 | |
Teva Pharmaceuticals International GmbH and Teva Canada Limited [Member] | Minimum [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 5.00% | |
Teva Canada Limited [Member] | ||
Related Party Transaction [Line Items] | ||
Number of common shares agreed to transfer and assign for cancellation | 1,000,000 | |
BVF Partners L.P [Member] | Exchange Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Percentage of ownership | 19.90% | |
BVF Partners L.P [Member] | Exchange Agreement [Member] | Series1 Preferred Shares | ||
Related Party Transaction [Line Items] | ||
Stock Issued | 2,868,000 | |
Common stock received in exchange of preferred shares | 2,868,000 |