Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 01, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Theravance Biopharma, Inc. | |
Entity Central Index Key | 1,583,107 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 54,103,378 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 91,301 | $ 344,709 |
Short-term marketable securities | 243,700 | 156,387 |
Accounts receivable, net of allowances of $724 and $779 at September 30, 2017 and December 31, 2016, respectively | 1,576 | 646 |
Receivables from collaborative arrangements | 11,547 | 9,076 |
Prepaid taxes | 289 | 3,060 |
Other prepaid and current assets | 3,462 | 2,405 |
Inventories | 15,258 | 12,220 |
Total current assets | 367,133 | 528,503 |
Property and equipment, net | 8,618 | 8,460 |
Long-term marketable securities | 99,399 | 91,565 |
Other investments | 0 | 8,000 |
Tax receivable | 8,070 | 0 |
Restricted cash | 833 | 833 |
Other assets | 2,106 | 1,893 |
Total assets | 486,159 | 639,254 |
Current liabilities: | ||
Accounts payable | 5,623 | 1,733 |
Accrued personnel-related expenses | 12,714 | 14,021 |
Accrued clinical and development expenses | 20,487 | 25,064 |
Other accrued liabilities | 9,828 | 8,298 |
Deferred revenue | 134 | 152 |
Total current liabilities | 48,786 | 49,268 |
Convertible senior notes, net | 223,478 | 222,676 |
Deferred rent | 3,288 | 3,966 |
Other long-term liabilities | 26,490 | 13,113 |
Commitments and contingencies | ||
Shareholders' equity | ||
Preferred shares, $0.00001 par value: 230 shares authorized, no shares issued or outstanding at September 30, 2017 and December 31, 2016, respectively | ||
Ordinary shares, $0.00001 par value: 200,000 shares authorized at September 30, 2017 and December 31, 2016; 54,087 and 52,833 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 1 | 1 |
Additional paid-in capital | 895,226 | 862,708 |
Accumulated other comprehensive loss | (292) | (253) |
Accumulated deficit | (710,818) | (512,225) |
Total shareholders' equity | 184,117 | 350,231 |
Total liabilities and shareholders' equity | $ 486,159 | $ 639,254 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Account receivable, allowance | $ 724 | $ 779 |
Preferred shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred shares, shares authorized | 230 | 230 |
Preferred shares, shares issued | 0 | 0 |
Preferred shares, outstanding shares | 0 | 0 |
Ordinary shares, par value (in dollars per share) | $ 0.00001 | $ 0.00001 |
Ordinary shares, authorized shares | 200,000 | 200,000 |
Ordinary shares, shares issued | 54,087 | 52,833 |
Ordinary shares, outstanding shares | 54,087 | 52,833 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Product sales | $ 4,140 | $ 3,901 | $ 10,664 | $ 12,571 |
Revenue from collaborative arrangements | 135 | 15,174 | 207 | 30,385 |
Total revenue | 4,275 | 19,075 | 10,871 | 42,956 |
Costs and expenses: | ||||
Cost of goods sold | 985 | 332 | 2,914 | 1,748 |
Research and development | 39,343 | 31,951 | 122,835 | 99,698 |
Selling, general and administrative | 20,944 | 20,286 | 66,069 | 64,143 |
Total costs and expenses | 61,272 | 52,569 | 191,818 | 165,589 |
Loss from operations | (56,997) | (33,494) | (180,947) | (122,633) |
Interest expense | (2,136) | 0 | (6,410) | 0 |
Other-than-temporary impairment loss | (8,000) | 0 | (8,000) | 0 |
Interest and other income (expense), net | 1,124 | 344 | 3,579 | 839 |
Loss before income taxes | (66,009) | (33,150) | (191,778) | (121,794) |
Provision for income taxes | 868 | 812 | 6,705 | 1,542 |
Net loss | (66,877) | (33,962) | (198,483) | (123,336) |
Share-based compensation expense | $ 10,685 | $ 9,895 | $ 31,352 | $ 31,129 |
Net loss per share: | ||||
Basic and diluted net loss per share (in dollars per share) | $ (1.27) | $ (0.73) | $ (3.80) | $ (2.86) |
Shares used to compute basic and diluted net loss per share (in shares) | 52,611 | 46,470 | 52,165 | 43,080 |
Net unrealized gain (loss) on available-for-sale investments | $ (44) | $ (142) | $ (39) | $ 109 |
Total comprehensive loss | (66,921) | (34,104) | (198,522) | (123,227) |
Research and development | ||||
Costs and expenses: | ||||
Share-based compensation expense | 5,005 | 4,933 | 15,023 | 15,052 |
Selling, general and administrative | ||||
Costs and expenses: | ||||
Share-based compensation expense | $ 5,680 | $ 4,962 | $ 16,329 | $ 16,077 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities | ||
Net loss | $ (198,483) | $ (123,336) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,009 | 1,944 |
Share-based compensation | 31,352 | 31,129 |
Other-than-temporary impairment loss | 8,000 | 0 |
Inventory write-down | 643 | 119 |
Other | (3) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (930) | 1,049 |
Receivables from collaborative arrangements | (2,471) | 12,519 |
Prepaid taxes | 2,788 | 9,596 |
Other prepaid and current assets | (1,251) | 796 |
Inventories | (2,963) | (1,838) |
Tax receivable | (7,890) | 0 |
Other assets | (349) | (3,705) |
Accounts payable | 3,540 | (12,838) |
Accrued personnel-related expenses, accrued clinical and development expenses, and other accrued liabilities | (4,524) | 8,190 |
Deferred rent | (678) | (439) |
Deferred revenue | 20 | 482 |
Other long-term liabilities | 13,340 | 5,456 |
Net cash used in operating activities | (156,850) | (70,876) |
Investing activities | ||
Purchases of property and equipment | (2,151) | (1,735) |
Purchases of marketable securities | (285,821) | (168,559) |
Maturities of marketable securities | 190,389 | 68,264 |
Net cash used in investing activities | (97,583) | (102,030) |
Financing activities | ||
Proceeds from sale of ordinary shares, net | 0 | 145,241 |
Proceeds from ESPP purchases | 2,657 | 1,944 |
Proceeds from option exercises | 5,693 | 2,436 |
Repurchase of shares to satisfy tax withholding | (7,325) | (2,850) |
Net cash provided by financing activities | 1,025 | 146,771 |
Net (decrease) increase in cash and cash equivalents | (253,408) | (26,135) |
Cash and cash equivalents at beginning of period | 344,709 | 112,707 |
Cash and cash equivalents at end of period | 91,301 | 86,572 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 3,717 | 0 |
Cash paid (received) for income taxes, net | $ 4,927 | $ (9,488) |
Description of Operations and S
Description of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Description of Operations and Summary of Significant Accounting Policies | |
Description of Operations and Summary of Significant Accounting Policies | 1. Description of Operations and Summary of Significant Accounting Policies Description of Operations Theravance Biopharma, Inc. (“Theravance Biopharma”, the “Company”, or “we” and other similar pronouns) is a diversified biopharmaceutical company with the core purpose of creating medicines that help improve the lives of patients suffering from serious illness. Our pipeline of internally discovered product candidates includes potential best-in-class medicines to address the unmet needs of patients being treated for serious conditions primarily in the acute care setting. VIBATIV ® (telavancin), our first commercial product, is a once-daily dual-mechanism antibiotic approved in the U.S., Europe and certain other countries for certain difficult-to-treat infections. Revefenacin (TD-4208) is a long-acting muscarinic antagonist (“LAMA”) being developed as a potential once-daily, nebulized treatment for chronic obstructive pulmonary disease (“COPD”). Our neprilysin (“NEP”) inhibitor program is designed to develop selective NEP inhibitors for the treatment of a range of major cardiovascular and renal diseases, including acute and chronic heart failure, hypertension and chronic kidney diseases such as diabetic nephropathy. Our research efforts are focused in the areas of inflammation and immunology, with the goal of designing medicines that provide targeted drug delivery to tissues in the lung and gastrointestinal tract in order to maximize patient benefit and minimize risk. The first program to emerge from this research is designed to develop intestinally restricted pan-Janus kinase (“JAK”) inhibitors for the treatment of a range of inflammatory intestinal diseases. In addition, we have an economic interest in future payments that may be made by Glaxo Group Limited or one of its affiliates (“GSK”) pursuant to its agreements with Innoviva, Inc. (“Innoviva”) (known as Theravance, Inc. prior to January 7, 2016) relating to certain drug development programs, including Trelegy Ellipta (the combination of fluticasone furoate, umeclidinium, and vilanterol in a single ELLIPTA ® inhaler, previously referred to as the Closed Triple), currently approved in the US for the treatment of appropriate COPD patients and in development for the treatment of COPD in several other countries. The product is also currently in development for the treatment of asthma. Basis of Presentation Our condensed consolidated financial information as of September 30, 2017, and the three and nine months ended September 30, 2017 and 2016 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2016 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017. On January 1, 2017, we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). Under ASU 2016-09, excess tax benefits from share-based compensation are now included on the Consolidated Statements of Cash Flows as an operating activity rather than a financing activity. This change has been applied prospectively as allowed under ASU 2016-09 and prior periods have not been adjusted on the Consolidated Statements of Cash Flows. Significant Accounting Policies Other than the below, there have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Share-Based Compensation In connection with the adoption of ASU 2016-09, we elected to change our accounting policy for recognizing share-based compensation expense by replacing the practice of estimating forfeitures to utilizing actual forfeitures as they occur. The change was applied on a modified retrospective basis, and the cumulative effect adjustment recorded to retained earnings, as of January 1, 2017, was immaterial. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “ Topic 606 ”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, companies may need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. Topic 606 differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments. Since the separation from our former parent, Innoviva, in June 2014, our revenues have been derived from collaboration agreements and product sales. The consideration we are eligible to receive under collaboration agreements includes upfront payments, research and development funding, milestone payments, and royalties. Each collaboration agreement is unique and will need to be assessed separately under the five-step process under Topic 606 . As part of our adoption efforts, we have completed the assessment of several collaboration agreements under Topic 606 and the assessment of the remaining collaboration agreements is in process. Under our current accounting policy, we recognize milestone revenue using the milestone method specified in ASC 605-28, which generally results in the recognition of the milestone payment as revenue in the period that the milestone is achieved. However, under the new accounting standard, it is possible to start to recognize milestone revenue before the milestone is achieved, subject to management’s assessment of whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This aspect of Topic 606 may have a material effect on our financial statements. We also recognize revenues from product sales. Although we have not yet completed our final review of the impact of Topic 606 , we currently do not anticipate a material impact on our revenue recognition practices for product sales. We will adopt Topic 606 in the first quarter of 2018 using the modified retrospective method which consists of applying and recognizing the cumulative effect of Topic 606 at the date of initial application and providing certain additional disclosures as defined per Topic 606 . We are in the process of reviewing variable consideration, potential disclosures, and our method of adoption to complete our evaluation of the impact on our consolidated financial statements prior to the end of 2017. In addition, we continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) (“ASU 2016-16”). ASU 2016-16 requires immediate recognition of income tax consequences of intra-company asset transfers, other than inventory transfers. Existing GAAP prohibits recognition of income tax consequences of intra-company asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludes from its scope intra-company inventory transfers whereby the recognition of tax consequences will take place when the inventory is sold to third parties. Two common examples of assets included in ASU 2016-16’s scope are intellectual property and property, plant and equipment. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption is permitted. We expect to adopt ASU 2016-16 in the first quarter of 2018 using the modified retrospective method. Currently, we do not anticipate a material impact on our consolidated financial statements and related disclosures upon adoption due to a full valuation allowance on our deferred tax assets. However, the ultimate impact of adopting ASU 2016-16 will depend on the balance of intercompany sales transactions, if any, between our subsidiaries as of the adoption date and our continued full valuation allowance position. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a share-based payment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting in accordance with Topic 718. The provisions of ASU 2017-09 are effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. We plan to adopt ASU 2017-09 on its effective date and apply the new guidance to evaluate future changes, if any, to the terms and conditions of our share-based payment awards. We have evaluated other recently issued accounting pronouncements and do not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss per Share | |
Net Loss per Share | 2. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of outstanding, less ordinary shares subject to forfeiture. Diluted net loss per share is computed by dividing net loss by the weighted-average number of shares outstanding, less ordinary shares subject to forfeiture, plus all additional ordinary shares that would have been outstanding, assuming dilutive potential ordinary shares had been issued for other dilutive securities. For the three and nine months ended September 30, 2017 and 2016, diluted and basic net loss per share was identical since potential ordinary shares were excluded from the calculation, as their effect was anti-dilutive. Anti-Dilutive Securities The following ordinary equivalent shares were not included in the computation of diluted net loss per share because their effect was anti-dilutive: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Share issuances under equity incentive plan and ESPP Restricted shares Share issuable upon the conversion of convertible senior notes — — In addition, as of September 30, 2017 and 2016, there were 1,305,000 shares and 1,440,000 shares, respectively, which were subject to performance-based vesting criteria which have been excluded from the ordinary equivalent shares table above. |
Collaborative Arrangements
Collaborative Arrangements | 9 Months Ended |
Sep. 30, 2017 | |
Collaborative Arrangements | |
Collaborative Arrangements | 3. Collaborative Arrangements Revenue from Collaborative Arrangements We recognized the following revenues from our collaborative arrangements: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Mylan $ $ $ $ R-Pharm Takeda Pharmaceuticals — — Other Total revenue from collaborative arrangements $ $ $ $ Mylan Development and Commercialization Agreement In January 2015, we established a strategic collaboration with Mylan Ireland Limited (“Mylan”) for the development and, subject to regulatory approval, commercialization of revefenacin (TD-4208), our investigational LAMA in development for the treatment of COPD. We entered into this collaboration to expand the breadth of our revefenacin development program and extend our commercial reach beyond the acute care setting where we currently market VIBATIV. For the three and nine months ended September 30, 2017, we recognized $25,000 and $77,000, respectively, in revenue primarily from the amortization of previously deferred revenue. For the three and nine months ended September 30, 2016, we recognized $25,000 and $15.1 million of revenue, respectively. The $25,000 resulted from amortization of previously deferred revenue and the $15.1 million resulted primarily from the achievement of 50% enrollment in the Phase 3 twelve-month safety study which triggered a milestone payment to Theravance Biopharma by Mylan. As of September 30, 2017, we are eligible to receive from Mylan additional potential development, regulatory and sales milestone payments totaling up to $205.0 million in the aggregate, with $160.0 million associated with revefenacin monotherapy and $45.0 million for future potential combination products. Of the $160.0 million associated with monotherapy, $150.0 million relates to commercialization and $10.0 million relates to regulatory actions in the European Union (“EU”). Development and regulatory milestones are deemed to be substantive milestones and will be recognized as revenue in the period upon achievement of each respective milestone. Sales milestones are considered contingent payments and are not deemed to be substantive milestones due to the fact that the achievement of the event underlying the payment predominantly relates to Mylan’s performance of future commercial activities. We do not expect to earn any milestone payments from Mylan in 2017. Takeda Collaborative Arrangement In June 2016, we entered into a License and Collaboration Agreement (the “Takeda Agreement”) with Millennium Pharmaceuticals, Inc. (“Millennium”), in order to establish a collaboration for the development and commercialization of TD-8954, a selective 5-HT4 receptor agonist. Prior to the Takeda Agreement, the Company has developed TD-8954 for potential use in the treatment of gastrointestinal motility disorders, including short-term intravenous use for enteral feeding intolerance (“EFI”) to achieve early nutritional adequacy in critically ill patients at high nutritional risk, an indication for which the compound received U.S. Food and Drug Administration (“FDA”) Fast Track Designation. Millennium is an indirect wholly-owned subsidiary of Takeda Pharmaceutical Company Limited (TSE: 4502) (collectively with Millennium, “Takeda”). Under the terms of the Takeda Agreement, Takeda is responsible for worldwide development and commercialization of TD-8954. We received an upfront cash payment of $15.0 million and will be eligible to receive success based development, regulatory and sales milestone payments by Takeda. The first $110.0 million of potential milestones are associated with the development, regulatory and commercial launch milestones for EFI or other intravenously dosed indications. We will also be eligible to receive a tiered royalty on worldwide net sales by Takeda at percentage royalty rates ranging from low double-digits to mid-teens. The Takeda Agreement was finalized in the third quarter of 2016, and we recognized $15.1 million in revenue for the three months ended September 30, 2016. Alfasigma (formerly Alfa Wassermann) Development and Collaboration Agreement Under an October 2012 development and collaboration agreement for velusetrag, we and Alfasigma S.p.A (“Alfasigma”) (formerly Alfa Wassermann S.p.A.) agreed to collaborate in the execution of a two-part Phase 2 program to test the efficacy, safety and tolerability of velusetrag in the treatment of patients with gastroparesis (a medical condition consisting of a paresis (partial paralysis) of the stomach, resulting in food remaining in the stomach for a longer time than normal). Alfasigma has an exclusive option to develop and commercialize velusetrag in the EU, Russia, China, Mexico and certain other countries, while we retain full rights to velusetrag in the United States, Canada, Japan and certain other countries. As part of this agreement, Alfasigma funded the majority of the costs associated with the Phase 2 gastroparesis program, which consisted of a Phase 2 study focused on gastric emptying and a Phase 2 study focused on symptoms. Now that these studies are complete, Alfasigma has the right to exercise its license option, and if it does so, we would receive a $10.0 million option fee. If velusetrag is successfully developed and commercialized under the agreement with Alfasigma, we are entitled to receive potential future contingent payments totaling up to $53.5 million, and royalties on net sales by Alfasigma ranging from the low teens to 20%. Reimbursement of R&D Costs Under certain collaborative arrangements, we are entitled to reimbursement of certain R&D costs. Our policy is to account for the reimbursement payments by our collaboration partners as reductions to R&D expense. The following table summarizes the reductions to R&D expenses related to the reimbursement payments: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Mylan $ $ $ $ Alfasigma — — Other — Total reduction to R&D expense $ $ $ $ |
Investments and Fair Value Meas
Investments and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Investments and Fair Value Measurements | |
Investments and Fair Value Measurements | 4. Investments and Fair Value Measurements Marketable Securities Our available-for-sale securities include: Fair Value Hierarchy Estimated Fair Value (In thousands) Level September 30, 2017 December 31, 2016 U.S. government securities Level 1 $ $ U.S. government agency securities Level 2 Corporate notes Level 2 Commercial paper Level 2 Marketable securities Money market funds Level 1 Total $ $ The estimated fair value of marketable securities is based on quoted market prices for these or similar investments that were based on prices obtained from a commercial pricing service. The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data including market research publications. Net unrealized losses were $0.3 million as of September 30, 2017 and December 31, 2016. As of September 30, 2017, all of the marketable securities had contractual maturities within two years and the weighted average maturity of the marketable securities was approximately nine months. There were no transfers between Level 1 and Level 2 during the periods presented and there have been no changes to our valuation techniques during the three and nine months ended September 30, 2017. We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis which may be maturity. We have determined that the gross unrealized losses on our marketable securities as of September 30, 2017 were temporary in nature. The gross unrealized loss on marketable securities held for greater than twelve months was immaterial, as of September 30, 2017. As of September 30, 2017, our accumulated other comprehensive loss on our condensed consolidated balance sheets consisted of net unrealized losses on available-for-sale investments. During the three and nine months ended September 30, 2017, we did not sell any of our marketable securities. Restricted cash pertained to certain lease agreements and letters of credit where we have pledged cash and cash equivalents as collateral. We have $230.0 million of 3.25% convertible senior notes outstanding as of September 30, 2017 with an estimated fair value of $280.9 million. The estimated fair value was primarily based upon the underlying price of Theravance Biopharma’s publicly traded shares and other observable inputs as of September 30, 2017. The inputs to determine fair value of the Notes are categorized as Level 2 inputs. Level 2 inputs include quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Non-Marketable Equity Securities and Other-Than-Temporary Impairment In September 2015, Trek Therapeutics, PBC (“TREKtx”) and we entered into a licensing agreement (the “TREKtx Agreement”) granting TREKtx an exclusive worldwide license for the development, manufacturing, use, marketing and sale of our NS5A inhibitor known as TD-6450 as a component in combination hepatitis C virus (“HCV”) products (the “HCV Products”). Pursuant to the TREKtx Agreement, we received an upfront payment of $8.0 million in the form of TREKtx’s Series A preferred stock and would be eligible to receive future royalties based on net sales of the HCV Products. TREKtx is solely responsible for all future costs associated with the supply, manufacture, development, sale and marketing of the licensed compound. At the date of the acquisition of the investment, we estimated the fair value of the consideration received to be $8.0 million based upon the price of similar Series A preferred stock that TREKtx sold to an independent third party for cash consideration. We also accounted for this investment using the cost method of accounting and recorded it in other investments on our consolidated balance sheets. We are not considered to be the primary beneficiary of TREKtx and therefore, do not consolidate the financial results of the company into our financial statements. Each of our equity investments is reviewed at least annually for impairment or whenever events or changes in circumstances indicate that the carrying value of the investment might not be recoverable. As of June 30, 2017, we identified indicators of impairment were present for our investment in non-marketable equity security of TREKtx. In the current quarter, we concluded that the impairment of this investment was other-than-temporary due to TREKtx’s challenges in securing additional funding and, as a result, we recorded an impairment charge. Due to the uncertainty in the recovery of the investment, we recorded an impairment charge for the full carrying value of the investment. The $8.0 million other-than-temporary impairment charge is reported as “Other-than-temporary impairment loss” on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2017. As the inputs utilized for the assessment are not based on observable market data, the determination of fair value of this cost-method investment is classified within Level 3 of the fair value hierarchy. To determine the fair value of this investment, we used all available financial information related to the investee, including liquidity, rate of cash use, and ability to secure additional funding. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventories | |
Inventories | 5. Inventories Inventory consists of the following: (In thousands) September 30, December 31, Raw materials $ $ Work-in-process Finished goods Total inventories $ $ |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Share-Based Compensation | |
Share-Based Compensation | 6. Share-Based Compensation Share-Based Compensation Expense Allocation The allocation of share-based compensation expense included in the condensed consolidated statements of operations was as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Research and development $ $ $ $ Selling, general and administrative Total share-based compensation expense $ $ $ $ Performance-Contingent Awards In the first quarter of 2016, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved the grant of 1,575,000 performance-contingent restricted share awards (“RSAs”) and 135,000 performance-contingent restricted share units (“RSUs”) to senior management. The vesting of such awards is dependent on the Company meeting its critical operating goals and objectives during a five-year period from 2016 to December 31, 2020. The goals that must be met in order for the performance-contingent RSAs and RSUs to vest are strategically important for the Company, and the Compensation Committee believes the goals, if achieved, will increase shareholder value. The awards have dual triggers of vesting based upon the achievement of these goals and continued employment. As of September 30, 2017, there were 1,305,000 of these performance-contingent RSAs and 135,000 of these performance-contingent RSUs outstanding, and as of September 30, 2016, there were 1,440,000 performance-contingent RSAs and 135,000 performance-contingent RSUs outstanding. Expense associated with these awards is broken into three separate tranches and may be recognized during the years 2016 to 2020 depending on the probability of meeting the performance conditions. Compensation expense relating to awards subject to performance conditions is recognized if it is considered probable that the performance goals will be achieved. The probability of achievement is reassessed at each quarter-end reporting period. The maximum potential expense associated with the awards could be up to $35.5 million (allocated as $13.3 million for research and development expense and $22.2 million for selling, general and administrative expense) if all of the performance conditions are achieved. As of September 30, 2017, we determined that the achievement of the requisite performance conditions for the first tranche of the awards is probable due to multiple advancements of programs within our development pipeline over the course of 2017. For the three and nine months ended September 30, 2017, we recognized $0.5 million and $1.4 million of share-based compensation expense from the first tranche of the awards, respectively. We have determined that the remaining second and third tranches are not probable of vesting and, as a result, no compensation expense related to these tranches has been recognized as of September 30, 2017. In the third quarter of 2017, the Compensation Committee approved the grant of 50,000 performance contingent RSUs to a newly appointed member of senior management. The RSUs have dual triggers of vesting based upon the achievement of certain corporate operating milestones in specified timelines, as well as a requirement for continued employment. When the performance goals are deemed to be probable of achievement, the recognition of the RSU’s share-based compensation expense will commence. As of September 30, 2017, we determined that the achievement of the requisite performance conditions of these RSUs have not been met and that they are not probable of vesting (less than 70%) and, as a result, no compensation expense was recognized for the three and nine months ended September 30, 2017. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | 7. Income Taxes The income tax provision was $0.9 million and $6.7 million for the three and nine months ended September 30, 2017, respectively, although we incurred operating losses on a consolidated basis. The provision for income tax was primarily due to recording contingent tax liabilities pertaining primarily to uncertain tax positions taken with respect to transfer pricing and tax credits. No provision for income taxes has been recognized on undistributed earnings of our foreign subsidiaries because we consider such earnings to be indefinitely reinvested. We follow the accounting guidance related to accounting for income taxes which requires that a company reduce its deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of its deferred tax assets will not be realized. As of September 30, 2017, our deferred tax assets were offset in full by a valuation allowance. We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Resolution of one or more of these uncertain tax positions in any period may have a material impact on the results of operations for that period. We include any applicable interest and penalties within the provision for income taxes in the condensed consolidated statements of operations. The difference between the Irish statutory rate and our effective tax rate was primarily due to the valuation allowance on deferred tax assets and the liabilities recorded for the uncertain tax position related to transfer pricing and tax credits. Our future income tax expense may be affected by such factors as changes in tax laws, our business, regulations, tax rates, interpretation of existing laws or regulations, the impact of accounting for share-based compensation, the impact of accounting for business combinations, our international organization, shifts in the amount of income before tax earned in the U.S. as compared with other regions in the world, the timing and amounts of releases of our valuation allowance and changes in overall levels of income before tax. |
Operating Leases
Operating Leases | 9 Months Ended |
Sep. 30, 2017 | |
Operating Leases | |
Operating Leases | 8. Operating Leases We lease approximately 150,000 square feet of office and laboratory space in two buildings in South San Francisco, California, under a non-cancelable operating lease that ends in May 2020. We have the right to extend the terms of this lease for two additional five-year periods. In April 2017, we entered into a 10-year lease for an office space in Connaught House, Dublin, Ireland (“Connaught House”). The Connaught House replaces our previously leased Dublin office space and allows us to accommodate future personnel growth. Under the terms of the Connaught House lease, we are leasing approximately 6,100 square feet at an initial base rent of approximately $443,000 per year. Future minimum lease payments under the leases, exclusive of executory costs, as of September 30, 2017, are as follows: (In thousands) Three months ending December 31, 2017 $ Years ending December 31: 2018 2019 2020 2021 Thereafter Total $ |
Description of Operations and14
Description of Operations and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Description of Operations and Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Our condensed consolidated financial information as of September 30, 2017, and the three and nine months ended September 30, 2017 and 2016 are unaudited but include all adjustments (consisting only of normal recurring adjustments), which we consider necessary for a fair presentation of the financial position at such date and of the operating results and cash flows for those periods, and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated December 31, 2016 financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2017. On January 1, 2017, we adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718) (“ASU 2016-09”). Under ASU 2016-09, excess tax benefits from share-based compensation are now included on the Consolidated Statements of Cash Flows as an operating activity rather than a financing activity. This change has been applied prospectively as allowed under ASU 2016-09 and prior periods have not been adjusted on the Consolidated Statements of Cash Flows. |
Significant Accounting Policies | Significant Accounting Policies Other than the below, there have been no material revisions in our significant accounting policies described in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Share-Based Compensation In connection with the adoption of ASU 2016-09, we elected to change our accounting policy for recognizing share-based compensation expense by replacing the practice of estimating forfeitures to utilizing actual forfeitures as they occur. The change was applied on a modified retrospective basis, and the cumulative effect adjustment recorded to retained earnings, as of January 1, 2017, was immaterial. |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09” or “ Topic 606 ”), which will replace most existing revenue recognition guidance in GAAP when it becomes effective. ASU 2014-09’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, companies may need to use more judgment and make more estimates than under the currently effective guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. Since ASU 2014-09 was issued, several additional ASUs have been issued and incorporated within Topic 606 to clarify various elements of the guidance. Topic 606 differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments. Since the separation from our former parent, Innoviva, in June 2014, our revenues have been derived from collaboration agreements and product sales. The consideration we are eligible to receive under collaboration agreements includes upfront payments, research and development funding, milestone payments, and royalties. Each collaboration agreement is unique and will need to be assessed separately under the five-step process under Topic 606 . As part of our adoption efforts, we have completed the assessment of several collaboration agreements under Topic 606 and the assessment of the remaining collaboration agreements is in process. Under our current accounting policy, we recognize milestone revenue using the milestone method specified in ASC 605-28, which generally results in the recognition of the milestone payment as revenue in the period that the milestone is achieved. However, under the new accounting standard, it is possible to start to recognize milestone revenue before the milestone is achieved, subject to management’s assessment of whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This aspect of Topic 606 may have a material effect on our financial statements. We also recognize revenues from product sales. Although we have not yet completed our final review of the impact of Topic 606 , we currently do not anticipate a material impact on our revenue recognition practices for product sales. We will adopt Topic 606 in the first quarter of 2018 using the modified retrospective method which consists of applying and recognizing the cumulative effect of Topic 606 at the date of initial application and providing certain additional disclosures as defined per Topic 606 . We are in the process of reviewing variable consideration, potential disclosures, and our method of adoption to complete our evaluation of the impact on our consolidated financial statements prior to the end of 2017. In addition, we continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact our current conclusions. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 is aimed at making leasing activities more transparent and comparable, and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including leases currently accounted for as operating leases. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2016-02 will have on our consolidated financial statements and related disclosures. In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) (“ASU 2016-16”). ASU 2016-16 requires immediate recognition of income tax consequences of intra-company asset transfers, other than inventory transfers. Existing GAAP prohibits recognition of income tax consequences of intra-company asset transfers whereby the seller defers any net tax effect and the buyer is prohibited from recognizing a deferred tax asset on the difference between the newly created tax basis of the asset in its tax jurisdiction and its financial statement carrying amount as reported in the consolidated financial statements. ASU 2016-16 specifically excludes from its scope intra-company inventory transfers whereby the recognition of tax consequences will take place when the inventory is sold to third parties. Two common examples of assets included in ASU 2016-16’s scope are intellectual property and property, plant and equipment. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption is permitted. We expect to adopt ASU 2016-16 in the first quarter of 2018 using the modified retrospective method. Currently, we do not anticipate a material impact on our consolidated financial statements and related disclosures upon adoption due to a full valuation allowance on our deferred tax assets. However, the ultimate impact of adopting ASU 2016-16 will depend on the balance of intercompany sales transactions, if any, between our subsidiaries as of the adoption date and our continued full valuation allowance position. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). ASU 2017-09 provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718 to a change to the terms and conditions of a share-based payment award. ASU 2017-09 also provides guidance about the types of changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting in accordance with Topic 718. The provisions of ASU 2017-09 are effective for all interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. We plan to adopt ASU 2017-09 on its effective date and apply the new guidance to evaluate future changes, if any, to the terms and conditions of our share-based payment awards. We have evaluated other recently issued accounting pronouncements and do not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures. |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss per Share | |
Schedule of anti-dilutive securities | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Share issuances under equity incentive plan and ESPP Restricted shares Share issuable upon the conversion of convertible senior notes — — |
Collaborative Arrangements (Tab
Collaborative Arrangements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Collaborative Arrangements | |
Schedule of revenue recognized from collaborative arrangements | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Mylan $ $ $ $ R-Pharm Takeda Pharmaceuticals — — Other Total revenue from collaborative arrangements $ $ $ $ |
Summary of reductions to R&D costs related to the reimbursement payments | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Mylan $ $ $ $ Alfasigma — — Other — Total reduction to R&D expense $ $ $ $ |
Investments and Fair Value Me17
Investments and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments and Fair Value Measurements | |
Schedule of available-for-sale securities | Fair Value Hierarchy Estimated Fair Value (In thousands) Level September 30, 2017 December 31, 2016 U.S. government securities Level 1 $ $ U.S. government agency securities Level 2 Corporate notes Level 2 Commercial paper Level 2 Marketable securities Money market funds Level 1 Total $ $ |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventories | |
Schedule of inventories | (In thousands) September 30, December 31, Raw materials $ $ Work-in-process Finished goods Total inventories $ $ |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share-Based Compensation | |
Schedule of share-based compensation expense included in the condensed consolidated statements of operations | Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2017 2016 2017 2016 Research and development $ $ $ $ Selling, general and administrative Total share-based compensation expense $ $ $ $ |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Operating Leases | |
Schedule of future minimum lease payments under non-cancelable operating lease | Future minimum lease payments under the leases, exclusive of executory costs, as of September 30, 2017, are as follows: (In thousands) Three months ending December 31, 2017 $ Years ending December 31: 2018 2019 2020 2021 Thereafter Total $ |
Description of Operations and21
Description of Operations and Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2017item | |
Description of Operations and Summary of Significant Accounting Policies | |
Affiliates of Glaxo Group Limited the Company has economic interest | 1 |
Net Loss per Share (Details)
Net Loss per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 9,771,000 | 3,644,000 | 9,777,000 | 3,532,000 |
Share issuances under equity incentive plan and ESPP | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 3,069,000 | 3,603,000 | 3,075,000 | 3,491,000 |
Restricted shares | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 26,000 | 41,000 | 26,000 | 41,000 |
Share issuable upon the conversion of convertible senior notes | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 6,676,000 | 0 | 6,676,000 | 0 |
RSA | ||||
Anti-Dilutive Securities | ||||
Shares not included in the computation of diluted net loss per share (in shares) | 1,305,000 | 1,440,000 |
Collaborative Arrangements - Re
Collaborative Arrangements - Revenue from Collaborative Arrangements (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Collaborative Arrangements | |||||
Total revenue from collaborative arrangements | $ 135 | $ 15,174 | $ 207 | $ 30,385 | |
Mylan | |||||
Collaborative Arrangements | |||||
Total revenue from collaborative arrangements | 25 | 25 | 77 | 15,076 | |
R-Pharm | |||||
Collaborative Arrangements | |||||
Total revenue from collaborative arrangements | 109 | 9 | 126 | 35 | |
Takeda Pharmaceuticals | |||||
Collaborative Arrangements | |||||
Total revenue from collaborative arrangements | $ 15,000 | 0 | 15,075 | 0 | 15,075 |
Other | |||||
Collaborative Arrangements | |||||
Total revenue from collaborative arrangements | $ 1 | $ 65 | $ 4 | $ 199 |
Collaborative Arrangements - De
Collaborative Arrangements - Development and Commercialization Agreement (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Collaborative Arrangements | ||||
Revenue from collaborative arrangements | $ 135,000 | $ 15,174,000 | $ 207,000 | $ 30,385,000 |
Mylan | ||||
Collaborative Arrangements | ||||
Revenue from collaborative arrangements | 25,000 | 25,000 | 77,000 | 15,076,000 |
Amortization of previously deferred revenue | 25,000 | $ 25,000 | 77,000 | |
Potential milestone or contingent payments | 205,000,000 | 205,000,000 | ||
Mylan | Revefenacin Monotherapy (TD-4208) | ||||
Collaborative Arrangements | ||||
Potential milestone or contingent payments | 160,000,000 | 160,000,000 | ||
Mylan | Future Potential Combination Products | ||||
Collaborative Arrangements | ||||
Potential milestone or contingent payments | 45,000,000 | 45,000,000 | ||
Mylan | Milestone - 50% enrollment in Phase 3 twelve-month safety study | ||||
Collaborative Arrangements | ||||
Milestone payment | $ 15,100,000 | |||
Mylan | Commercialization | Revefenacin Monotherapy (TD-4208) | ||||
Collaborative Arrangements | ||||
Potential milestone or contingent payments | 150,000,000 | 150,000,000 | ||
Mylan | Regulatory actions | Revefenacin Monotherapy (TD-4208) | European Union | ||||
Collaborative Arrangements | ||||
Potential milestone or contingent payments | $ 10,000,000 | $ 10,000,000 |
Collaborative Arrangements - 25
Collaborative Arrangements - Development and Collaboration Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Collaborative Arrangements | |||||
Revenue from collaborative arrangements | $ 135 | $ 15,174 | $ 207 | $ 30,385 | |
Alfasigma | Alfasigma license option | |||||
Collaborative Arrangements | |||||
Potential milestone or contingent payments | 10,000 | 10,000 | |||
Alfasigma | Commercialization | |||||
Collaborative Arrangements | |||||
Potential milestone or contingent payments | 53,500 | $ 53,500 | |||
Alfasigma | Maximum | Commercialization | |||||
Collaborative Arrangements | |||||
Royalty rate, as a percentage of net sales | 20.00% | ||||
Takeda Pharmaceuticals | |||||
Collaborative Arrangements | |||||
Revenue from collaborative arrangements | $ 15,000 | $ 0 | $ 15,075 | $ 0 | $ 15,075 |
Takeda Pharmaceuticals | Success based development, regulatory and sales milestones | |||||
Collaborative Arrangements | |||||
Potential milestone or contingent payments | $ 110,000 |
Collaborative Arrangements - 26
Collaborative Arrangements - Reimbursement of R&D Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Research and Development Reimbursement | ||||
Total reduction to R&D expense | $ 5,839 | $ 21,262 | $ 17,737 | $ 82,315 |
Mylan | ||||
Research and Development Reimbursement | ||||
Total reduction to R&D expense | 5,839 | 18,638 | 17,696 | 75,782 |
Alfasigma | ||||
Research and Development Reimbursement | ||||
Total reduction to R&D expense | 0 | 2,607 | 0 | 6,393 |
Other | ||||
Research and Development Reimbursement | ||||
Total reduction to R&D expense | $ 0 | $ 17 | $ 41 | $ 140 |
Investments and Fair Value Me27
Investments and Fair Value Measurements - Available for sale securities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Unrealized losses | ||
Net unrealized losses | $ (300) | $ (300) |
Maturity period for marketable securities | ||
Maximum contractual maturity period | 2 years | |
Weighted average contractual maturity period | 9 months | |
Fair value transfers | ||
Fair value of assets transferred from Level 1 to Level 2 | $ 0 | |
Fair value of assets transferred from Level 2 to Level 1 | 0 | |
Fair value of liabilities transferred from Level 1 to Level 2 | 0 | |
Fair value of liabilities transferred from Level 2 to Level 1 | 0 | |
Estimated Fair Value | ||
Available for sale securities: | ||
Marketable securities | 346,093 | 247,952 |
Total Available for sale securities | 409,245 | 571,554 |
Level 1 | Estimated Fair Value | ||
Available for sale securities: | ||
Money market funds | 63,152 | 323,602 |
U.S. government securities | Level 1 | Estimated Fair Value | ||
Available for sale securities: | ||
Marketable securities | 103,774 | 69,955 |
U.S. government agency securities | Level 2 | Estimated Fair Value | ||
Available for sale securities: | ||
Marketable securities | 52,458 | 60,747 |
Corporate notes | Level 2 | Estimated Fair Value | ||
Available for sale securities: | ||
Marketable securities | 162,053 | 98,313 |
Commercial paper | Level 2 | Estimated Fair Value | ||
Available for sale securities: | ||
Marketable securities | $ 27,808 | $ 18,937 |
Investments and Fair Value Me28
Investments and Fair Value Measurements - Convertible senior notes (Details) - Convertible senior notes due 2023 $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Convertible senior notes | |
Proceeds from issuance of debt | $ 230 |
Interest rate (as a percent) | 3.25% |
Level 2 | Estimated Fair Value | |
Convertible senior notes | |
Notes fair value | $ 280.9 |
Investments and Fair Value Me29
Investments and Fair Value Measurements - TREKtx and Other Than Temporary Impairment (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Non-Marketable Equity Securities and Other-Than-Temporary Impairment | |||||
Other-than-temporary impairment loss | $ 8,000 | $ 0 | $ 8,000 | $ 0 | |
TREKtx | |||||
Non-Marketable Equity Securities and Other-Than-Temporary Impairment | |||||
Upfront payment, value of Series A Preferred stock | $ 8,000 | ||||
Other-than-temporary impairment loss | $ 8,000 | $ 8,000 | |||
Significant Unobservable Inputs, Level 3 | TREKtx | |||||
Non-Marketable Equity Securities and Other-Than-Temporary Impairment | |||||
Consideration received, fair value | $ 8,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventories | ||
Raw materials | $ 9,948 | $ 6,067 |
Work-in-process | 756 | 2,627 |
Finished goods | 4,554 | 3,526 |
Total inventories | $ 15,258 | $ 12,220 |
Share-Based Compensation - Expe
Share-Based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-Based Compensation | ||||
Share-based compensation expense | $ 10,685 | $ 9,895 | $ 31,352 | $ 31,129 |
Research and development | ||||
Share-Based Compensation | ||||
Share-based compensation expense | 5,005 | 4,933 | 15,023 | 15,052 |
Selling, general and administrative | ||||
Share-Based Compensation | ||||
Share-based compensation expense | $ 5,680 | $ 4,962 | $ 16,329 | $ 16,077 |
Share-Based Compensation - Perf
Share-Based Compensation - Performance-Contingent Awards (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017USD ($)shares | Sep. 30, 2016USD ($)shares | Mar. 31, 2016shares | Sep. 30, 2017USD ($)trancheshares | Sep. 30, 2016USD ($)shares | |
Share-Based Compensation | |||||
Number of tranches | tranche | 3 | ||||
Share-based compensation expense | $ 10,685,000 | $ 9,895,000 | $ 31,352,000 | $ 31,129,000 | |
First tranche | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 500,000 | 1,400,000 | |||
Second tranche | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 0 | ||||
Third tranche | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 0 | ||||
Research and development | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 5,005,000 | 4,933,000 | 15,023,000 | 15,052,000 | |
Selling, general and administrative | |||||
Share-Based Compensation | |||||
Share-based compensation expense | $ 5,680,000 | $ 4,962,000 | 16,329,000 | $ 16,077,000 | |
Maximum potential expense | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 35,500,000 | ||||
Maximum potential expense | Research and development | |||||
Share-Based Compensation | |||||
Share-based compensation expense | 13,300,000 | ||||
Maximum potential expense | Selling, general and administrative | |||||
Share-Based Compensation | |||||
Share-based compensation expense | $ 22,200,000 | ||||
RSA | |||||
Share-Based Compensation | |||||
Awards approved for grant (in shares) | shares | 1,575,000 | ||||
Vesting period | 5 years | ||||
Awards outstanding (in shares) | shares | 1,305,000 | 1,440,000 | 1,305,000 | 1,440,000 | |
RSU | |||||
Share-Based Compensation | |||||
Awards approved for grant (in shares) | shares | 50,000 | 135,000 | 50,000 | ||
Vesting period | 5 years | ||||
Awards outstanding (in shares) | shares | 135,000 | 135,000 | 135,000 | 135,000 | |
Share-based compensation expense | $ 0 | $ 0 | |||
RSU | Minimum | |||||
Share-Based Compensation | |||||
Vesting of RSU (as a percent) | 70.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Taxes | ||||
Provision for income taxes | $ 868 | $ 812 | $ 6,705 | $ 1,542 |
Provision for income taxes on undistributed earnings of foreign subsidiaries | $ 0 | $ 0 |
Operating Leases (Details)
Operating Leases (Details) | 1 Months Ended | 9 Months Ended |
Apr. 30, 2017USD ($)ft² | Sep. 30, 2017USD ($)ft²buildingitem | |
Future minimum lease payments | ||
Three months ending December 31,2017 | $ 1,657,000 | |
2,018 | 6,763,000 | |
2,019 | 6,952,000 | |
2,020 | 3,216,000 | |
2,021 | 458,000 | |
Thereafter | 2,413,000 | |
Total | $ 21,459,000 | |
South San Francisco, California | ||
Operating Leases | ||
Square feet of office and laboratory space | ft² | 150,000 | |
Number of buildings | building | 2 | |
Number of rights to extend lease period | item | 2 | |
Additional lease period | 5 years | |
Dublin, Ireland | ||
Operating Leases | ||
Square feet of office and laboratory space | ft² | 6,100 | |
Lease period | 10 years | |
Initial base rent | $ 443,000 |