Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 08, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Egalet Corp | |
Entity Central Index Key | 1,586,105 | |
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 | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 43,029,615 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 37,750 | $ 44,355 |
Marketable securities, available for sale | 64,308 | 42,471 |
Accounts receivable | 5,607 | 1,108 |
Inventory | 1,835 | 1,700 |
Prepaid expenses and other current assets | 1,399 | 2,537 |
Other receivables | 1,153 | 1,001 |
Total current assets | 112,052 | 93,172 |
Intangible assets, net | 7,076 | 8,350 |
Restricted cash | 400 | |
Property and equipment, net | 10,607 | 12,709 |
Deposits and other assets | 1,052 | 627 |
Total assets | 131,187 | 114,858 |
Current liabilities: | ||
Accounts payable | 5,626 | 2,392 |
Accrued expenses | 17,972 | 18,147 |
Deferred revenue | 8,759 | 3,975 |
Debt - current | 547 | 381 |
Warrant liability | 8,166 | |
Total current liabilities | 41,070 | 24,895 |
Debt - non-current portion, net | 126,161 | 83,711 |
Deferred income tax liability | 25 | 23 |
Derivative liability | 12 | |
Other liabilities | 770 | 891 |
Total liabilities | 168,026 | 109,532 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity (deficit) | ||
Common stock--$0.001 par value; 75,000,000 shares authorized at December 31, 2016 and September 30, 2017; 25,189,125 and 43,029,615 shares issued and outstanding at December 31, 2016 and September 30, 2017, respectively | 43 | 25 |
Additional paid-in capital | 258,989 | 230,379 |
Accumulated other comprehensive income | 868 | 100 |
Accumulated deficit | (296,739) | (225,178) |
Total stockholders' equity (deficit) | (36,839) | 5,326 |
Total liabilities and stockholders' equity (deficit) | $ 131,187 | $ 114,858 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 75,000,000 | 75,000,000 |
Common stock, issued | 43,029,615 | 25,189,125 |
Common stock, outstanding | 43,029,615 | 25,189,125 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | ||||
Net product sales | $ 6,651 | $ 4,711 | $ 18,333 | $ 10,724 |
Collaboration revenues | 100 | |||
Total revenue | 6,651 | 4,711 | 18,333 | 10,824 |
Cost and Expenses | ||||
Cost of sales (excluding amortization of product rights) | 1,249 | 914 | 3,646 | 2,580 |
Amortization of product rights | 528 | 502 | 1,554 | 1,506 |
General and administrative | 6,849 | 7,950 | 27,811 | 22,802 |
Sales and marketing | 8,803 | 6,973 | 27,402 | 19,455 |
Research and development | 2,073 | 12,070 | 13,187 | 26,886 |
Restructuring charges | 2,983 | 2,983 | ||
Total costs and expenses | 22,485 | 28,409 | 76,583 | 73,229 |
Loss from operations | (15,834) | (23,698) | (58,250) | (62,405) |
Other (income) expense: | ||||
Change in fair value of warrant and derivative liability | (1,500) | 11 | (1,513) | (642) |
Interest expense, net | 4,675 | 3,601 | 13,958 | 8,225 |
Other (gain) loss | (60) | (12) | 106 | 54 |
Gain on foreign currency exchange | (1) | (3) | (1) | |
Total other (income) expense | 3,114 | 3,597 | 12,550 | 7,637 |
Loss before provision (benefit) for income taxes | (18,948) | (27,295) | (70,800) | (70,042) |
Provision (benefit) for income taxes | 0 | (358) | 0 | (780) |
Net loss | $ (18,948) | $ (26,937) | $ (70,800) | $ (69,262) |
Per share information: | ||||
Net loss per share of common stock, basic and diluted (in dollars per share) | $ (0.46) | $ (1.10) | $ (2.32) | $ (2.83) |
Weighted-average shares outstanding, basic and diluted (in shares) | 41,149,838 | 24,565,554 | 30,525,158 | 24,480,494 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (18,948) | $ (26,937) | $ (70,800) | $ (69,262) |
Other comprehensive income (loss): | ||||
Unrealized (loss) gain on available for sale securities | 19 | (15) | (18) | 150 |
Foreign currency translation adjustments | 166 | 123 | 786 | 494 |
Comprehensive loss | $ (18,763) | $ (26,829) | $ (70,032) | $ (68,618) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Operating activities: | ||
Net loss | $ (70,800) | $ (69,262) |
Adjustment to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 3,818 | 2,747 |
Change in fair value of warrant and derivative liability | (1,513) | (642) |
Stock-based compensation expense | 5,056 | 4,677 |
Noncash interest and amortization of debt discount | 4,589 | 4,019 |
Amortization of premium on marketable securities | 45 | 549 |
Deferred income taxes | (780) | |
Loss on extinguishment of debt | 800 | |
Changes in assets and liabilities: | ||
Related party receivable | 59 | |
Accounts receivable | (4,499) | (3,595) |
Inventory | (135) | 350 |
Prepaid expenses and other current assets | 1,140 | (572) |
Other receivables | (50) | (208) |
Deposits and other assets | (417) | 2,176 |
Accounts payable | 3,233 | 373 |
Accrued expenses | (280) | 6,304 |
Deferred revenue | 4,778 | (5,220) |
Other current liabilities | 1 | 311 |
Other liabilities | (134) | 836 |
Net cash used in operating activities | (55,168) | (57,078) |
Investing activities: | ||
Payments for purchase of property and equipment | (90) | (9,074) |
Increase in restricted cash | (400) | |
Purchases of investments | (93,391) | (45,522) |
Sales of investments | 12,195 | 8,570 |
Maturity of investments | 59,297 | 81,002 |
Net cash (used in) provided by investing activities | (22,389) | 34,976 |
Financing activities: | ||
Net proceeds from issuance of common stock and warrants | 32,504 | 274 |
Payments on borrowings | (15,856) | |
Net proceeds from debt and royalty rights | 38,304 | 37,231 |
Royalty payments in connection with the 13% Notes | (307) | |
Net cash provided by financing activities | 70,501 | 21,649 |
Effect of foreign currency translation on cash and cash equivalents | 451 | 410 |
Net decrease in cash and cash equivalents | (6,605) | (43) |
Cash at beginning of period | 44,355 | 46,665 |
Cash at end of period | 37,750 | 46,622 |
Supplemental disclosures of cash flow information: | ||
Fair value of warrants issued in connection with common stock | 9,667 | |
Cash interest payments | $ 10,662 | $ 3,564 |
13% Notes | ||
Financing activities: | ||
Interest rate (as a percent) | 13.00% |
Organization and Description of
Organization and Description of the Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Description of the Business | |
Organization and Description of the Business | 1. Organization and Description of the Business Organization and Business Overview Egalet Corporation (the “Company”) is a fully integrated specialty pharmaceutical company manufacturing and commercializing innovative treatments for pain and other conditions. Given the need for acute and chronic pain products and the issue of prescription abuse, the Company is focused on bringing non-narcotic and abuse-deterrent (“AD”) formulations to patients and healthcare providers. The Company is currently marketing ARYMO ® ER (morphine sulfate) extended-release (“ER”) tablets, for oral use CII (“ARYMO ER”), SPRIX ® (ketorolac tromethamine) Nasal Spray (“SPRIX Nasal Spray”), and OXAYDO ® (oxycodone HCI, USP) tablets for oral use only—CII (“OXAYDO”). ARYMO ER is an ER morphine product formulated with AD properties and approved for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment and for which alternative treatment options are inadequate. ARYMO ER is the Company’s first product developed using its proprietary Guardian™ Technology. SPRIX Nasal Spray is a nonsteroidal anti-inflammatory drug indicated in adult patients for the short‑term (up to five days) management of moderate to moderately severe pain that requires analgesia at the opioid level. OXAYDO is an immediate release (“IR”) oxycodone product designed to discourage abuse via snorting, indicated for the management of acute and chronic pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate. The Company also has a pipeline of products developed using Guardian Technology that it may look to partner out. The Company plans to continue to grow through the revenues of its three commercial products, business development opportunities and leveraging its proprietary Guardian Technology. Liquidity The Company has incurred recurring operating losses since inception. As of September 30, 2017, the Company had an accumulated deficit of $296.7 million and will require substantial additional capital to fund its commercialization strategies for ARYMO ER, SPRIX Nasal Spray and OXAYDO. The Company reasonably expects that its cash and cash equivalents and marketable securities at September 30, 2017 and its corporate restructuring initiative announced in August 2017 will enable it to fund future cash requirements for at least the next 12 months from the date of the issuance of these unaudited consolidated financial statements. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to its commercial organization. As the Company continues to incur losses, a transition to profitability is dependent upon the successful commercialization of its approved products and the achievement of a level of revenue adequate to support the Company’s cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital. Management intends to fund future operations through the sale of equity, debt financings or other sources, including potential additional collaborations, until profitability is achieved, if ever. There can be no assurance, however, that additional funding will be available on terms acceptable to the Company, or at all. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Basis of Accounting | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies and Basis of Accounting | |
Summary of Significant Accounting Policies and Basis of Accounting | 2. Summary of Significant Accounting Policies and Basis of Accounting Basis of Presentation The unaudited consolidated financial statements are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and footnotes normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q. The Company’s consolidation policy requires the consolidation of entities where a controlling financial interest is held. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial information at September 30, 2017 and the three and nine months ended September 30, 2016 and 2017 is unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of September 30, 2017, the consolidated results of its operations and comprehensive loss for the three and nine months ended September 30, 2016 and 2017, and consolidated cash flows for the nine months ended September 30, 2016 and 2017. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2016 and 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017, any other interim periods or any future year or period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 filed on March 13, 2017 with the SEC. The Company’s significant accounting policies are described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting , which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 became effective for the Company in the first quarter of 2017 and was applied using a modified retrospective transition approach. Under ASU 2016-09, the Company has elected to no longer estimate forfeiture rates as part of its stock-based compensation expense and will true up forfeitures as they occur. As a result of the adoption of ASU 2016-09, the Company recorded a cumulative adjustment of $763,000, which increased its accumulated deficit as of January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that the standard will have on the financial statements, and has not yet determined what effect, if any, the impact of adoption will be. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities , which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on the financial statements, and has not yet determined what effect, if any, the impact of adoption will be. In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the balance sheet classification of deferred taxes and requires that all deferred taxes be presented as noncurrent. ASU 2015-17 was effective for fiscal years beginning after December 15, 2016 and early adoption was permitted. The adoption of the update did not have a material effect on the Company’s financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern . ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued, and to make certain disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 was effective for the Company for annual reporting periods beginning in 2016 and for interim reporting periods starting in the first quarter of 2017. The adoption of this update did not have a material effect on the Company’s financial statements. In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires an entity to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require an entity to use more judgment and make more estimates than under the current guidance. The new guidance becomes effective in calendar year 2018 and early adoption in calendar year 2017 is permitted. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. In March 2016, April 2016 and December 2016, the FASB issued ASU No. 2016-08, Revenue From Contracts with Customers : Principal Versus Agent Considerations , ASU No. 2016-10, Revenue From Contracts with Customers : Identifying Performance Obligations and Licensing , and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers , respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU 2016-12 Revenue from Contracts with Customers , narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition (collectively “ASC 606”). These standards will be effective for the Company beginning in the first quarter of 2018. Early adoption is permitted. The Company has formed a task force that is in the process of analyzing the Company’s customer contracts and the potential impacts the standard may have on previously reported revenues and future revenues. Under ASC 606, the Company expects to recognize net product sales at the time it ships its products to its customers (primarily wholesalers and specialty pharmacies), rather than the current policy of recognizing net product sales when prescriptions are dispensed to patients. As a result, the Company expects to recognize the majority of net product sales under such contracts earlier under ASC 606 than it would have recognized under current guidance. However, the Company is still evaluating the materiality of the impact on the consolidated financial statements and related disclosures. The Company plans to adopt the new standard effective January 1, 2018 using the modified retrospective approach. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments | |
Investments | 3. Investments Marketable Securities Marketable securities consisted of the following at December 31, 2016: (in thousands) Cost Basis Unrealized Gains Unrealized Losses Fair Value Corporate notes and bonds $ 42,481 $ 4 $ (14) $ 42,471 Total $ 42,481 $ 4 $ (14) $ 42,471 Marketable securities consisted of the following as of September 30, 2017: (in thousands) Cost Basis Unrealized Gains Unrealized Losses Fair Value Corporate notes and bonds $ 64,336 $ — $ (28) $ 64,308 Total $ 64,336 $ — $ (28) $ 64,308 The fair value of marketable securities as of September 30, 2017 with a maturity of less than one year is $64.3 million. There were no marketable securities with a maturity of greater than one year as of September 30, 2017. At September 30, 2017, the Company held 10 marketable securities that were in a continuous loss position for less than one year. The unrealized losses are immaterial in amount and are the result of current economic and market conditions and the Company has determined that no other than temporary impairment exists at September 30, 2017. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory | |
Inventory | 4. Inventory Inventory is stated at the lower of cost or market using actual cost net of reserve for excess and obsolete inventory. The following represents the components of inventory at December 31, 2016 and September 30, 2017: December 31, September 30, (in thousands) 2016 2017 Raw materials $ 779 $ 1,112 Finished goods 820 516 Deferred cost of sales 101 207 Total $ 1,700 $ 1,835 The deferred costs of sales will be recognized upon release of the product to patients. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets | |
Intangible Assets | 5. Intangible Assets The following represents the balance of the intangible assets at December 31, 2016: Gross Net Remaining Useful Intangible Accumulated Intangible Life (in thousands) Assets Amortization Assets (in years) OXAYDO product rights $ 7,520 $ (2,124) $ 5,396 5.00 SPRIX Nasal Spray product rights 4,620 (1,827) 2,793 3.00 IP R&D 161 — 161 Indefinite Total $ 12,301 $ (3,951) $ 8,350 The following represents the balance of the intangible assets at September 30, 2017: Gross Net Remaining Useful Intangible Accumulated Intangible Life (in thousands) Assets Amortization Assets (in years) OXAYDO product rights $ 7,671 $ (2,988) $ 4,683 4.25 SPRIX Nasal Spray product rights 4,928 (2,688) 2,240 2.25 IP R&D 180 (27) 153 4.25 Total $ 12,779 $ (5,703) $ 7,076 There was no impairment to intangible assets in the three and nine months ended September 30, 2016 and 2017. Collaboration and License Agreement with Acura Pharmaceuticals, Inc. (“Acura”) In January 2015, the Company entered into a Collaboration and License Agreement with Acura to commercialize OXAYDO™ (oxycodone hydrochloride) tablets containing Acura’s Aversion® Technology (the “OXAYDO License Agreement”). The Company paid Acura an upfront payment of $5.0 million in January 2015 and a $2.5 million milestone payment in October 2015 as a result of the first commercial sale of OXAYDO. The Company also incurred transaction costs of $172,000 associated with the OXAYDO License Agreement. Refer to Note 12 — Acquisitions and License and Collaboration Agreements for additional details. During the three and nine months ended September 30, 2016, the Company recognized amortization expense of $271,000, and $813,000, respectively, related to the OXAYDO product rights intangible asset. During the three and nine months ended September 30, 2017, the Company recognized amortization expense of $274,000, and $813,000, respectively, related to the OXAYDO product rights intangible asset. Purchase Agreement with Luitpold Pharmaceuticals, Inc. (“Luitpold”) In January 2015, the Company entered into and consummated the transactions contemplated by the Purchase Agreement with Luitpold to purchase SPRIX Nasal Spray (the “SPRIX Purchase Agreement”). Pursuant to the SPRIX Purchase Agreement, the Company acquired specified assets and liabilities associated with SPRIX (ketorolac tromethamine) Nasal Spray for a purchase price of $7.0 million. The Company recorded an intangible asset of $4.6 million related to this transaction. Refer to Note 12 — Acquisitions and License and Collaboration Agreements for additional details. During the three and nine months ended September 30, 2016, the Company recognized amortization expense of $231,000 and $693,000, respectively, related to the SPRIX Nasal Spray product rights intangible asset. During the three and nine months ended September 30, 2017, the Company recognized amortization expense of $246,000 and $714,000, respectively, related to the SPRIX Nasal Spray product rights intangible asset. In-Process Research and Development (“IP R&D”) In connection with the acquisition of Egalet A/S, the Company recognized an IP R&D asset related to the drug delivery platform specifically designed to help deter physical abuse of pain medications, the Guardian Technology. Through December 31, 2016, the IP R&D was considered an indefinite-lived intangible asset and was assessed for impairment annually or more frequently if impairment indicators existed. Following the approval of ARYMO ER in January 2017, the Company began to amortize the intangible asset over a useful life of 5 years. During the three and nine months ended September 30, 2017, the Company recognized amortization expense of $9,000 and $26,000, respectively, related to the IP R&D intangible asset. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long Term Debt | |
Long Term Debt | 6. Long-Term Debt Hercules Loan and Security Agreement In January 2015, the Company entered into the Loan and Security Agreement, which was subsequently amended in December 2015 (as amended, the “Loan Agreement”), with Hercules Technology Growth Capital, Inc. (now known as Hercules Capital, Inc.) (“Hercules”) and certain other lenders, pursuant to which the Company borrowed $15.0 million under a term loan. The term loan bore an interest rate per annum equal to the greater of either (i) 9.40% plus the prime rate as reported in The Wall Street Journal minus 3.25% or (ii) 9.40%. Under the Loan Agreement, the Company made interest only payments through July 1, 2016, and was scheduled to repay the principal balance of the loan in 30 equal monthly payments of principal and interest through the scheduled maturity date of July 1, 2018. In connection with the Loan Agreement, the Company granted a security interest in substantially all of its assets, excluding intellectual property and certain new drug applications and related approvals, as collateral for the obligations under the Loan Agreement. On August 31, 2016, the Company repaid all outstanding obligations under the Loan Agreement with the proceeds of the 13% Notes (as defined below). 5.50% Convertible Senior Notes Due 2020 (the “5.50% Notes”) In April and May 2015, the Company issued through a private placement $61.0 million in aggregate principal amount of the 5.50% Notes. Interest on the 5.50% Notes is payable semi-annually in arrears on April 1 and October 1 of each year and commenced on October 1, 2015. The 5.50% Notes are general, unsecured and unsubordinated obligations and rank senior in right of payment to all of the Company’s indebtedness that is expressly subordinated in right of payment to the 5.50% Notes. The 5.50% Notes rank equal in right of payment to the Company’s existing and future indebtedness and other liabilities that are not so subordinated. The 5.50% Notes are effectively subordinated to any of the Company’s future secured indebtedness to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all indebtedness and other liabilities incurred by the Company’s subsidiaries, including trade payables. The 5.50% Notes rank equal in right of the payment to the 13% Notes (as defined below). The Company may not redeem the 5.50% Notes prior to maturity. The 5.50% Notes are convertible prior to maturity, subject to certain conditions described below, into shares of the Company’s common stock, par value $0.001 per share (“Common Stock”) at an initial conversion rate of 67.2518 shares per $1,000 principal amount of the 5.50% Notes (equivalent to an initial conversion price of approximately $14.87 per share of Common Stock). This conversion rate is subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. The Company will satisfy the conversion obligation by paying or delivering, as the case may be, cash, shares of the Company’s Common Stock or a combination thereof, at the Company’s election. Holders may convert all or any portion of their 5.50% Notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on the business day immediately preceding January 1, 2020 only under the following circumstances: · on or after the date that is six months after the last date of original issuance of the 5.50% Notes, if the last reported sale price of the Company’s Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending within the five trading days immediately preceding a conversion date is greater than or equal to the conversion price for the 5.50% Notes on each applicable trading day; · during the five business day period after any five consecutive trading day period, (the “measurement period”), in which the trading price per $1,000 principal amount of 5.50% Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s Common Stock and the conversion rate on each such trading day; or · upon the occurrence of specified corporate events. On or after January 1, 2020 until the close of business on the second scheduled trading day immediately preceding the maturity date (April 1, 2020), holders may convert all or any portion of their 5.50% Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s Common Stock or a combination of cash and shares of the Company’s Common Stock, at the Company’s election, and an interest make-whole payment in shares of the common stock, if applicable. If the Company satisfies the conversion obligation solely in cash or through payment and delivery, as the case may be, of a combination of cash and shares of the Company’s Common Stock, the amount of cash and shares of Common Stock, if any, due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 50 trading day observation period. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its 5.50% Notes in connection with such a corporate event in certain circumstances. Holders will not receive any additional cash payment or additional shares representing accrued and unpaid interest, if any, upon conversion of a note, except in limited circumstances. Instead, interest will be deemed to be paid in full, rather than cancelled, extinguished or forfeited from the consideration paid to the holders upon conversion of a 5.50% Note. On or after the date that is six months after the last date of original issuance of the 5.50% Notes, if the last reported sale price of the Company’s Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending within the five trading days immediately preceding a conversion date is greater than or equal to the conversion price for the 5.50% Notes on each applicable trading day, the Company will, in addition to the other consideration payable or deliverable in connection with such conversion, make an interest make-whole payment to the converting holder equal to the sum of the present value of the remaining scheduled payments of interest that would have been made on the 5.50% Notes to be converted had such notes remained outstanding from the conversion date through April 1, 2018, computed using a discount rate equal to 2%. The Company will pay any interest make-whole payment by delivering shares of the Company’s Common Stock valued at 95% of the simple average of the daily volume weighted average price for the 10 trading days ending on and including the trading day immediately preceding the conversion date. Notwithstanding the foregoing, the number of shares the Company may deliver in connection with a conversion of the 5.50% Notes, including those delivered in connection with an interest make-whole payment, will not exceed 77.3395 shares of Common Stock per $1,000 principal amount of 5.50% Notes, subject to adjustment. The Company will not be required to make any cash payments in lieu of any fractional shares or have any further obligation to deliver any shares of Common Stock or pay any cash in excess of the threshold described above. In addition, if in connection with any conversion the conversion rate is adjusted, then such holder will not receive the interest make-whole payment with respect to such 5.50% Note. The Company accounts for convertible debt instruments by recording the liability and equity components of the convertible debt separately. The liability is computed based on the fair value of a similar debt instrument that does not include the conversion option. The liability component includes both the value of the embedded interest make-whole derivative and the carrying value of the 5.50% Notes. The equity component is computed based on the total debt proceeds less the fair value of the liability component. The equity component is also recorded as debt discount and amortized as interest expense over the expected term of the 5.50% Notes, using the effective interest method. The liability component of the 5.50% Notes on the date of issuance was computed as $41.6 million, including the value of the embedded interest make-whole derivative of $0.9 million and the carrying value of the 5.50% Notes of $40.6 million. Accordingly, the equity component on the date of issuance was $19.4 million. The discount on the 5.50% Notes is being amortized to interest expense over the term of the 5.50% Notes, using the effective interest method. The conversion criteria for the 5.50% Notes have not been met at September 30, 2017. Should the 5.50% Notes become convertible, management will determine whether the intent is to settle in cash, which would result in the liability component of the 5.50% notes being classified as a current liability and the equity component being presented as redeemable equity if the liability is considered current. Transaction costs of $4.1 million related to the issuance of the 5.50% Notes are allocated to the liability and equity components in proportion to the allocation of the proceeds and accounted for as debt discount and equity issuance costs, respectively. Approximately $1.3 million of this amount was allocated to equity and the remaining $2.8 million was recorded as debt discount. The following table summarizes how the issuance of the 5.50% Notes is reflected in the Company’s balance sheet at December 31, 2016 and September 30, 2017: December 31, 2016 September 30, 2017 (in thousands) Gross proceeds $ 61,000 $ 61,000 Unamortized debt discount (15,091) (11,608) Carrying value $ 45,909 $ 49,392 In September 2016, in connection with the issuance of the 13% Notes (as defined below), the Company and its subsidiaries entered into Supplemental Indentures with the trustee for the 5.50% Notes pursuant to which the Company’s subsidiaries became guarantors under the indenture guaranteeing the 5.50% Notes. 13% Senior Secured Notes (the “13% Notes”) In August 2016, the Company completed the initial closing (the “Initial Closing”) of its offering (the “Offering”) of up to $80.0 million aggregate principal amount of its 13% Notes and entered into an indenture (the “Indenture”) governing the 13% Notes with the guarantors party thereto (the “Guarantors”) and U.S. Bank National Association, a national banking association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”). The Company issued $40.0 million aggregate principal amount of the 13% Notes at the Initial Closing, and issued an additional $40.0 million aggregate principal amount upon the FDA’s approval of ARYMO™ ER in January 2017 (the “Second Closing”). Net proceeds from the Initial Closing and Second Closing were $37.2 million and $38.3 million, respectively, after deducting the estimated Offering expenses payable by the Company in connection with the Initial Closing and Second Closing. The 13% Notes were sold only to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended. The Company has used and will use the net proceeds from the 13% Notes and the Royalty Rights (as defined below) to repay all outstanding obligations to Hercules under the Loan Agreement with Hercules, to support the commercialization of ARYMO ER, to support the development of Egalet-002 and for general corporate purposes. Prior to the Second Closing, interest on the 13% Notes accrued at a rate of 13% per annum and was payable semi-annually in arrears on March 20 and September 20 of each year (each, a “Payment Date”) commencing on March 20, 2017. On each Payment Date commencing on March 20, 2018, the Company was required to also pay an installment of principal of the 13% Notes pursuant to a straight-line fixed amortization schedule. Following the Second Closing in January 2017, in lieu of the straight-line fixed amortization schedule, on each Payment Date commencing on March 20, 2018, the Company will pay an installment of principal on the 13% Notes in an amount equal to 15% (or 17% if certain sales targets are not met) of the aggregate net sales of OXAYDO, SPRIX Nasal Spray, ARYMO ER and, if approved, Egalet-002 for the two consecutive fiscal quarterly period most recently ended, less the amount of interest payable on the 13% Notes on such Payment Date. The 13% Notes are senior secured obligations of the Company and will be equal in right of payment to all existing and future pari passu indebtedness of the Company (including the Company’s outstanding 5.50% Notes due 2020), will be senior in right of payment to all existing and future subordinated indebtedness of the Company, will have the benefit of a security interest in the 13% Notes collateral and will be junior in lien priority in respect of any collateral that secures any first priority lien obligations incurred, which includes intellectual property (“IP”), from time to time in accordance with the Indenture. Following the Second Closing, the stated maturity date of the 13% Notes became September 30, 2033. Upon the occurrence of a Change of Control, subject to certain conditions, or certain Asset Sales events (each, as defined in the Indenture), holders of the 13% Notes may require the Company to repurchase for cash all or part of their 13% Notes at a repurchase price equal to 101.00% of the principal amount of the 13% Notes to be repurchased, plus accrued and unpaid interest to the date of repurchase. The Company may redeem the 13% Notes at its option, in whole or in part from time to time, prior to August 31, 2018, at a redemption price equal to 100.00% of the principal amount of the 13% Notes being redeemed, plus accrued and unpaid interest, if any, through the redemption date, plus a make-whole premium computed using a discount rate equal to the treasury rate in respect of such redemption date plus 100 basis points. The Company may redeem the 13% Notes at its option, in whole or in part from time to time, on or after August 31, 2018 at a redemption price equal to: (i) from and including August 31, 2018 to and including August 30, 2019, 109.00% of the principal amount of the 13% Notes to be redeemed, (ii) from and including August 31, 2019 to and including August 30, 2020, 104.50% of the principal amount of the 13% Notes to be redeemed, and (iii) from and including August 31, 2020 and thereafter, 100.00% of the principal amount of the 13% Notes to be redeemed, in each case, plus accrued and unpaid interest to the redemption date. In addition, prior to August 31, 2018, the Company may redeem, at its option, up to 35% of the aggregate principal amount of the 13% Notes with the proceeds of one or more public or private equity offerings at a redemption price equal to 113.50% of the aggregate principal amount of the 13% Notes to be redeemed, plus accrued and unpaid interest to the date of redemption in accordance with the Indenture; provided that at least 65% of the aggregate principal amount of 13% Notes issued under the Indenture remains outstanding immediately after each such redemption and provided further that each such redemption occurs within 90 days of the date of closing of each such equity offering. No sinking fund is provided for the 13% Notes, which means that the Company is not required to periodically redeem or retire the 13% Notes. The obligations of the Company under the Indenture and the 13% Notes are unconditionally guaranteed on a secured basis by the Guarantors. Under the terms of the Indenture, the Company may designate entities within its corporate structure as unrestricted subsidiaries, which entities will therefore not be guarantors provided that certain conditions set forth in the Indenture are met. Pursuant to the Indenture, the Company and its restricted subsidiaries must also comply with certain affirmative covenants, such as furnishing financial statements to the holders of the 13% Notes, and negative covenants, including limitations on the following: the incurrence of debt; the issuance of preferred and/or disqualified stock; the payment of dividends, the repurchase of shares and under certain conditions making certain other restricted payments; the prepayment, redemption or repurchase of subordinated debt; the merger, amalgamation or consolidation involving the Company; engaging in certain transactions with affiliates; and the making of investments other than those permitted by the Indenture. The Indenture governing the 13% Notes contains customary events of default with respect to the 13% Notes (including the Company’s failure to make any payment of principal or interest on the 13% Notes when due and payable), and upon certain events of default occurring and continuing, the Trustee by notice to the Company, or the holders of at least 25% in principal amount of the outstanding 13% Notes by notice to the Company and the Trustee, may (subject to the provisions of the Indenture) declare 100% of the principal of and accrued and unpaid interest, if any, on all of the 13% Notes to be due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, as well as the then-applicable optional redemption premium under the Indenture, will be due and payable immediately. In the case of certain events of bankruptcy, insolvency or reorganization involving the Company or a Restricted Subsidiary (as defined in the Indenture), the 13% Notes will automatically become due and payable. In connection with the Initial Offering in August 2016, the Company entered into royalty rights agreements with each of the 13% Notes Purchasers pursuant to which the Company sold to such Purchasers the right to receive, in the aggregate, a payment equal to 1.5% of the aggregate net sales of OXAYDO and SPRIX Nasal Spray from the Initial Closing through December 31, 2019, inclusive (the “Royalty Rights”). Following the approval of ARYMO ER in January 2017, the Royalty Rights will continue through December 31, 2020 and include royalties of ARYMO ER as described below. The Company also entered into separate royalty rights agreements with each of the Purchasers pursuant to which the Company sold to such Purchasers the right to receive 1.5% of the aggregate net sales of ARYMO ER payable from the date of first sale of ARYMO ER through December 31, 2020, inclusive. The royalty rights agreements also include other terms and conditions customary in agreements of this type. The Royalty Rights were determined to be a freestanding element with respect to the 13% Notes and the Company is accounting for the Royalty Rights obligation relating to future royalties as a debt instrument. The Company has Royalty Rights obligations of $4.7 million as of September 30, 2017, which are classified within current and non-current debt in the consolidated balance sheet. The Company incurred fees and legal expenses of $4.5 million in connection with the issuance of the 13% Notes, which have been recorded as a discount on the debt in the consolidated balance sheets and are amortized using the effective interest method. The Company calculated an effective interest rate of 15.2% as of September 30, 2017 based on its best estimate of future cash outflows. The accounting for the 13% Notes requires the Company to make certain estimates and assumptions about the future net sales of OXAYDO, SPRIX Nasal Spray and ARYMO ER in the U.S. The estimates of the magnitude and timing of OXAYDO, SPRIX Nasal Spray and ARYMO ER net sales are subject to significant variability due to the recent product launch and the extended time period associated with the financing transaction, and are thus subject to significant uncertainty. Therefore, these estimates and assumptions are likely to change as the Company continues to gain experience marketing OXAYDO, SPRIX Nasal Spray and ARYMO ER, which may result in future adjustments to the portion of the debt that is classified as a current liability, the amortization of debt issuance costs and discount as well as the accretion of the interest expense. Any such adjustments could be material. The fair value of the Royalty Rights associated with certain net product sales was estimated to be $4.9 million at the issuance of the 13% Notes using a probability-weighted present value analysis. The following table summarizes how the issuance of the 13% Notes is reflected in the Company’s consolidated balance sheets at December 31, 2016 and September 30, 2017: December 31, 2016 September 30, 2017 (in thousands) Gross proceeds $ 40,000 $ 80,000 Unamortized debt discount (5,187) (7,400) Carrying value $ 34,813 $ 72,600 Current and non-current debt on the Company’s consolidated balance sheets at December 31, 2016 and September 30, 2017 includes the carrying value of the 5.50% Notes and the 13% Notes, as well as $3.3 million and $4.7 million, respectively, for the Royalty Rights issued in connection with the 13% Notes. |
Stockholders Equity
Stockholders Equity | 9 Months Ended |
Sep. 30, 2017 | |
Convertible Preferred Stock and Stockholders' Deficit | |
Stockholders equity | 7. Stockholders’ Equity At the Market Offering In July 2015, the Company entered into a Controlled Equity Offering Sales Agreement (“2015 Sales Agreement”) with Cantor Fitzgerald & Co. (“Cantor”), under which the Company could, at its discretion, from time to time, sell shares of its Common Stock, for an aggregate offering price of up to $30.0 million. The Company provided Cantor with customary indemnification rights, and Cantor is entitled to a commission at a fixed rate of 3% of the gross proceeds per share sold. Sales of the shares under the 2015 Sales Agreement have been and, if there are additional sales under the 2015 Sales Agreement, will be, made in transactions deemed to be “at the market offerings”, as defined in Rule 415 under the Securities Act of 1933, as amended. The Company initiated sales of shares under the 2015 Sales Agreement in March 2017 and sold an aggregate of 1,126,528 shares of Common Stock through September 30, 2017, resulting in net proceeds of $3.7 million after deducting commissions of $114,000. The Company has not sold any additional shares under the Sales Agreement during the period subsequent to September 30, 2017. July 2017 Equity Offering On July 6, 2017, the Company entered into an underwriting agreement with Cantor Fitzgerald & Co. relating to an underwritten public offering (the “July 2017 Equity Offering”) of 16,666,667 shares of the Company’s Common Stock and accompanying warrants to purchase 16,666,667 shares of Common Stock, at a combined public offering price of $1.80 per share and accompanying warrant, for gross proceeds of $30.0 million. The net offering proceeds were $28.6 million after deducting underwriting discounts and commissions and offering-related costs of $1.4 million.. Each warrant has an exercise price of $2.70, subject to adjustment in certain circumstances. The shares of Common Stock and warrants were issued separately. The warrants may be exercised at any time on or after the date of issuance and will expire five years from the date of issuance. The Company accounted for the warrants using ASC 480 – Distinguishing Liabilities from Equity and determined that the warrants were a freestanding financial instrument that are subject to liabilitity classification. Pursuant to the terms of the agreement, the Company could be required to settle the warrants in cash in the event of an acquisition of the Company, and as a result the warrants are required to be measured at fair value and reported as a liability in the Company’s consolidated balance sheet. The warrant exercise price is subject to adjustment upon the issuance of certain equity securities at a price less than the exercise price of the warrants then in effect. The fair value of the warrants to purchase shares of the Company’s Common Stock in connection with the July 2017 Equity Offering was $9.7 million on the date of issuance, which was determined using a lattice model that takes into account various future financing scenarios and the impact of those scenarios on the fair value of the warrants. The fair value of the warrants of $9.7 million on the date of issuance was recorded as a liability which will be marked to its estimated fair value at each reporting period. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 8. Fair Value Measurements The Company measures certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (the exit price) in an orderly transaction between market participants at the measurement date. The guidance in ASC 820 outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, the Company maximizes the use of quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. The fair value hierarchy is broken down into three levels based on the source of inputs as follows: · Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities. · Level 2—Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities. · Level 3—Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement. The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis : (in thousands) Fair Value Measurements as of December 31, 2016 Level 1 Level 2 Level 3 Total Assets Cash equivalents (money market funds) $ 27,635 $ — $ — $ 27,635 Marketable securities, available-for-sale — 42,471 — 42,471 Total assets $ 27,635 $ 42,471 $ — $ 70,106 Liabilities Interest make-whole derivative $ — $ — $ 12 $ 12 Total liabilities $ — $ — $ 12 $ 12 (in thousands) Fair Value Measurements as of September 30, 2017 Level 1 Level 2 Level 3 Total Assets Cash equivalents (money market funds and commercial paper) $ 27,380 $ — $ — $ 27,380 Marketable securities, available-for-sale — 64,308 — 64,308 Total assets $ 27,380 $ 64,308 $ — $ 91,688 Liabilities Interest make-whole derivative $ — $ — $ — $ — Warrant liability $ — $ — $ 8,166 $ 8,166 Total liabilities $ — $ — $ 8,166 $ 8,166 The following tables set forth a summary of changes in the fair value during the nine months ended September 30, 2017: (in thousands) Fair Value December 31, Change in September 30, 2017 2016 Additions 2017 Interest make-whole derivative 12 $ — $ (12) $ — Warrant liability — $ 9,667 $ (1,501) $ 8,166 Total liabilities $ 12 $ 9,667 $ (1,513) $ 8,166 The 5.50% Notes include an interest make-whole feature whereby if a noteholder converts any of the 5.50% Notes prior to April 1, 2018, the Company will, in addition to the other consideration payable or deliverable in connection with such conversion, make an interest make-whole payment to the converting holder equal to the sum of the present value of the remaining scheduled payments of interest that would have been made on the 5.50% Notes to be converted had such notes remained outstanding from the conversion date through April 1, 2018, computed using a discount rate equal to 2%. The Company has determined that this feature is an embedded derivative and has recognized the fair value of this derivative as a liability in the Company’s consolidated balance sheet, with subsequent changes to fair value recorded through earnings at each reporting period on the Company’s consolidated statements of operations and comprehensive loss as change in fair value of derivative liabilities. The fair value of this embedded derivative was determined based on a binomial tree lattice model. The fair value of the Company’s warrant liablity was estimated utilizing a lattice tree model both for the initial valuation and as of September 30, 2017. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value measurement was based on several factors including: · Various future financing scenarios · Volatility of the Company’s common stock and risk free rate As of September 30, 2017, the fair value of the 5.50% Notes was estimated utilizing the binomial lattice tree model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value measurement was based on several factors including: · Credit spread at the valuation date · Discount yield as of the valuation date The fair value and carrying value of the Company’s 5.50% Notes at September 30, 2017 was as follows: (in thousands) Fair Value Carrying Value Face Value 5.50% Notes due April 1, 2020 $ 39,807 $ 49,392 $ 61,000 The fair value of the Company’s 13% Notes approximates its carrying value of $72.6 million as the interest rate is reflective of the interest rates on debt the Company could currently obtain with similar terms and conditions and thus represents a Level 2 measurement within the fair value hierarchy. |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss Per Common Share | |
Net Loss Per Common Share | 9. Net Loss Per Common Share The following table sets forth the computation of basic and diluted net loss per share for the periods indicated: (in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2016 2017 2016 2017 Basic and diluted net loss per common share calculation: Net loss $ (26,937) $ (18,948) $ (69,262) $ (70,800) Weighted average common stock outstanding 24,565,554 41,149,838 24,480,494 30,525,158 Net loss per share of common stock—basic and diluted $ (1.10) $ (0.46) $ (2.83) $ (2.32) The following outstanding securities for the three and nine months ended September 30, 2016 and 2017 have been excluded from the computation of diluted weighted shares outstanding, as they would have been anti-dilutive: Three and nine months ended September 30, 2016 2017 Stock options outstanding 2,141,072 4,452,314 Unvested restricted stock awards 574,191 32,683 Common shares issuable upon conversion of the 5.50% Notes 4,102,360 4,102,360 Common shares issuable upon exercise of warrants — 16,666,667 Total 6,817,623 25,254,024 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation 2013 Stock-Based Incentive Compensation Plan In November 2013, the Company adopted its 2013 Stock-Based Incentive Compensation Plan (as subsequently amended from time to time, the “2013 Plan”). Pursuant to the 2013 Plan, the compensation committee of the Company’s board of directors is authorized to grant equity-based incentive awards to its directors, executive officers and other employees and service providers, including officers, employees and service providers of its subsidiaries and affiliates. The number of shares of the Company’s Common Stock initially reserved for issuance under the 2013 Plan was 1,680,000 in the form of Common Stock, deferred stock, restricted stock, restricted stock units, stock options and stock appreciation rights. Share increases of 2,000,000 and 2,600,000 to the number of shares originally reserved for issuance under the 2013 Plan were authorized by the Company’s stockholders in June 2014 and June 2016, respectively. The amount, terms of grants and exercisability provisions are determined by the compensation committee, and in certain circumstances pursuant to delegated authority, the Company’s chief executive officer and chief financial officer, acting jointly. The term of the options may be up to 10 years, and options are exercisable in cash or as otherwise determined by the compensation committee. All stock options vest over time as stipulated in the individual award agreements. In September 2015, the compensation committee voted to amend the 2013 Plan to, among other things, allow for monthly vesting of stock options granted thereunder after the first annual vesting. 2017 Inducement Plan In December 2016, the Company adopted its 2017 Inducement Plan (the “Inducement Plan”), which became effective in January 2017. Pursuant to the Inducement Plan, the Company’s compensation committee is authorized to grant equity-based incentive awards to its employees, including employees of its subsidiaries, who were not previously employees or non-employee directors of the Company or any of its subsidiaries (or who have had a bona fide period of non-employment with the Company and its subsidiaries) in compliance with Rule 5635(c)(4) of the NASDAQ Global Market. The number of shares of the Company’s Common Stock initially reserved for issuance under the Plan was 300,000, in the form of Common Stock, deferred stock, restricted stock, restricted stock units, stock options and stock appreciation rights. The amount, terms of grants and exercisability provisions are determined by the compensation committee of the Company’s board of directors. The term of stock options issued under the Inducement Plan may be up to 10 years, and stock options are exercisable in cash or as otherwise determined by the compensation committee of the Company’s board of directors. All stock options vest over time as stipulated in the individual award agreements. Employee Stock Purchase Plan In January 2016, the Company established an Employee Stock Purchase Plan (the “Purchase Plan”), which was approved by the Company’s stockholders in June 2016. A total of 750,000 shares of Common Stock were originally approved for future issuance under the Purchase Plan pursuant to purchase rights granted to the Company’s employees. Under the Company’s Purchase Plan, eligible employees can purchase the Company’s Common Stock through accumulated payroll deductions at such times as established by the administrator. The Purchase Plan is administered by the compensation committee. Under the Purchase Plan, eligible employees may purchase the Company’s Common Stock at 85% of the lower of the fair market value of a share of the Company’s Common Stock on the first day of an offering period or on the last day of the offering period. Eligible employees may contribute up to 10% of their eligible compensation. A participant may purchase a maximum of 1,500 shares of common stock per offering period. Under the Purchase Plan, a participant may not accrue rights to purchase more than $25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding. At the end of each offering period, shares of the Company’s Common Stock may be purchased at 85% of the lower of the fair market value of the Company’s Common Stock on the first or last day of the respective offering period. In accordance with the guidance in ASC 718-50 – Compensation – Stock Compensation , the ability to purchase shares of the Company’s Common Stock at the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the pricing date) represents a stock option and, therefore, the Purchase Plan is a compensatory plan under this guidance. Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value and is recognized over the requisite service period of the option. The Company recognized stock-based compensation expense of $19,000 and $89,000, respectively, during the three and nine months ended September 30, 2017, and stock-based compensation expense of $29,000 and $82,000, respectively, during the three and nine months ended September 30, 2016 related to the Purchase Plan. Shares Available for Future Grant Under Equity Compensation Plans As of September 30, 2017, the Company has reserved the following shares to be granted under its equity compensation plans: Shares initially reserved under the 2013 Plan 1,680,000 Shares reserved under the Inducement Plan 300,000 Shares reserved under the Purchase Plan 750,000 Authorized increase to the 2013 Plan 4,600,000 Common stock options granted under the 2013 Plan (5,079,938) Common stock options granted under the Inducement Plan (212,500) Restricted stock awards granted under the 2013 Plan (1,543,660) Common stock issued under the Purchase Plan (98,548) Stock options and restricted stock awards forfeited 849,226 Remaining shares available for future grant 1,244,580 The estimated grant-date fair value of the Company’s share-based awards is amortized ratably over the awards’ service periods. Stock-based compensation expense recognized was as follows: Three Months Ended September 30, Nine months ended September 30, (in thousands) 2016 2017 2016 2017 General and administrative $ 1,448 $ 1,162 $ 3,854 $ 3,783 Sales and marketing 115 83 250 386 Research and development 246 85 573 523 Restructuring charges — 364 — 364 Total stock based compensation expense $ 1,809 $ 1,694 $ 4,677 $ 5,056 Stock Options Granted Under Equity Compensation Plans Stock Options Outstanding Weighted-average Remaining Number of Weighted-Average Contractual Shares Exercise Price Term (in years) Outstanding at December 31, 2016 2,952,572 $ Granted 1,987,581 Exercised — — Forfeited (460,250) Cancelled (27,589) 9.43 Outstanding at September 30, 2017 4,452,314 $ 8.57 Vested or expected to vest at September 30, 2017 4,452,314 $ 8.57 Exercisable at September 30, 2017 1,080,537 $ 7.12 The intrinsic value of the 4,452,314 stock options outstanding as of September 30, 2017 was $4,000, based on a per share price of $1.28, the Company’s closing stock price on that date, and a weighted-average exercise price of $6.61 per share. The Company uses the Black-Scholes valuation model in determining the fair value of equity awards. For stock options granted to employees and directors with only service-based vesting conditions, the Company measures stock-based compensation expense at the grant date based on the estimated fair value of the award and recognizes it as expense over the requisite service period on a straight-line basis. The Company records the expense of equity compensation for non-employees based on the estimated fair value of the stock option as of the respective vesting date. Further, the Company expenses the fair value of non-employee stock options that contain only service-based vesting conditions over the requisite service period of the underlying stock options. Following the adoption of ASU 2016-09, the Company no longer estimates forfeitures in calculating its stock-based compensation expense and adjusts each period to reflect actual forfeitures. On June 8, 2017, the Company granted stock options for 630,000 shares of the Company’s Common Stock to nine senior executives (the “June 2017 Grant”). The contractual term of each of the grants made in the June 2017 Grant is 10 years and the exercise price is $2.38 per share. Provided that the grantee is still employed by the Company, the vesting terms of the June 2017 Grant include a combination of market and service-based conditions as follows: (a) 25% of the award will vest on the later of (i) the six-month anniversary of the grant and (ii) the date on which the average closing price of the Company's Common Stock on NASDAQ is at least $3.33 for 30 consecutive trading days. (b) 25% of the award will vest on the later of (i) the twelve-month anniversary of the grant and (ii) the date on which the average closing price of the Company's Common Stock on NASDAQ is at least $4.05 for 30 consecutive trading days. (c) 50% of the award will vest on the later of (i) the twenty-four-month anniversary of the grant and (ii) the date on which the average closing price of the Company's Common Stock on NASDAQ is at least $4.76 for 30 consecutive trading days. The Company used the binomial model to estimate the compensation cost for the June 2017 Grant. Key assumptions used in calculating the total estimated compensation cost of $1,334,000 included (i) an estimated term of 5.6 years, (ii) expected volatility of 95.54%, (iii) expected dividends of $0.00 and (iv) a risk-free return of 1.80%. Stock-based compensation expense related to the June 2017 Grant will be recognized ratably over the requisite service period of 5.6 years and amounted to $60,000 and $76,000 for the three and nine months ended September 30, 2017, respectively. The per-share weighted-average grant date fair value of the options granted to employees during the nine months ended September 30, 2017 was estimated at $2.64 per share on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: 2017 Risk-free interest rate 1.92 % Expected term of options (in years) 6.14 Expected volatility 80.57 % Dividend yield — The weighted-average valuation assumptions were determined as follows: · Risk-free interest rate: The Company based the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term. · Expected term of options: The Company estimated the expected life of its employee stock options using the “simplified” method, as prescribed in Staff Accounting Bulletin (“SAB”) No. 107, “ Share Based Payments ”, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to its lack of sufficient historical data. · Expected stock price volatility: The Company estimated the expected volatility based on its actual historical volatility of the Company’s stock price. The Company calculated the historical volatility by using daily closing prices over a period of the expected term of the associated award. A decrease in the expected volatility would have decreased the fair value of the underlying instrument. Prior to January 1, 2017, the Company estimated the expected volatility based on actual historical volatility of the stock price of similar companies with publicly-traded equity securities. The Company calculated the historical volatility of the selected companies by using daily closing prices over a period of the expected term of the associated award. The impact of this change had an immaterial effect on the Company’s financial results for the three and nine months ended September 30, 2017. · Expected annual dividend yield: The Company estimated the expected dividend yield based on consideration of its historical dividend experience and future dividend expectations. The Company has not historically declared or paid dividends to stockholders. Moreover, it does not intend to pay dividends in the future, but instead expects to retain any earnings to invest in the continued growth of the business. Accordingly, the Company assumed an expected dividend yield of 0.0%. As of September 30, 2017, there was $10.2 million of total unrecognized stock-based compensation expense, related to unvested options granted under the 2013 Plan and the Inducement Plan, which will be recognized over the weighted-average remaining period of 2.71 years. Restricted Stock A summary of the status of the Company’s restricted stock awards at September 30, 2017 and of changes in restricted stock awards outstanding under the 2013 Plan for the nine months ended September 30, 2017 is as follows: Weighted-average Number of Grant Date Fair Shares Value per Share Unvested at December 31, 2016 543,577 $ 10.77 Granted — $ — Forfeited (28,750) $ 6.92 Vested restricted stock awards (482,144) $ 11.21 Unvested at September 30, 2017 32,683 $ 7.80 For stock awards that vest subject to the satisfaction of service requirements, stock-based compensation expense is measured based on the fair value of the award on the date of grant and is recognized as expense on a straight-line basis over the requisite service period. All of the restricted stock awards reflected above vest over time as stipulated in the individual award agreements. In the event of a change in control, the unvested awards will be accelerated and fully vested immediately prior to the change in control. As of September 30, 2017, there was $255,000 of total unrecognized stock-based compensation expense, related to restricted stock awards under the 2013 Plan, which will be recognized over the weighted-average remaining period of 2.52 years. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 11. Commitments and Contingencies Legal Proceedings On January 27, 2017 and February 10, 2017, respectively, two putative securities class actions were filed in the U.S. District Court for the Eastern District of Pennsylvania that named as defendants Egalet Corporation and current officers Robert S. Radie, Stanley J. Musial, and Jeffrey M. Dayno. These two complaints, captioned Mineff v. Egalet Corp. et al., No. 2:17-cv-00390-MMB and Klein v. Egalet Corp. et al., No. 2:17-cv-00617-MMB, assert securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) on behalf of putative classes of persons who purchased or otherwise acquired Egalet Corporation securities between December 15, 2015 and January 9, 2017. On May 1, 2017, the Court entered an order consolidating the two cases before it, appointing the Egalet Investor Group (consisting of Joseph Spizzirri, Abdul Rahiman and Kyle Kobold) as lead plaintiff and approving their selection of lead and liaison counsel. On July 3, 2017, the plaintiffs filed their consolidated amended complaint, which named the same defendants and also asserts claims for purported violations of Sections 10(b) and 20(a) of the Exchange Act. Plaintiffs bring their claims individually and on behalf of a putative class of all persons who purchased or otherwise acquired shares of the Company between November 4, 2015 and January 9, 2017 inclusive. The consolidated amended complaint bases its claims on allegedly false and/or misleading statements and/or failures to disclose information about the likelihood that ARYMO ER would be approved for intranasal abuse-deterrent labeling. The Company disputes these allegations and intends to defend these actions vigorously. The defendants’ filed a motion to dismiss the consolidated amended complaint on September 1, 2017. The plaintiffs filed their opposition to the motion to dismiss on October 31, 2017. The Company cannot determine the likelihood of, nor can it reasonably estimate the range of, any potential loss, if any, from these lawsuits. |
Acquisitions and License and Co
Acquisitions and License and Collaboration Agreements | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions and License and Collaboration Agreements | |
Acquisitions and License and Collaboration Agreements | 12. Acquisitions and License and Collaboration Agreements Collaboration and License Agreement with Acura In January 2015, the Company entered into the OXAYDO License Agreement with Acura to commercialize OXAYDO tablets containing Acura’s Aversion Technology. OXAYDO (formerly known as Oxecta®) is currently approved by the FDA for marketing in the U.S. in 5 mg and 7.5 mg strengths, but was not actively marketed at the time of the OXAYDO License Agreement. Under the terms of the OXAYDO License Agreement, Acura transferred the approved New Drug Application (“NDA”) for OXAYDO to the Company and the Company was granted an exclusive license under Acura’s intellectual property rights for development and commercialization of OXAYDO worldwide in all strengths. The Company paid Acura an upfront payment of $5.0 million in January 2015 and a $2.5 million milestone payment in October 2015 as a result of the first commercial sale of OXAYDO. In addition, Acura will be entitled to a one-time $12.5 million milestone payment when OXAYDO net sales reach a level of $150.0 million in a calendar year. The Company has recorded a product rights intangible asset of $7.7 million related to the arrangement, which includes $172,000 of transaction costs related to the License Agreement. The intangible asset is being amortized over a useful life of 7 years, which coincides with the patent protection of the product in the U.S. In addition, Acura receives from the Company, a tiered royalty percentage based on sales thresholds. Based on the Company’s current level of net sales, the royalty percentage payable to Acura is in the mid-single digits; however, the percentage may increase in future years in the event we achieve the higher sales thresholds set forth in the License Agreement. In addition, in any calendar year in which net sales exceed a specified threshold, Acura will receive a double digit royalty on all OXAYDO net sales in that year. The Company’s royalty payment obligations commence on the first commercial sale of OXAYDO and expire, on a country-by-country basis, upon the expiration of the last to expire valid patent claim covering OXAYDO in such country (or if there are no patent claims in such country, then upon the expiration of the last valid claim in the U.S.). Royalties will be reduced upon the entry of generic equivalents, as well for payments required to be made by the Company to acquire intellectual property rights to commercialize OXAYDO, with an aggregate minimum floor. Purchase Agreement with Luitpold In January 2015, the Company entered into and consummated the transactions contemplated by the SPRIX Nasal Spray Purchase Agreement with Luitpold (the “SPRIX Purchase Agreement”). Pursuant to the SPRIX Purchase Agreement, the Company acquired specified assets and liabilities associated with SPRIX Nasal Spray for a purchase price of $7.0 million. The Company concurrently purchased an additional $1.1 million of glassware, equipment and active pharmaceutical ingredient (“API”) from Luitpold and agreed to purchase an additional $340,000 of API after closing. Under the SPRIX Purchase Agreement the Company was assigned the license for SPRIX Nasal Spray from Recordati. S.p.A. Under the agreement with Recordati S.p.A., the Company is obligated to use best commercial efforts to market and sell SPRIX Nasal Spray and pay a fixed, single-digit royalty to Recordati S.p.A. based on net sales. The Company accounted for the arrangement as a business combination. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Taxes | |
Income Taxes | 13. Income Taxes In accordance with ASC Topic No. 270 “ Interim Reporting ” and ASC Topic No. 740 “ Income Taxes ” (Topic No. 740) at the end of each interim period, the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. For the three and nine months ended September 30, 2016, the Company recorded a tax benefit of $358,000 and $780,000, respectively. For the three and nine months ended September 30, 2017, the Company had no tax provision since it is now in a full valuation allowance for federal, foreign and state purposes. The Company maintains a full valuation allowance against all deferred tax assets as management has determined that it is not more likely than not that the Company will realize these future tax benefits. The Company will continue to monitor and determine whether valuation allowances are appropriate. |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring | |
Restructuring | 14. Restructuring In August 2017, the Company announced a corporate restructuring initiative intended to streamline operations and achieve operating efficiencies. The initiative included a reduction-in-force and the elimination of certain other expenditures and other non-recurring costs. For the three months ended September 30, 2017 the Company recorded restructuring charges of $3.0 million, which included non-cash stock compensation costs of $364,000, all related to terminated employee compensation costs. During the three months ended September 30, 2017 the Company paid out $566,000 to severed employees and at September 30, 2017, has $2.0 million recorded in accrued expenses related to restructuring charges. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies and Basis of Accounting (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies and Basis of Accounting | |
Basis of Presentation | Basis of Presentation The unaudited consolidated financial statements are prepared in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information. Certain information and footnotes normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q. The Company’s consolidation policy requires the consolidation of entities where a controlling financial interest is held. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial information at September 30, 2017 and the three and nine months ended September 30, 2016 and 2017 is unaudited. The interim unaudited financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of September 30, 2017, the consolidated results of its operations and comprehensive loss for the three and nine months ended September 30, 2016 and 2017, and consolidated cash flows for the nine months ended September 30, 2016 and 2017. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2016 and 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017, any other interim periods or any future year or period. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2016 filed on March 13, 2017 with the SEC. The Company’s significant accounting policies are described in Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Since the date of those financial statements, there have been no changes to the Company’s significant accounting policies. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-09, Improvements to Employee Share-Based Payment Accounting , which provides for simplification of certain aspects of employee share-based payment accounting including income taxes, classification of awards as either equity or liabilities, accounting for forfeitures and classification on the statement of cash flows. ASU 2016-09 became effective for the Company in the first quarter of 2017 and was applied using a modified retrospective transition approach. Under ASU 2016-09, the Company has elected to no longer estimate forfeiture rates as part of its stock-based compensation expense and will true up forfeitures as they occur. As a result of the adoption of ASU 2016-09, the Company recorded a cumulative adjustment of $763,000, which increased its accumulated deficit as of January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact that the standard will have on the financial statements, and has not yet determined what effect, if any, the impact of adoption will be. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial Liabilities , which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 will be effective for annual periods and interim periods within those annual periods beginning after December 15, 2017 and early adoption is not permitted. The Company is currently evaluating the impact that the standard will have on the financial statements, and has not yet determined what effect, if any, the impact of adoption will be. In November 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the balance sheet classification of deferred taxes and requires that all deferred taxes be presented as noncurrent. ASU 2015-17 was effective for fiscal years beginning after December 15, 2016 and early adoption was permitted. The adoption of the update did not have a material effect on the Company’s financial statements. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements—Going Concern . ASU 2014-15 requires management of all entities to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements are issued, and to make certain disclosures if it concludes that substantial doubt exists or when its plans alleviate substantial doubt about the entity’s ability to continue as a going concern. ASU 2014-15 was effective for the Company for annual reporting periods beginning in 2016 and for interim reporting periods starting in the first quarter of 2017. The adoption of this update did not have a material effect on the Company’s financial statements. In May 2014, the FASB issued new guidance related to revenue recognition, ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”), which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires an entity to recognize revenue upon transfer of goods or services to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. ASC 606 defines a five-step approach for recognizing revenue, which may require an entity to use more judgment and make more estimates than under the current guidance. The new guidance becomes effective in calendar year 2018 and early adoption in calendar year 2017 is permitted. Two methods of adoption are permitted: (a) full retrospective adoption, meaning the standard is applied to all periods presented; or (b) modified retrospective adoption, meaning the cumulative effect of applying the new guidance is recognized at the date of initial application as an adjustment to the opening retained earnings balance. In March 2016, April 2016 and December 2016, the FASB issued ASU No. 2016-08, Revenue From Contracts with Customers : Principal Versus Agent Considerations , ASU No. 2016-10, Revenue From Contracts with Customers : Identifying Performance Obligations and Licensing , and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue From Contracts with Customers , respectively, which further clarify the implementation guidance on principal versus agent considerations contained in ASU No. 2014-09. In May 2016, the FASB issued ASU 2016-12 Revenue from Contracts with Customers , narrow-scope improvements and practical expedients which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transition (collectively “ASC 606”). These standards will be effective for the Company beginning in the first quarter of 2018. Early adoption is permitted. The Company has formed a task force that is in the process of analyzing the Company’s customer contracts and the potential impacts the standard may have on previously reported revenues and future revenues. Under ASC 606, the Company expects to recognize net product sales at the time it ships its products to its customers (primarily wholesalers and specialty pharmacies), rather than the current policy of recognizing net product sales when prescriptions are dispensed to patients. As a result, the Company expects to recognize the majority of net product sales under such contracts earlier under ASC 606 than it would have recognized under current guidance. However, the Company is still evaluating the materiality of the impact on the consolidated financial statements and related disclosures. The Company plans to adopt the new standard effective January 1, 2018 using the modified retrospective approach. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments | |
Schedule of marketable securities | Marketable securities consisted of the following at December 31, 2016: (in thousands) Cost Basis Unrealized Gains Unrealized Losses Fair Value Corporate notes and bonds $ 42,481 $ 4 $ (14) $ 42,471 Total $ 42,481 $ 4 $ (14) $ 42,471 Marketable securities consisted of the following as of September 30, 2017: (in thousands) Cost Basis Unrealized Gains Unrealized Losses Fair Value Corporate notes and bonds $ 64,336 $ — $ (28) $ 64,308 Total $ 64,336 $ — $ (28) $ 64,308 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory | |
Schedule of components of inventory | December 31, September 30, (in thousands) 2016 2017 Raw materials $ 779 $ 1,112 Finished goods 820 516 Deferred cost of sales 101 207 Total $ 1,700 $ 1,835 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Intangible Assets | |
Schedule of intangible assets | The following represents the balance of the intangible assets at December 31, 2016: Gross Net Remaining Useful Intangible Accumulated Intangible Life (in thousands) Assets Amortization Assets (in years) OXAYDO product rights $ 7,520 $ (2,124) $ 5,396 5.00 SPRIX Nasal Spray product rights 4,620 (1,827) 2,793 3.00 IP R&D 161 — 161 Indefinite Total $ 12,301 $ (3,951) $ 8,350 The following represents the balance of the intangible assets at September 30, 2017: Gross Net Remaining Useful Intangible Accumulated Intangible Life (in thousands) Assets Amortization Assets (in years) OXAYDO product rights $ 7,671 $ (2,988) $ 4,683 4.25 SPRIX Nasal Spray product rights 4,928 (2,688) 2,240 2.25 IP R&D 180 (27) 153 4.25 Total $ 12,779 $ (5,703) $ 7,076 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
5.50% Notes | |
Summary of debt reflected in the balance sheet | December 31, 2016 September 30, 2017 (in thousands) Gross proceeds $ 61,000 $ 61,000 Unamortized debt discount (15,091) (11,608) Carrying value $ 45,909 $ 49,392 |
13% Notes | |
Summary of debt reflected in the balance sheet | December 31, 2016 September 30, 2017 (in thousands) Gross proceeds $ 40,000 $ 80,000 Unamortized debt discount (5,187) (7,400) Carrying value $ 34,813 $ 72,600 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Schedule of information about each major category of financial assets and liabilities measured at fair value on a recurring basis | (in thousands) Fair Value Measurements as of December 31, 2016 Level 1 Level 2 Level 3 Total Assets Cash equivalents (money market funds) $ 27,635 $ — $ — $ 27,635 Marketable securities, available-for-sale — 42,471 — 42,471 Total assets $ 27,635 $ 42,471 $ — $ 70,106 Liabilities Interest make-whole derivative $ — $ — $ 12 $ 12 Total liabilities $ — $ — $ 12 $ 12 (in thousands) Fair Value Measurements as of September 30, 2017 Level 1 Level 2 Level 3 Total Assets Cash equivalents (money market funds and commercial paper) $ 27,380 $ — $ — $ 27,380 Marketable securities, available-for-sale — 64,308 — 64,308 Total assets $ 27,380 $ 64,308 $ — $ 91,688 Liabilities Interest make-whole derivative $ — $ — $ — $ — Warrant liability $ — $ — $ 8,166 $ 8,166 Total liabilities $ — $ — $ 8,166 $ 8,166 |
Summary of changes in the fair value of Level 3 liabilities | (in thousands) Fair Value December 31, Change in September 30, 2017 2016 Additions 2017 Interest make-whole derivative 12 $ — $ (12) $ — Warrant liability — $ 9,667 $ (1,501) $ 8,166 Total liabilities $ 12 $ 9,667 $ (1,513) $ 8,166 |
Schedule of fair value and carrying value of convertible debt | (in thousands) Fair Value Carrying Value Face Value 5.50% Notes due April 1, 2020 $ 39,807 $ 49,392 $ 61,000 |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss Per Common Share | |
Schedule of computation of basic and diluted net loss per share | (in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2016 2017 2016 2017 Basic and diluted net loss per common share calculation: Net loss $ (26,937) $ (18,948) $ (69,262) $ (70,800) Weighted average common stock outstanding 24,565,554 41,149,838 24,480,494 30,525,158 Net loss per share of common stock—basic and diluted $ (1.10) $ (0.46) $ (2.83) $ (2.32) |
Schedule of outstanding securities excluded from the computation of diluted weighted shares outstanding | Three and nine months ended September 30, 2016 2017 Stock options outstanding 2,141,072 4,452,314 Unvested restricted stock awards 574,191 32,683 Common shares issuable upon conversion of the 5.50% Notes 4,102,360 4,102,360 Common shares issuable upon exercise of warrants — 16,666,667 Total 6,817,623 25,254,024 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock-Based Compensation | |
Schedule of shares available for future grant | Shares initially reserved under the 2013 Plan 1,680,000 Shares reserved under the Inducement Plan 300,000 Shares reserved under the Purchase Plan 750,000 Authorized increase to the 2013 Plan 4,600,000 Common stock options granted under the 2013 Plan (5,079,938) Common stock options granted under the Inducement Plan (212,500) Restricted stock awards granted under the 2013 Plan (1,543,660) Common stock issued under the Purchase Plan (98,548) Stock options and restricted stock awards forfeited 849,226 Remaining shares available for future grant 1,244,580 |
Schedule of stock-based compensation expense recognized | Three Months Ended September 30, Nine months ended September 30, (in thousands) 2016 2017 2016 2017 General and administrative $ 1,448 $ 1,162 $ 3,854 $ 3,783 Sales and marketing 115 83 250 386 Research and development 246 85 573 523 Restructuring charges — 364 — 364 Total stock based compensation expense $ 1,809 $ 1,694 $ 4,677 $ 5,056 |
Schedule of stock options granted under the 2013 stock-based incentive plan | Stock Options Outstanding Weighted-average Remaining Number of Weighted-Average Contractual Shares Exercise Price Term (in years) Outstanding at December 31, 2016 2,952,572 $ Granted 1,987,581 Exercised — — Forfeited (460,250) Cancelled (27,589) 9.43 Outstanding at September 30, 2017 4,452,314 $ 8.57 Vested or expected to vest at September 30, 2017 4,452,314 $ 8.57 Exercisable at September 30, 2017 1,080,537 $ 7.12 |
Schedule of weighted-average assumptions | 2017 Risk-free interest rate 1.92 % Expected term of options (in years) 6.14 Expected volatility 80.57 % Dividend yield — |
Summary of status and change in restricted stock awards | Weighted-average Number of Grant Date Fair Shares Value per Share Unvested at December 31, 2016 543,577 $ 10.77 Granted — $ — Forfeited (28,750) $ 6.92 Vested restricted stock awards (482,144) $ 11.21 Unvested at September 30, 2017 32,683 $ 7.80 |
Organization and Description 29
Organization and Description of the Business (Details) $ in Thousands | Sep. 30, 2017USD ($)product | Dec. 31, 2016USD ($) |
Liquidity [Abstract] | ||
Number of Products | product | 3 | |
Accumulated deficit | $ | $ (296,739) | $ (225,178) |
Summary of Significant Accoun30
Summary of Significant Accounting Policies and Basis of Accounting (Details) | Jan. 01, 2017USD ($) |
ASU 2016-09 | |
Schedule of Accounting Policies [Line Items] | |
Cumulative adjustment to accumulated deficit | $ (763,000) |
Investments (Details)
Investments (Details) | 9 Months Ended | |
Sep. 30, 2017USD ($)security | Dec. 31, 2016USD ($) | |
Marketable Securities | ||
Cost Basis | $ 64,336,000 | $ 42,481,000 |
Unrealized Gains | 4,000 | |
Unrealized Losses | (28,000) | (14,000) |
Fair Value | 64,308,000 | 42,471,000 |
Fair value of marketable securities with a maturity of less than one year | 64,300,000 | |
Fair value of marketable securities with a maturity greater than one year | $ 0 | |
Number of marketable securities which were in a continuous loss position for less than one year | security | 10 | |
Other than temporary impairment | $ 0 | |
Corporate notes and bonds | ||
Marketable Securities | ||
Cost Basis | 64,336,000 | 42,481,000 |
Unrealized Gains | 4,000 | |
Unrealized Losses | (28,000) | (14,000) |
Fair Value | $ 64,308,000 | $ 42,471,000 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory | ||
Raw materials | $ 1,112 | $ 779 |
Finished goods | 516 | 820 |
Deferred cost of sales | 207 | 101 |
Total | $ 1,835 | $ 1,700 |
Intangible Assets - Balance of
Intangible Assets - Balance of Intangible Assets and Impairment (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Finite-lived intangible assets | ||||||
Accumulated Amortization | $ (5,703,000) | $ (5,703,000) | $ (3,951,000) | |||
Gross Intangible Assets | 12,779,000 | 12,779,000 | 12,301,000 | |||
Net Intangible Assets | 7,076,000 | 7,076,000 | 8,350,000 | |||
Impairment of intangible assets | 0 | $ 0 | 0 | $ 0 | ||
OXAYDO product rights | ||||||
Finite-lived intangible assets | ||||||
Gross Intangible Assets | 7,671,000 | 7,671,000 | 7,520,000 | |||
Accumulated Amortization | (2,988,000) | (2,988,000) | (2,124,000) | |||
Net Intangible Assets | 4,683,000 | $ 4,683,000 | $ 5,396,000 | |||
Remaining Useful Life | 4 years 3 months | 5 years | ||||
OXAYDO product rights | Acura | Collaboration and License Agreement | ||||||
Finite-lived intangible assets | ||||||
Amortization expense | 274,000 | $ 813,000 | ||||
SPRIX Nasal Spray product rights | ||||||
Finite-lived intangible assets | ||||||
Gross Intangible Assets | 4,928,000 | 4,928,000 | $ 4,620,000 | |||
Accumulated Amortization | (2,688,000) | (2,688,000) | (1,827,000) | |||
Net Intangible Assets | 2,240,000 | $ 2,240,000 | $ 2,793,000 | |||
Remaining Useful Life | 2 years 3 months | 3 years | ||||
SPRIX Nasal Spray product rights | Luitpold | ||||||
Finite-lived intangible assets | ||||||
Amortization expense | 246,000 | $ 231,000 | $ 714,000 | $ 693,000 | ||
IP R&D | ||||||
Finite-lived intangible assets | ||||||
Accumulated Amortization | (27,000) | $ (27,000) | ||||
Remaining Useful Life | 4 years 3 months | |||||
Gross Intangible Assets | 180,000 | $ 180,000 | $ 161,000 | |||
Net Intangible Assets | 153,000 | 153,000 | $ 161,000 | |||
Amortization expense | $ 9,000 | $ 26,000 | ||||
Useful life of intangible asset | 5 years |
Intangible Assets - Collaborati
Intangible Assets - Collaboration and License Agreement, Purchase Agreement and IP R&D (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jan. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Oct. 31, 2015 | |
OXAYDO tablets | Acura | Collaboration and License Agreement | ||||||
Collaboration and License Agreement with Acura | ||||||
Upfront payment paid | $ 5,000,000 | |||||
Milestone payment payable | $ 2,500,000 | |||||
Transaction costs | 172,000 | |||||
Amortization expense | ||||||
Amortization expense | $ 271,000 | $ 813,000 | ||||
IP R&D | ||||||
Amortization expense | ||||||
Amortization expense | $ 9,000 | $ 26,000 | ||||
Luitpold | ||||||
Acquisition | ||||||
Purchase price | 7,000,000 | |||||
Intangible asset | $ 4,600,000 |
Long-term Debt - Convertible Se
Long-term Debt - Convertible Senior Notes (Details) | Aug. 31, 2016USD ($)item | Jan. 31, 2017USD ($) | Jan. 31, 2015USD ($)installment | May 31, 2015USD ($)item$ / shares | Sep. 30, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares |
Long-term Debt | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Repurchase price (as a percent) | 101.00% | |||||
Royalty rights agreements | ||||||
Long-term Debt | ||||||
Royalty rights obligations | $ 4,900,000 | |||||
Current and non-current debt | Royalty rights agreements | ||||||
Long-term Debt | ||||||
Royalty rights obligations | $ 4,700,000 | $ 3,300,000 | ||||
Hercules Term Loan | ||||||
Long-term Debt | ||||||
No of equal monthly installments | installment | 30 | |||||
Aggregate principal amount of debt issued | $ 15,000,000 | |||||
5.50% Notes | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 5.50% | |||||
Initial conversion rate | 0.0672518 | |||||
Conversion price (in dollar per share) | $ / shares | $ 14.87 | |||||
Principal amount denomination for conversion | $ 1,000 | |||||
Number of threshold trading days within the 30 consecutive trading days during which the conversion terms will apply | item | 20 | |||||
Number of consecutive trading days during which the sale price of the entity's common stock must equal or exceed the conversion price for the 20 trading days for the notes to be converted | 30 days | |||||
Number of trading days immediately preceding a conversion date within which the threshold consecutive trading days apply | 5 days | |||||
Discount rate used to calculate the present value of the remaining scheduled payments of interest for an interest make-whole payment (as a percent) | 2.00% | |||||
Percentage of stock value of the simple average of the daily volume weighted average price for the specified period used to calculate the interest make-whole payment (as a percent) | 95.00% | |||||
Period ending on and including the trading day immediately preceding the conversion date within which the simple average of the daily volume weighted average price is used to calculate the interest make-whole payment | 10 days | |||||
Fair value | $ 41,600,000 | $ 39,807,000 | ||||
Interest make-whole derivative | 900,000 | |||||
Carrying amount | 40,600,000 | |||||
Value of equity component | $ 19,400,000 | |||||
Transaction costs | 4,100,000 | |||||
Transaction costs allocated to debt discount | 2,800,000 | |||||
Transaction costs allocated to equity | 1,300,000 | |||||
Aggregate principal amount of debt issued | 61,000,000 | 61,000,000 | ||||
Unamortized debt discount | (11,608,000) | (15,091,000) | ||||
Carrying value | 49,392,000 | 45,909,000 | ||||
Transaction costs | $ 4,100,000 | |||||
5.50% Notes | Current and non-current debt | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 5.50% | |||||
5.50% Notes | Private placement | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 5.50% | |||||
Aggregate principal amount of debt issued | $ 61,000,000 | |||||
5.50% Notes | Maximum | ||||||
Long-term Debt | ||||||
Initial conversion rate | 0.0773395 | |||||
5.50% Notes | Conversion prior to January 1, 2020 | ||||||
Long-term Debt | ||||||
Number of threshold trading days within the 30 consecutive trading days during which the conversion terms will apply | item | 20 | |||||
Number of consecutive trading days during which the sale price of the entity's common stock must equal or exceed the conversion price for the 20 trading days for the notes to be converted | 30 days | |||||
Number of trading days immediately preceding a conversion date within which the threshold consecutive trading days apply | 5 days | |||||
Period after any five consecutive trading days of the note measurement period | 5 days | |||||
Number of consecutive trading days during the five business day period the conversion terms were measured | 5 days | |||||
Maximum percentage of the trading price to the product of the sale price of the entity's common stock and the conversion rate (as a percent) | 98.00% | |||||
5.50% Notes | Conversion on or after January 1, 2020 | ||||||
Long-term Debt | ||||||
Principal amount denomination for conversion | $ 1,000 | |||||
Observation period to determine the amount due upon conversion based on a daily conversion value calculated on a proportionate basis for each trading day | 50 days | |||||
13% Notes | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 13.00% | 13.00% | ||||
Aggregate principal amount of debt issued | $ 80,000,000 | 40,000,000 | ||||
Unamortized debt discount | (7,400,000) | (5,187,000) | ||||
Carrying value | $ 72,600,000 | $ 34,813,000 | ||||
13% Notes | Prior to August 31, 2018 | ||||||
Long-term Debt | ||||||
Spread on treasury rate | 0.01 | |||||
13% Notes | Current and non-current debt | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 13.00% | |||||
13% Notes | Senior notes | ||||||
Long-term Debt | ||||||
Transaction costs | $ 4,500,000 | |||||
Accrual interest rate (as a percent) | 13.00% | |||||
Frequency of interest payment | semi-annually | |||||
Percentage of payment of principal to aggregate net sales (as a percent) | 15.00% | |||||
Percentage of payment of principal to aggregate net sales, if sales targets not met (as a percent) | 17.00% | |||||
Number of consecutive quarters | item | 2 | |||||
Redemption price of debt (as a percent) | 113.50% | |||||
Number of days for the redemption of principal, after equity offering | 90 days | |||||
Sinking fund | $ 0 | |||||
Percentage of amount due and payable (as a percent) | 100.00% | |||||
Transaction costs | $ 4,500,000 | |||||
Effective interest rate (as a percent) | 15.20% | |||||
13% Notes | Senior notes | Royalty rights agreements | ||||||
Long-term Debt | ||||||
Royalty rights obligations | $ 4,900,000 | |||||
13% Notes | Senior notes | Prior to August 31, 2018 | ||||||
Long-term Debt | ||||||
Redemption price of debt (as a percent) | 100.00% | |||||
13% Notes | Senior notes | On or after August 31, 2018, till August 30, 2019 | ||||||
Long-term Debt | ||||||
Redemption price of debt (as a percent) | 109.00% | |||||
13% Notes | Senior notes | From August 31, 2019, till August 30, 2020 | ||||||
Long-term Debt | ||||||
Redemption price of debt (as a percent) | 104.50% | |||||
13% Notes | Senior notes | August 31, 2020 and thereafter | ||||||
Long-term Debt | ||||||
Redemption price of debt (as a percent) | 100.00% | |||||
13% Notes | Senior notes | Current and non-current debt | Royalty rights agreements | ||||||
Long-term Debt | ||||||
Royalty rights obligations | 4,700,000 | |||||
13% Notes | Senior notes | Initial closing | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 13.00% | |||||
Aggregate principal amount of debt issued | $ 40,000,000 | |||||
Conditional aggregate principal amount | 40,000,000 | |||||
Net proceeds from the issuance of secured notes | $ 37,200,000 | |||||
13% Notes | Senior notes | Second closing | ||||||
Long-term Debt | ||||||
Net proceeds from the issuance of secured notes | $ 38,300,000 | |||||
13% Notes | Senior notes | Maximum | ||||||
Long-term Debt | ||||||
Percentage of principal amount of debt redeemed or to be redeemed (as a percent) | 35.00% | |||||
13% Notes | Senior notes | Maximum | Initial closing | ||||||
Long-term Debt | ||||||
Maximum borrowings | $ 80,000,000 | |||||
13% Notes | Senior notes | Minimum | ||||||
Long-term Debt | ||||||
Percentage of aggregate principal amount remains outstandings | 65.00% | |||||
Percentage of debt instrument holders (as a percent) | 25.00% | |||||
Prime rate | Hercules Term Loan | ||||||
Long-term Debt | ||||||
Basis spread (as a percent) | 9.40% | |||||
Percentage point reduction to calculated variable rate | 3.25% | |||||
Variable rate basis | prime rate | |||||
Base rate | Hercules Term Loan | ||||||
Long-term Debt | ||||||
Interest rate (as a percent) | 9.40% | |||||
OXAYDO and SPRIX Nasal Spray | 13% Notes | Senior notes | Royalty rights agreements | ||||||
Long-term Debt | ||||||
Percentage of royalty right payment to aggregate net sale | $ 1.5 | |||||
ARYMO ER | 13% Notes | Senior notes | Royalty rights agreements | ||||||
Long-term Debt | ||||||
Percentage of royalty right payment to aggregate net sale | $ 1.5 |
Stockholders Equity (Details)
Stockholders Equity (Details) - USD ($) | Jul. 06, 2017 | Sep. 30, 2017 | Jul. 31, 2015 |
Sale of stocks | |||
Proceeds from issuance of warrants | $ 30,000,000 | ||
Net cash inflow from issuance of warrants after deduct the discounts and commissions | 28,600,000 | ||
Underwriting discounts and commissions | $ 1,400,000 | ||
Fair value of warrants | $ 8,166,000 | ||
Cantor Fitzgerald And Co. | |||
Sale of stocks | |||
Fixed Commission rate on sale of common stock (as a percent) | 3.00% | ||
2015 Sales Agreement | |||
Sale of stocks | |||
Aggregate offering price | $ 30,000,000 | ||
Issuance of stock (in shares) | 1,126,528 | ||
Commissions paid on sale of common stock | $ 114,000 | ||
Net proceeds from sale of common stock | $ 3,700,000 | ||
Over allotment | |||
Sale of stocks | |||
Issuance of stock (in shares) | 16,666,667 | ||
Number of shares callable by warrants | 16,666,667 | ||
Stock price (in dollars per share) | $ 1.80 | ||
Exercise price of warrants (in dollars per share) | $ 2.70 | ||
Expiration term of warrants (in years) | 5 years | ||
Fair value of warrants | $ 9,700,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 2 Months Ended | 9 Months Ended | ||
May 31, 2015 | Sep. 30, 2017 | Dec. 31, 2016 | Aug. 31, 2016 | |
Fair Value Measurements | ||||
Marketable securities, available for sale | $ 64,308,000 | $ 42,471,000 | ||
Warrant liability | $ 8,166,000 | |||
5.50% Notes | ||||
Fair Value Measurements | ||||
Interest make-whole derivative | $ 900,000 | |||
Interest rate (as a percent) | 5.50% | |||
Discount rate used to calculate the present value of the remaining scheduled payments of interest for an interest make-whole payment (as a percent) | 2.00% | |||
Changes in the fair value of Level 3 liabilities | ||||
Fair value | $ 41,600,000 | $ 39,807,000 | ||
Carrying Value | 49,392,000 | 45,909,000 | ||
Face Value | $ 61,000,000 | 61,000,000 | ||
13% Notes | ||||
Fair Value Measurements | ||||
Interest rate (as a percent) | 13.00% | 13.00% | ||
Changes in the fair value of Level 3 liabilities | ||||
Carrying Value | $ 72,600,000 | 34,813,000 | ||
Face Value | $ 80,000,000 | 40,000,000 | ||
Level 2 | 13% Notes | ||||
Fair Value Measurements | ||||
Interest rate (as a percent) | 13.00% | |||
Changes in the fair value of Level 3 liabilities | ||||
Carrying Value | $ 72,600,000 | |||
Recurring basis | ||||
Fair Value Measurements | ||||
Cash equivalents (money market funds and commercial paper) | 27,380,000 | 27,635,000 | ||
Marketable securities, available for sale | 64,308,000 | 42,471,000 | ||
Total assets | 91,688,000 | 70,106,000 | ||
Interest make-whole derivative | 12,000 | |||
Warrant liability | 8,166,000 | |||
Total liabilities | 8,166,000 | 12,000 | ||
Changes in the fair value of Level 3 liabilities | ||||
Beginning balance | 12,000 | |||
Additions | 9,667,000 | |||
Fair Value Change during the period | (1,513,000) | |||
Ending balance | 8,166,000 | |||
Recurring basis | Interest make-whole derivative | ||||
Changes in the fair value of Level 3 liabilities | ||||
Beginning balance | 12,000 | |||
Fair Value Change during the period | (12,000) | |||
Recurring basis | Warrants | ||||
Changes in the fair value of Level 3 liabilities | ||||
Additions | 9,667,000 | |||
Fair Value Change during the period | (1,501,000) | |||
Ending balance | 8,166,000 | |||
Recurring basis | Level 1 | ||||
Fair Value Measurements | ||||
Cash equivalents (money market funds and commercial paper) | 27,380,000 | 27,635,000 | ||
Total assets | 27,380,000 | 27,635,000 | ||
Recurring basis | Level 2 | ||||
Fair Value Measurements | ||||
Marketable securities, available for sale | 64,308,000 | 42,471,000 | ||
Total assets | 64,308,000 | 42,471,000 | ||
Recurring basis | Level 3 | ||||
Fair Value Measurements | ||||
Interest make-whole derivative | 12,000 | |||
Warrant liability | 8,166,000 | |||
Total liabilities | $ 8,166,000 | $ 12,000 |
Net Loss Per Common Share (Deta
Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic and diluted net loss per common share calculation: | ||||
Net loss | $ (18,948) | $ (26,937) | $ (70,800) | $ (69,262) |
Weighted-average common shares outstanding | 41,149,838 | 24,565,554 | 30,525,158 | 24,480,494 |
Net loss per share of common stock - basic and diluted | $ (0.46) | $ (1.10) | $ (2.32) | $ (2.83) |
Shares excluded from the calculation of diluted weighted average shares outstanding, as they would be anti-dilutive | 25,254,024 | 6,817,623 | 25,254,024 | 6,817,623 |
5.50% Notes | ||||
Basic and diluted net loss per common share calculation: | ||||
Interest rate (as a percent) | 5.50% | 5.50% | ||
Stock options | ||||
Basic and diluted net loss per common share calculation: | ||||
Shares excluded from the calculation of diluted weighted average shares outstanding, as they would be anti-dilutive | 4,452,314 | 2,141,072 | 4,452,314 | 2,141,072 |
Restricted stock awards | ||||
Basic and diluted net loss per common share calculation: | ||||
Shares excluded from the calculation of diluted weighted average shares outstanding, as they would be anti-dilutive | 32,683 | 574,191 | 32,683 | 574,191 |
Common shares issuable upon conversion of the 5.50% notes | ||||
Basic and diluted net loss per common share calculation: | ||||
Shares excluded from the calculation of diluted weighted average shares outstanding, as they would be anti-dilutive | 4,102,360 | 4,102,360 | 4,102,360 | 4,102,360 |
Warrants | ||||
Basic and diluted net loss per common share calculation: | ||||
Shares excluded from the calculation of diluted weighted average shares outstanding, as they would be anti-dilutive | 16,666,667 | 16,666,667 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Plans (Details) | Jun. 08, 2017item$ / sharesshares | Dec. 31, 2016$ / sharesshares | Jun. 30, 2016shares | Jun. 30, 2014shares | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Jan. 31, 2016shares | Nov. 30, 2013shares |
Shares of common stock reserved for issuance: | ||||||||||
Common stock shares issued | (25,189,125) | (43,029,615) | (43,029,615) | |||||||
Shares Available for Future Grant Under Equity Compensation Plans | 1,244,580 | 1,244,580 | ||||||||
Total stock-based compensation expense | $ | $ 1,694,000 | $ 1,809,000 | $ 5,056,000 | $ 4,677,000 | ||||||
Share-based Compensation | $ | 5,056,000 | 4,677,000 | ||||||||
General and administrative | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Total stock-based compensation expense | $ | 1,162,000 | 1,448,000 | 3,783,000 | 3,854,000 | ||||||
Sales and marketing | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Total stock-based compensation expense | $ | 83,000 | 115,000 | 386,000 | 250,000 | ||||||
Research and development | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Total stock-based compensation expense | $ | 85,000 | 246,000 | 523,000 | 573,000 | ||||||
Restructuring charges | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Total stock-based compensation expense | $ | $ 364,000 | $ 364,000 | ||||||||
Stock options | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Expected term of options | 6 years 1 month 21 days | |||||||||
Options, additional disclosures | ||||||||||
Weighted average grant date fair value of the options granted (in dollars per share) | $ / shares | $ 2.64 | |||||||||
Weighted average assumptions: | ||||||||||
Risk free interest rate (as a percent) | 1.92% | |||||||||
Expected term of options | 6 years 1 month 21 days | |||||||||
Expected volatility (as a percent) | 80.57% | |||||||||
Dividend yield (as a percent) | 0.00% | |||||||||
Stock options and restricted stock | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Stock options and restricted stock awards forfeited | 849,226 | 849,226 | ||||||||
Employee stock purchase plan | ||||||||||
Stock-based Compensation | ||||||||||
Common stock initially reserved for issuance (in shares) | 750,000 | 750,000 | ||||||||
Shares of common stock reserved for issuance: | ||||||||||
Shares initially reserved under the Plan | 750,000 | 750,000 | ||||||||
Common stock shares issued | (98,548) | (98,548) | ||||||||
Shares Available for Future Grant Under Equity Compensation Plans | 750,000 | |||||||||
Total stock-based compensation expense | $ | $ 19,000 | $ 29,000 | $ 89,000 | $ 82,000 | ||||||
2013 Stock-Based Incentive Plan | ||||||||||
Stock-based Compensation | ||||||||||
Common stock initially reserved for issuance (in shares) | 1,680,000 | 1,680,000 | 1,680,000 | |||||||
Authorized increase to the Plan | 2,600,000 | 2,000,000 | 4,600,000 | |||||||
Shares of common stock reserved for issuance: | ||||||||||
Shares initially reserved under the Plan | 1,680,000 | 1,680,000 | 1,680,000 | |||||||
Authorized increase to the Plan | 2,600,000 | 2,000,000 | 4,600,000 | |||||||
Common stock options granted | (5,079,938) | (5,079,938) | ||||||||
Restricted stock awards granted | (1,543,660) | (1,543,660) | ||||||||
2013 Stock-Based Incentive Plan | Stock options | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 2 years 8 months 16 days | |||||||||
Options Outstanding, Number of Shares | ||||||||||
Balance at beginning of the period (in shares) | 2,952,572 | |||||||||
Granted (in shares) | 1,987,581 | |||||||||
Forfeited (in shares) | (460,250) | |||||||||
Cancelled (in shares) | (27,589) | |||||||||
Balance at end of the period (in shares) | 2,952,572 | 4,452,314 | 4,452,314 | |||||||
Vested or expected to vest at the end of the period (in shares) | 4,452,314 | 4,452,314 | ||||||||
Exercisable at the end of the period (in shares) | 1,080,537 | 1,080,537 | ||||||||
Options Outstanding, Weighted-Average Exercise Price | ||||||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 8.63 | |||||||||
Granted (in dollars per share) | $ / shares | 3.76 | |||||||||
Forfeited (in dollars per share) | $ / shares | 7.14 | |||||||||
Cancelled ( in dollars per share) | $ / shares | 9.43 | |||||||||
Outstanding at end of the period (in dollars per share) | $ / shares | $ 8.63 | $ 6.61 | 6.61 | |||||||
Vested or expected to vest at the end of the period (in dollars per share) | $ / shares | 6.61 | 6.61 | ||||||||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 8.77 | $ 8.77 | ||||||||
Options, additional disclosures | ||||||||||
Balance at the end of the period, Weighted-average remaining contractual term | 8 years 6 months 26 days | |||||||||
Vested or expected to vest at the end of the period, Weighted-average remaining contractual term | 8 years 6 months 26 days | |||||||||
Exercisable at the end of the period, Weighted-average remaining contractual term | 7 years 1 month 13 days | |||||||||
Unvested options (in shares) | 4,452,314 | 4,452,314 | ||||||||
Intrinsic value of unvested options (in dollars) | $ | $ 4,000 | $ 4,000 | ||||||||
Stock price (in dollars per share) | $ / shares | $ 1.28 | $ 1.28 | ||||||||
Unvested options, Weighted Average Exercise Price (in dollars per share) | $ / shares | $ 6.61 | $ 6.61 | ||||||||
Unrecognized compensation expense and recognition period disclosure | ||||||||||
Unrecognized compensation expense | $ | $ 10,200,000 | $ 10,200,000 | ||||||||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 2 years 8 months 16 days | |||||||||
2013 Stock-Based Incentive Plan | Stock options | Maximum | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Expected term of options | 10 years | |||||||||
Weighted average assumptions: | ||||||||||
Expected term of options | 10 years | |||||||||
2017 Inducement Plan | ||||||||||
Stock-based Compensation | ||||||||||
Common stock initially reserved for issuance (in shares) | 300,000 | 300,000 | ||||||||
Shares of common stock reserved for issuance: | ||||||||||
Shares initially reserved under the Plan | 300,000 | 300,000 | ||||||||
Shares reserved under Plan for future issuance | 300,000 | |||||||||
Common stock options granted | (212,500) | (212,500) | ||||||||
Term of the awards | P10Y | |||||||||
June 2017 Grant | Stock options | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Total stock-based compensation expense | $ | $ 60,000 | $ 76,000 | ||||||||
Granted (in shares) | 630,000 | |||||||||
Number of senior executives | item | 9 | |||||||||
Expected term of options | 10 years | 5 years 7 months 6 days | ||||||||
Granted (in dollars per share) | $ / shares | $ 2.38 | |||||||||
Share-based Compensation | $ | $ 1,334,000 | |||||||||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 5 years 7 months 6 days | |||||||||
Weighted average assumptions: | ||||||||||
Risk free interest rate (as a percent) | 1.80% | |||||||||
Expected term of options | 10 years | 5 years 7 months 6 days | ||||||||
Expected volatility (as a percent) | 95.54% | |||||||||
Dividend yield (as a percent) | 0.00% | |||||||||
Unrecognized compensation expense and recognition period disclosure | ||||||||||
Weighted average remaining period over which unrecognized compensation expense will be recognized | 5 years 7 months 6 days | |||||||||
June 2017 Grant | Stock options | Tranche one | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Vesting percentage | 25.00% | |||||||||
Average closing price | $ / shares | $ 3.33 | |||||||||
Consecutive trading days for average closing price | 30 days | |||||||||
June 2017 Grant | Stock options | Tranche two | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Vesting percentage | 25.00% | |||||||||
Average closing price | $ / shares | $ 4.05 | |||||||||
Consecutive trading days for average closing price | 30 days | |||||||||
June 2017 Grant | Stock options | Tranche three | ||||||||||
Shares of common stock reserved for issuance: | ||||||||||
Vesting percentage | 50.00% | |||||||||
Average closing price | $ / shares | $ 4.76 | |||||||||
Consecutive trading days for average closing price | 30 days |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Restricted stock awards | |
Shares | |
Unvested balance at the beginning of the period (in shares) | shares | 543,577 |
Forfeited (in shares) | shares | (28,750) |
Vested restricted stock awards (in shares) | shares | (482,144) |
Unvested balance at the end of the period (in shares) | shares | 32,683 |
Weighted-average Grant Date Fair Value per Share | |
Outstanding balance at the beginning of the period (in dollars per share) | $ / shares | $ 10.77 |
Forfeited (in dollars per share) | $ / shares | 6.92 |
Vested restricted stock awards (in dollars per share) | $ / shares | 11.21 |
Outstanding balance at the end of the period (in dollars per share) | $ / shares | $ 7.80 |
2013 Stock-Based Incentive Plan | Restricted stock awards | |
Weighted-average Grant Date Fair Value per Share | |
Unrecognized stock-based compensation expense | $ | $ 255,000 |
Weighted average remaining period over which unrecognized compensation expense will be recognized | 2 years 6 months 7 days |
2013 Stock-Based Incentive Plan | Stock options | |
Weighted-average Grant Date Fair Value per Share | |
Weighted average remaining period over which unrecognized compensation expense will be recognized | 2 years 8 months 16 days |
Stock-based Compensation - Empl
Stock-based Compensation - Employee Stock Purchase Plans (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-based Compensation | ||||
The maximum value of shares an employee can accrue to purchase under the plan per calendar year | $ 25,000 | |||
Share-based compensation expense recognized | $ 1,694,000 | $ 1,809,000 | $ 5,056,000 | $ 4,677,000 |
Employee stock purchase plan | ||||
Stock-based Compensation | ||||
Purchase price of common stock expressed as a percentage of its fair value | 85.00% | |||
Maximum employee contribution rate | 10.00% | 10.00% | ||
Maximum number of shares to purchase per employee per period | 1,500 | |||
Share-based compensation expense recognized | $ 19,000 | $ 29,000 | $ 89,000 | $ 82,000 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) - security | Feb. 10, 2017 | Jan. 27, 2017 |
Commitments and Contingencies. | ||
Number of putative securities | 2 | 2 |
Acquisitions and License and 43
Acquisitions and License and Collaboration Agreements - Shionogi and Acura (Details) - Collaboration and License Agreement - Acura - OXAYDO tablets - USD ($) | 1 Months Ended | |
Jan. 31, 2015 | Oct. 31, 2015 | |
License and collaboration agreement | ||
Upfront payment paid | $ 5,000,000 | |
Milestone payment payable | $ 2,500,000 | |
Milestone payment payable upon achievement of net product sales in calendar year threshold | 12,500,000 | |
Net product sales threshold in calendar year to be met for one-time milestone payment | 150,000,000 | |
Intangible assets | 7,700,000 | |
Transaction costs | $ 172,000 | |
Useful life | 7 years |
Acquisitions and License and 44
Acquisitions and License and Collaboration Agreements - Luitpold Agreement (Details) - Luitpold | 1 Months Ended |
Jan. 31, 2015USD ($) | |
Acquisition | |
Purchase price | $ 7,000,000 |
Additional glassware, equipment and active pharmaceutical ingredient purchased | 1,100,000 |
Additional pharmaceutical ingredient to be purchased after closing | 340,000 |
Allocation | |
Finite lived intangible-product rights | $ 4,600,000 |
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 | ||||
Income tax expense (benefit) | $ 0 | $ (358) | $ 0 | $ (780) |
Restructuring (Details)
Restructuring (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($) | Sep. 30, 2017USD ($) | |
Restructuring Charges | ||
Restructuring charges | $ 2,983,000 | $ 2,983,000 |
Non-cash stock compensation costs to terminated employee | 364,000 | |
Payment to severed employees | 566,000 | |
Accrued expenses | ||
Restructuring Charges | ||
Restructuring reserve | $ 2,000,000 | $ 2,000,000 |