Alpine Immune Sciences (ALPN) 10-Q 21 Jul 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 21, 2017
Document and Entity Information
Entity Registrant Name	Nivalis Therapeutics, Inc.
Entity Central Index Key	1,626,199
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		15,656,251
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

Balance Sheets

Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 27,548	$ 24,203
Marketable securities	21,949	36,832
Prepaid expenses and other current assets	129	628
Total current assets	49,626	61,663
Property and equipment and other assets, net	18	272
Total assets	49,644	61,935
Current liabilities:
Accounts payable	815	1,921
Accrued direct program expenses	8	2,646
Accrued restructuring charges	2,584
Accrued employee benefits	146	1,879
Accrued other liabilities	25	53
Total current liabilities	3,578	6,499
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized and no shares issued and outstanding for both periods presented
Common stock, $0.001 par value; 200,000,000 shares authorized for both periods presented; 15,656,251 and 15,565,973 shares issued and outstanding, respectively	16	16
Additional paid-in capital	238,980	235,737
Accumulated other comprehensive income	(4)	(17)
Accumulated deficit	(192,926)	(180,300)
Total stockholders’ equity	46,066	55,436
Total liabilities and stockholders’ equity	$ 49,644	$ 61,935

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	15,656,251	15,565,973
Common stock, shares outstanding	15,656,251	15,565,973

Statements of Operations and Co

Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Operating expenses:
Research and development	$ 359	$ 6,424	$ 3,117	$ 11,991
General and administrative	2,592	2,172	5,373	4,539
Restructuring charges	864		4,350
Loss from operations	(3,815)	(8,596)	(12,840)	(16,530)
Interest income	105	117	214	213
Net loss attributable to common stockholders	(3,710)	(8,479)	(12,626)	(16,317)
Unrealized gains (losses) on marketable securities, net	10	20	13	20
Comprehensive loss	$ (3,700)	$ (8,459)	$ (12,613)	$ (16,297)
Weighted average shares outstanding - basic and diluted (in shares)	15,656	15,462	15,650	15,462
Net loss per share attributable to common stockholders - basic and diluted (in dollars per share)	$ (0.24)	$ (0.55)	$ (0.81)	$ (1.06)
Total stock-based compensation expense	$ 546	$ 700	$ 3,243	$ 1,407
Research and development
Operating expenses:
Total stock-based compensation expense	168	300	1,433	513
General and administrative
Operating expenses:
Total stock-based compensation expense	$ 378	$ 400	$ 1,810	$ 894

Statement of Stockholders' Equi

Statement of Stockholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total
Balance, beginning at Dec. 31, 2016	$ 16	$ 235,737	$ (17)	$ (180,300)	$ 55,436
Balance, beginning (in shares) at Dec. 31, 2016	15,566
Employee stock-based compensation expense		3,243			3,243
Issuance of common stock under restricted stock unit awards (in shares)	90
Unrealized gains on marketable securities			13		13
Net loss				(12,626)	(12,626)
Balance, ending at Jun. 30, 2017	$ 16	$ 238,980	$ (4)	$ (192,926)	$ 46,066
Balance, ending (in shares) at Jun. 30, 2017	15,656

Statements of Cash Flows

Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (12,626)	$ (16,317)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	109	66
Stock-based compensation expense	3,243	1,407
Gain on sales of property and equipment	(27)
Changes in operating assets and liabilities:
Prepaid expenses and other	596	(168)
Accounts payable	(1,106)	1,116
Accrued direct program expenses	(2,638)	1,187
Accrued restructuring charges	2,584
Accrued employee benefits	(1,733)	(690)
Accrued other liabilities	(28)	(159)
Net cash used in operating activities	(11,626)	(13,558)
Investing activities
Purchases of property and equipment		(74)
Proceeds from sales of property and equipment	75
Purchases of marketable securities	(19,940)	(52,235)
Proceeds from sales and maturities of marketable securities	34,836	56,200
Net cash provided by investing activities	14,971	3,891
Financing activities
Proceeds from employee stock purchases and stock options exercised		92
Net cash provided by financing activities		92
Net increase (decrease) in cash and cash equivalents	3,345	(9,575)
Cash and cash equivalents, beginning of period	24,203	24,991
Cash and cash equivalents, end of period	$ 27,548	$ 15,416

Organization and Description of

Organization and Description of Business	6 Months Ended
	Jun. 30, 2017
Organization and Description of Business
Organization and Description of Business	1. Organization and Description of Business Nivalis Therapeutics, Inc. (the “Company” or “Nivalis”), incorporated in Delaware on August 1, 2012, is a pharmaceutical company that has historically focused on the discovery and development of product candidates for patients with cystic fibrosis, or CF. In November 2016, the Company announced that its Phase 2 trial, evaluating the efficacy and safety of cavosonstat in adult patients with CF, had failed to demonstrate a benefit in its primary endpoint. On January 3, 2017, the Company announced that its board of directors had initiated a process to explore and review a range of strategic alternatives. At that time, the Company also announced that it had engaged a financial advisor and established a Special Committee of the Board to explore strategic alternatives. As a result of this process, on April 18, 2017, the Company, Nautilus Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), and Alpine Immune Sciences, Inc., a Delaware corporation (“Alpine”), entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Alpine, with Alpine continuing as a wholly owned subsidiary of Nivalis and the surviving corporation of the merger (the “Merger”). See Note 7 below for more information regarding the Merger.

Liquidity Risks

Liquidity Risks	6 Months Ended
	Jun. 30, 2017
Liquidity Risks
Liquidity Risks	2. Liquidity Risks The Company has incurred operating losses and has an accumulated deficit as a result of ongoing research and development spending. As of June 30, 2017, the Company had an accumulated deficit of $192.9 million. For the six months ended June 30, 2017, net loss was $12.6 million and net cash used in operating activities was $11.6 million. As announced on January 12, 2017, the Company committed to a restructuring plan that consisted primarily of a workforce reduction of 25 positions, to a total of five remaining positions in order to conserve cash while the Company continued to evaluate strategic alternatives. In connection with this restructuring, the Company discontinued a substantial portion of its research and clinical development activities and no longer anticipates expending material resources on any of its drug candidates in order to reduce expenditures. The Company expects to incur significant transaction related expenses relating to the consummation of the Merger. After considering the actions taken by management, the Company has sufficient cash and marketable securities to fund operations for at least the next 12 months.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2017
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	3. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include all adjustments necessary for the presentation of the Company’s financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes, including accrued liabilities and the fair value-based measurement of equity instruments. Actual results could differ materially from those estimates. The Company evaluates its estimates and assumptions as facts and circumstances dictate. Unaudited Interim Financial Data The balance sheet at December 31, 2016 was derived from the Company’s audited financial statements, but these interim financial statements do not include all the annual disclosures required by GAAP. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2016. The accompanying interim financial statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016, are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state the Company’s financial position as of June 30, 2017 and the results of operations and cash flows for the three and six months ended June 30, 2017 and 2016. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any future interim period. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking, interest-bearing and demand money market accounts. Marketable Securities The Company has designated marketable securities as available-for-sale securities and accounts for them at their respective fair values. Marketable securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Securities that are classified as available-for-sale are carried at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of stockholders’ equity until their disposition. The Company reviews all available-for-sale securities at each period end to determine if they remain available-for-sale based on the Company’s then current intent and ability to sell the security if it is required to do so. The cost of securities sold is based on the specific identification method. All marketable securities are subject to a periodic impairment review. The Company will recognize an impairment charge when a decline in the fair value of the investments below the cost basis is judged to be other-than-temporary. Accrued Direct Program Expenses Substantial portions of the Company’s preclinical studies and clinical trials, including the manufacture and packaging of drug supplies, were performed by third-party laboratories, contract manufacturing organizations, medical centers, contract research organizations and other service providers (collectively vendors). These vendors generally bill monthly or quarterly for services performed or upon achieving certain milestones. For preclinical studies and product development and manufacturing, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon patient enrollment and the duration of the study. The Company monitored patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported by these vendors using software tracking systems, or through clinical site visits and vendor correspondence. The Company’s estimates depend on the timeliness and accuracy of the data provided by these vendors regarding the status of each program and total program spending. The Company periodically evaluates these estimates to determine if adjustments are necessary or appropriate based on information received. Accrued Restructuring Charges In January 2017, the Company committed to a restructuring plan that consisted primarily of a workforce reduction of 25 positions, to a total of five remaining positions in order to conserve cash while the Company continued to evaluate strategic alternatives. The restructuring was substantially completed during the first quarter of 2017. Total restructuring charges for the six-month period ended June 30, 2017, in connection with the workforce reduction, comprised principally of monthly or one-time severance payments, retention bonuses and benefit continuation costs, were approximately $4.4 million of which approximately $1.2 million and $570,000 was paid during the first and second quarters of 2017, respectively. As of June 30, 2017, approximately $2.6 million was accrued for remaining restructuring-related payments expected to be paid in July 2017. In accordance with ASC 420, “Exit and Disposal Cost Obligations”, the Company is recognizing the restructuring liabilities related to the five remaining positions over the employees’ anticipated service period, which is expected to be the first seven months of 2017. The Company recognized approximately $864,000 and $1.4 million of accrued restructuring costs for these remaining employees during the three and six-month periods ended June 30, 2017, respectively. Comprehensive Loss Comprehensive loss is comprised of net loss and adjustments for the change in unrealized gains and losses on the Company’s investments in available-for-sale marketable securities. The Company presents comprehensive loss and its components in the statements of operations and comprehensive loss for the three and six months ended June 30, 2017. Net Loss per Share The Company reports net loss per share in accordance with the standard codification of ASC “Earnings per Share” (“ASC 260”). Under ASC 260, basic earnings per share, which excludes dilution, is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net loss by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share excludes the impact of options to purchase common stock, restricted stock units and warrants to purchase common stock, as the effect would be anti-dilutive. During a loss period, the assumed exercise of in-the-money stock options and other potentially diluted instruments has an anti-dilutive effect and therefore, these instruments are excluded from the computation of dilutive earnings per share. Recent Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification within the statement of cash flows. The guidance is effective for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this standard as of January 1, 2017 and it did not have a material effect on its financial statements. As part of the adoption of this standard, the Company elected to recognize forfeiture of awards as they occur rather than estimating the expected forfeiture rate, as was previously required. For additional discussion of recent accounting pronouncements please refer to Note 3, “Summary of Significant Accounting Policies – Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements”, in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2016. Fair Value of Financial Instruments The carrying amounts of cash equivalents and marketable securities approximate their fair value based upon quoted market prices. Certain financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, accounts payable, accrued direct program expenses, accrued restructuring charges, and accrued employee benefits , and other financial instruments included within current assets or current liabilities. Fair Value Measurements In general, asset and liability fair values are determined using the following categories: Level 1 – inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 – inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 – inputs are unobservable inputs and include situations where there is little, if any, market activity for the balance sheet items at period end. Pricing inputs are unobservable for the terms and are based on the Company’s own estimates about the assumptions that a market participant would use in pricing an asset. The Company’s financial instruments, including money market investments, reverse repurchase agreements, corporate debt securities, U.S. Treasury securities and obligations of U.S. government agencies, are measured at fair value on a recurring basis. There were no transfers between levels for the six months ended June 30, 2017. Assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of June 30, 2017 and December 31, 2016 (in thousands): Quoted prices Quoted prices Quoted prices Quoted prices in active for similar assets in active for similar assets markets for observable in the markets for observable in the June 30, identical assets marketplace December 31, identical assets marketplace Description 2017 (Level 1) (Level 2) 2016 (Level 1) (Level 2) Assets measured at fair value: Money market investments $ 21,544 $ 21,544 $ — $ 14,186 $ 14,186 $ — U.S. Treasury securities, obligations of U.S. government agencies, corporate debt securities and reverse repurchase agreements 24,937 — 24,937 41,832 — 41,832

Cash, Cash Equivalents and Mark

Cash, Cash Equivalents and Marketable Securities	6 Months Ended
	Jun. 30, 2017
Cash, Cash Equivalents and Marketable Securities
Cash, Cash Equivalents and Marketable Securities	4. Cash, Cash Equivalents and Marketable Securities The following is a summary of cash, cash equivalents and marketable securities as of June 30, 2017 and December 31, 2016 (in thousands): Gross unrealized Gross unrealized Fair market Amortized Cost gains losses value June 30, 2017 Cash $ 3,016 $ - $ - $ 3,016 Money market funds 21,544 - - 21,544 Reverse repurchase agreement 3,000 - - 3,000 U.S Treasury securities and obligations of U.S. government agencies 8,965 - (3) 8,962 Corporate debt securities 12,976 - (1) 12,975 Total for June 30, 2017 $ 49,501 $ - $ (4) $ 49,497 December 31, 2016 Cash $ 5,017 $ – $ – $ 5,017 Money market funds 14,186 – – 14,186 Reverse repurchase agreements 5,000 – – 5,000 U.S Treasury securities and obligations of U.S. government agencies 16,458 1 (2) 16,457 Corporate debt securities 20,391 1 (17) 20,375 Total for December 31, 2016 $ 61,052 $ 2 $ (19) $ 61,035

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2017
Stockholders' Equity
Stockholders' Equity	5. Stockholders’ Equity Common Stock On June 22, 2015, the Company completed its IPO of 6,325,000 shares of its common stock, including 875,000 shares from the exercise of the underwriters’ over-allotment option. The Company received proceeds of $78.8 million from its IPO, net of $9.8 million in expenses and underwriters’ discounts and commissions relating to the issuance and distribution of the securities. On April 18, 2016, in connection with the appointment of the Company’s new Chief Medical Officer, the Company approved a grant of stock options to purchase 108,333 shares of the Company’s common stock (the “Options”) and 216,667 restricted stock units (“RSUs”). The Options and RSUs were issued pursuant to a separate Notice of Inducement Stock Option Grant and Inducement Stock Option Agreement and Notice of Restricted Stock Unit Inducement Grant and Inducement Restricted Stock Unit Agreement and are considered inducement grants made in accordance with NASDAQ Listing Rule 5635(c)(4). In January 15, 2017, Dr. Rodman’s employment was terminated as part of our workforce reduction when his position was eliminated. As a result of the termination of Dr. Rodman’s employment, all unvested Options were 100% vested and the unvested portion of the RSUs that would have vested in the 12-month period following the termination date vested and the remaining unvested RSUs were forfeited. On July 5, 2016, the Company filed a registration statement on Form S-3 that was declared effective on July 14, 2016 registering (i) the offering, issuance and sale of up to $125,000,000 in the aggregate of an indeterminate number of shares of common stock and preferred stock, an indeterminate principal amount of debt securities and an indeterminate number of warrants and (ii) the resale of up to 3,732,412 shares of common stock by selling stockholders pursuant to a base prospectus that forms a part of the registration statement. The registration statement also registers the offering, issuance and sale of the Company’s common stock having up to a maximum aggregate offering price of $20,000,000 that may be issued and sold in an at-the-market offering under a sales agreement the Company entered into with Cowen and Company, LLC on July 5, 2016 pursuant to a sales agreement prospectus that forms a part of the registration statement. The $20,000,000 of common stock that may be sold under the sales agreement prospectus is included in the $125,000,000 that may be sold by the Company under the base prospectus. As of June 30, 2017, approximately 20,000 shares of common stock have been sold at an average sales price of $8.00 per share under the sales agreement, net of offering costs of approximately $140,000. At June 30, 2017, shares of common stock have been reserved for issuance as follows: Options to purchase common stock - issued 1,710,328 Options to purchase common stock - unissued 1,426,225 Employee stock purchase plan - unissued 180,845 Warrants to purchase common stock 18,534 Stock-Based Compensation During the three and six-month periods ended June 30, 2017, the Company recorded approximately $546,000 and $3.2 million, respectively, in stock-based compensation expense for the vesting of stock options and RSUs. For the three and six-month periods ended June 30, 2016, the Company recorded approximately $700,000 and $1.4 million, respectively, in stock-based compensation expense. The Company recorded approximately $2.3 million of stock-based compensation expense during the first quarter of 2017 specifically related to the accelerated vesting of options and RSUs held by employees affected by the restructuring plan and workforce reduction announced on January 12, 2017.

Net Loss per Share

Net Loss per Share	6 Months Ended
	Jun. 30, 2017
Net Loss per Share
Net Loss per Share	6. Net Loss per Share The Company excluded the following common stock equivalents, outstanding as of June 30, 2017 and 2016, from the computation of diluted net loss per share for the applicable quarterly periods because they had an anti-dilutive impact on the computation: June 30, 2017 2016 Options to purchase common stock - issued Inducement grants - issued — 325,000 Warrants to purchase common stock 18,534 18,534 Total

Plan of Merger and Reorganizati

Plan of Merger and Reorganization	6 Months Ended
	Jun. 30, 2017
Plan of Merger and Reorganization
Plan of Merger and Reorganization	7. Plan of Merger and Reorganization On April 18, 2017, the Company, Merger Sub and Alpine entered into the Merger Agreement pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Alpine, with Alpine continuing as a wholly owned subsidiary of Nivalis and the surviving corporation of the Merger. The merger is intended to qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, each outstanding share of Alpine’s capital stock will be converted into the right to receive shares of Nivalis’ common stock (subject to the payment of cash in lieu of fractional shares and after giving effect to a reverse stock split of Nivalis’ common stock if determined necessary or appropriate by Nivalis, Alpine and Merger Sub) such that, immediately following the effective time of the Merger, preexisting Nivalis stockholders, optionholders and warrantholders are expected to own, or hold rights to acquire, approximately 26% of the fully-diluted common stock of Nivalis, and preexisting stockholders, optionholders and warrantholders of Alpine are expected to own, or hold rights to acquire, approximately 74% of the fully-diluted common stock of Nivalis. Prior to the execution and delivery of the Merger Agreement, and as a condition of the willingness of Nivalis to enter into the Merger Agreement, certain existing stockholders of Alpine have entered into agreements with Alpine pursuant to which such stockholders have agreed, subject to the terms and conditions of such agreements, to purchase prior to the consummation of the Merger shares of Alpine’s capital stock for an aggregate purchase price of approximately $17.0 million. The consummation of the transactions contemplated by such agreements is conditioned upon the satisfaction or waiver of the conditions set forth in the Merger Agreement. Consummation of the Merger is subject to certain closing conditions, including, among other things, approval by the stockholders of Nivalis and Alpine, and satisfaction of minimum net cash thresholds by each of Nivalis and Alpine. In accordance with the terms of the Merger Agreement, (i) certain executive officers, directors and stockholders of Alpine (solely in their respective capacities as Alpine stockholders) have entered into support agreements with Nivalis to vote all of their shares of Alpine’s capital stock in favor of adoption of the Merger Agreement and approval of the transactions contemplated therein, including the Merger and (ii) certain executive officers, directors and stockholders of Nivalis (solely in their respective capacities as Nivalis stockholders) have entered into support agreements with Alpine to vote all of their shares of Nivalis’ common stock in favor of approval of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger and the issuance of shares of Nivalis’ common stock to Alpine’s stockholders. The Merger Agreement contains certain termination rights for both Nivalis and Alpine, and further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $2.5 million, or in some circumstances reimburse the other party’s expenses up to a maximum of $1.0 million. At the effective time of the Merger, the board of directors of Nivalis is expected to consist of six members, four of whom will be designated by Alpine and are expected to be Mitchell H. Gold, M.D., Peter Thompson, M.D., James N. Topper, M.D., Ph.D., and Jay Venkatesan, M.D., and two of whom will be designated by Nivalis and are expected to be Robert E. Conway and Paul Sekhri, two existing directors of Nivalis. Following consummation of the Merger, it is anticipated that the size of the board of directors will be increased to seven and that a person, unaffiliated with Nivalis or Alpine, will be designated by a majority of the other members of the board of directors.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2017
Subsequent Events
Subsequent Events	8. Subsequent Events On July 19, 2017, the Company held a special meeting of stockholders in order to obtain the stockholder approvals necessary to complete the Merger. The required approval of the Company’s stockholders were obtained for each of the matters submitted to the stockholders for approval at the meeting as follows: 1. Approval of the Agreement and Plan of Merger and Reorganization, dated as of April 18, 2017, by and among Nivalis, Merger Sub, and Alpine and the transactions contemplated thereby, including the Merger and the issuance of shares of Nivalis’ common stock to Alpine’s stockholders pursuant to the terms of the Merger Agreement. 2. Approval of an amendment to the amended and restated certificate of incorporation of Nivalis to effect a reverse stock split of Nivalis’ common stock, at a ratio of one new share for every four shares outstanding. 3. Approval of an amendment to the amended and restated certificate of incorporation of Nivalis to change the corporate name of Nivalis from “Nivalis Therapeutics, Inc.” to “Alpine Immune Sciences, Inc.” 4. The stockholders of the Company had also been solicited to vote to approve an adjournment of the special meeting, if necessary, to solicit additional proxies if there were insufficient votes at the time of the special meeting to approve the Merger Agreement or the reverse stock split, but such adjournment was deemed unnecessary. No other matters were considered or brought before the special stockholders meeting. The closing of the Merger and the other approved actions are expected to occur on July 24, 2017.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2017
Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates	Basis of Presentation and Use of Estimates The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include all adjustments necessary for the presentation of the Company’s financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes, including accrued liabilities and the fair value-based measurement of equity instruments. Actual results could differ materially from those estimates. The Company evaluates its estimates and assumptions as facts and circumstances dictate.
Unaudited Interim Financial Data	Unaudited Interim Financial Data The balance sheet at December 31, 2016 was derived from the Company’s audited financial statements, but these interim financial statements do not include all the annual disclosures required by GAAP. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2016. The accompanying interim financial statements as of June 30, 2017 and for the three and six months ended June 30, 2017 and 2016, are unaudited. The unaudited interim financial statements have been prepared on a basis consistent with the audited financial statements, pursuant to the rules and regulations of the SEC for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary to fairly state the Company’s financial position as of June 30, 2017 and the results of operations and cash flows for the three and six months ended June 30, 2017 and 2016. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any future interim period.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking, interest-bearing and demand money market accounts.
Marketable Securities	Marketable Securities The Company has designated marketable securities as available-for-sale securities and accounts for them at their respective fair values. Marketable securities are classified as short-term or long-term based on the nature of the securities and their availability to meet current operating requirements. Securities that are classified as available-for-sale are carried at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of stockholders’ equity until their disposition. The Company reviews all available-for-sale securities at each period end to determine if they remain available-for-sale based on the Company’s then current intent and ability to sell the security if it is required to do so. The cost of securities sold is based on the specific identification method. All marketable securities are subject to a periodic impairment review. The Company will recognize an impairment charge when a decline in the fair value of the investments below the cost basis is judged to be other-than-temporary.
Accrued Direct Program Expenses	Accrued Direct Program Expenses Substantial portions of the Company’s preclinical studies and clinical trials, including the manufacture and packaging of drug supplies, were performed by third-party laboratories, contract manufacturing organizations, medical centers, contract research organizations and other service providers (collectively vendors). These vendors generally bill monthly or quarterly for services performed or upon achieving certain milestones. For preclinical studies and product development and manufacturing, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon patient enrollment and the duration of the study. The Company monitored patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported by these vendors using software tracking systems, or through clinical site visits and vendor correspondence. The Company’s estimates depend on the timeliness and accuracy of the data provided by these vendors regarding the status of each program and total program spending. The Company periodically evaluates these estimates to determine if adjustments are necessary or appropriate based on information received.
Accrued Restructuring Charges	Accrued Restructuring Charges In January 2017, the Company committed to a restructuring plan that consisted primarily of a workforce reduction of 25 positions, to a total of five remaining positions in order to conserve cash while the Company continued to evaluate strategic alternatives. The restructuring was substantially completed during the first quarter of 2017. Total restructuring charges for the six-month period ended June 30, 2017, in connection with the workforce reduction, comprised principally of monthly or one-time severance payments, retention bonuses and benefit continuation costs, were approximately $4.4 million of which approximately $1.2 million and $570,000 was paid during the first and second quarters of 2017, respectively. As of June 30, 2017, approximately $2.6 million was accrued for remaining restructuring-related payments expected to be paid in July 2017. In accordance with ASC 420, “Exit and Disposal Cost Obligations”, the Company is recognizing the restructuring liabilities related to the five remaining positions over the employees’ anticipated service period, which is expected to be the first seven months of 2017. The Company recognized approximately $864,000 and $1.4 million of accrued restructuring costs for these remaining employees during the three and six-month periods ended June 30, 2017, respectively.
Comprehensive Loss	Comprehensive Loss Comprehensive loss is comprised of net loss and adjustments for the change in unrealized gains and losses on the Company’s investments in available-for-sale marketable securities. The Company presents comprehensive loss and its components in the statements of operations and comprehensive loss for the three and six months ended June 30, 2017.
Net Loss per Share	Net Loss per Share The Company reports net loss per share in accordance with the standard codification of ASC “Earnings per Share” (“ASC 260”). Under ASC 260, basic earnings per share, which excludes dilution, is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution of securities that could be exercised or converted into common shares, and is computed by dividing net loss by the weighted average of common shares outstanding plus the dilutive potential common shares. Diluted earnings per share excludes the impact of options to purchase common stock, restricted stock units and warrants to purchase common stock, as the effect would be anti-dilutive. During a loss period, the assumed exercise of in-the-money stock options and other potentially diluted instruments has an anti-dilutive effect and therefore, these instruments are excluded from the computation of dilutive earnings per share.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this update simplify several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification within the statement of cash flows. The guidance is effective for the annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company adopted this standard as of January 1, 2017 and it did not have a material effect on its financial statements. As part of the adoption of this standard, the Company elected to recognize forfeiture of awards as they occur rather than estimating the expected forfeiture rate, as was previously required. For additional discussion of recent accounting pronouncements please refer to Note 3, “Summary of Significant Accounting Policies – Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements”, in the Company’s previously filed Annual Report on Form 10-K for the year ended December 31, 2016.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The carrying amounts of cash equivalents and marketable securities approximate their fair value based upon quoted market prices. Certain financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, accounts payable, accrued direct program expenses, accrued restructuring charges, and accrued employee benefits , and other financial instruments included within current assets or current liabilities.
Fair Value Measurements	Fair Value Measurements In general, asset and liability fair values are determined using the following categories: Level 1 – inputs utilize quoted prices in active markets for identical assets or liabilities. Level 2 – inputs include quoted prices for similar assets or liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 – inputs are unobservable inputs and include situations where there is little, if any, market activity for the balance sheet items at period end. Pricing inputs are unobservable for the terms and are based on the Company’s own estimates about the assumptions that a market participant would use in pricing an asset. The Company’s financial instruments, including money market investments, reverse repurchase agreements, corporate debt securities, U.S. Treasury securities and obligations of U.S. government agencies, are measured at fair value on a recurring basis. There were no transfers between levels for the six months ended June 30, 2017. Assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of June 30, 2017 and December 31, 2016 (in thousands): Quoted prices Quoted prices Quoted prices Quoted prices in active for similar assets in active for similar assets markets for observable in the markets for observable in the June 30, identical assets marketplace December 31, identical assets marketplace Description 2017 (Level 1) (Level 2) 2016 (Level 1) (Level 2) Assets measured at fair value: Money market investments $ 21,544 $ 21,544 $ — $ 14,186 $ 14,186 $ — U.S. Treasury securities, obligations of U.S. government agencies, corporate debt securities and reverse repurchase agreements 24,937 — 24,937 41,832 — 41,832

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2017
Summary of Significant Accounting Policies
Schedule of assets measured at fair value on a recurring basis (in thousands)	Quoted prices Quoted prices Quoted prices Quoted prices in active for similar assets in active for similar assets markets for observable in the markets for observable in the June 30, identical assets marketplace December 31, identical assets marketplace Description 2017 (Level 1) (Level 2) 2016 (Level 1) (Level 2) Assets measured at fair value: Money market investments $ 21,544 $ 21,544 $ — $ 14,186 $ 14,186 $ — U.S. Treasury securities, obligations of U.S. government agencies, corporate debt securities and reverse repurchase agreements 24,937 — 24,937 41,832 — 41,832

Cash, Cash Equivalents and Ma17

Cash, Cash Equivalents and Marketable Securities (Tables)	6 Months Ended
	Jun. 30, 2017
Cash, Cash Equivalents and Marketable Securities
Schedule of cash, cash equivalents and marketable securities (in thousands)	Gross unrealized Gross unrealized Fair market Amortized Cost gains losses value June 30, 2017 Cash $ 3,016 $ - $ - $ 3,016 Money market funds 21,544 - - 21,544 Reverse repurchase agreement 3,000 - - 3,000 U.S Treasury securities and obligations of U.S. government agencies 8,965 - (3) 8,962 Corporate debt securities 12,976 - (1) 12,975 Total for June 30, 2017 $ 49,501 $ - $ (4) $ 49,497 December 31, 2016 Cash $ 5,017 $ – $ – $ 5,017 Money market funds 14,186 – – 14,186 Reverse repurchase agreements 5,000 – – 5,000 U.S Treasury securities and obligations of U.S. government agencies 16,458 1 (2) 16,457 Corporate debt securities 20,391 1 (17) 20,375 Total for December 31, 2016 $ 61,052 $ 2 $ (19) $ 61,035

Stockholders' Equity (Tables)

Stockholders' Equity (Tables)	6 Months Ended
	Jun. 30, 2017
Stockholders' Equity
Schedule of common stock reserved for issuance	Options to purchase common stock - issued 1,710,328 Options to purchase common stock - unissued 1,426,225 Employee stock purchase plan - unissued 180,845 Warrants to purchase common stock 18,534

Net Loss per Share (Tables)

Net Loss per Share (Tables)	6 Months Ended
	Jun. 30, 2017
Net Loss per Share
Schedule of anti-dilutive common stock equivalents	June 30, 2017 2016 Options to purchase common stock - issued Inducement grants - issued — 325,000 Warrants to purchase common stock 18,534 18,534 Total

Liquidity Risks (Details)

Liquidity Risks (Details) $ in Thousands	Jan. 12, 2017employee	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2017USD ($)	Jun. 30, 2016USD ($)	Dec. 31, 2016USD ($)
Liquidity Risks
Accumulated deficit		$ 192,926		$ 192,926		$ 180,300
Net loss		$ 3,700	$ 8,459	12,613	$ 16,297
Cash used in operating activities				$ 11,626	$ 13,558
Workforce reduction, positions | employee	25
Workforce reduction, remaining positions | employee	5

Summary of Significant Accoun21

Summary of Significant Accounting Policies (Restructuring) (Details)	Jan. 12, 2017employee	Jun. 30, 2017USD ($)	Mar. 31, 2017USD ($)	Jun. 30, 2017USD ($)
Restructuring Cost and Reserve [Line Items]
Workforce reduction, positions | employee	25
Workforce reduction, remaining positions | employee	5
Restructuring charges		$ 864,000		$ 4,350,000
Payments for restructuring		570,000	$ 1,200,000
Accrued restructuring charges		2,584,000		2,584,000
Employee Severance
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 864,000		$ 1,400,000

Summary of Significant Accoun22

Summary of Significant Accounting Policies (Fair Value) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Fair Value Measurements
Fair value measurements, transfers between levels, amount	$ 0
Assets measured at fair value:
Fair market value	49,497	$ 61,035
Money market funds
Assets measured at fair value:
Fair market value	21,544	14,186
Money market funds | Recurring
Assets measured at fair value:
Fair market value	21,544	14,186
Money market funds | Recurring | Level 1
Assets measured at fair value:
Fair market value	21,544	14,186
U.S. Treasury securities, obligations of U.S. government agencies, corporate debt securities and reverse repurchase agreements | Recurring
Assets measured at fair value:
Fair market value	24,937	41,832
U.S. Treasury securities, obligations of U.S. government agencies, corporate debt securities and reverse repurchase agreements | Recurring | Level 2
Assets measured at fair value:
Fair market value	$ 24,937	$ 41,832

Cash, Cash Equivalents and Ma23

Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Summary of cash, cash equivalents and marketable securities
Amortized Cost	$ 49,501	$ 61,052
Gross unrealized gains		2
Gross unrealized losses	(4)	(19)
Fair market value	49,497	61,035
Cash
Summary of cash, cash equivalents and marketable securities
Amortized Cost	3,016	5,017
Fair market value	3,016	5,017
Money market funds
Summary of cash, cash equivalents and marketable securities
Amortized Cost	21,544	14,186
Fair market value	21,544	14,186
Reverse repurchase agreements
Summary of cash, cash equivalents and marketable securities
Amortized Cost	3,000	5,000
Fair market value	3,000	5,000
U.S. Treasury securities and obligations of U.S. government agencies
Summary of cash, cash equivalents and marketable securities
Amortized Cost	8,965	16,458
Gross unrealized gains		1
Gross unrealized losses	(3)	(2)
Fair market value	8,962	16,457
Corporate debt securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	12,976	20,391
Gross unrealized gains		1
Gross unrealized losses	(1)	(17)
Fair market value	$ 12,975	$ 20,375

Stockholders' Equity (Details)

Stockholders' Equity (Details) - USD ($)	Jan. 15, 2017	Jul. 05, 2016	Apr. 18, 2016	Jun. 22, 2015	Jun. 30, 2017
Stockholders' Equity
Proceeds from issuance of common stock, net of offering costs				$ 78,800,000
Issuance of common stock, costs				9,800,000
Net of offering costs				$ 9,800,000
IPO
Stockholders' Equity
Issuance of common stock, net of costs (in shares)				6,325,000
Underwriters' Over-Allotment Option
Stockholders' Equity
Issuance of common stock, net of costs (in shares)				875,000
Employee Severance
Stockholders' Equity
Vesting percentage	100.00%
Executive Vice President | Options to purchase common stock
Stockholders' Equity
Additional number of shares authorized (in shares)			108,333
Executive Vice President | Restricted stock units ("RSUs")
Stockholders' Equity
Additional number of shares authorized (in shares)			216,667
Base Prospectus
Stockholders' Equity
Securities registration, maximum potential aggregate offering price		$ 125,000,000
Common Stock
Stockholders' Equity
Issuance of common stock, net of costs (in shares)					20,000
Issuance of common stock, costs					$ 140,000
Net of offering costs					$ 140,000
Sales price (in dollars per share)					$ 8
Common Stock | Base Prospectus
Stockholders' Equity
Maximum potential shares issued and sold under sales agreement		3,732,412
Common Stock | Sales Agreement Prospectus
Stockholders' Equity
Securities registration, maximum potential aggregate offering price		$ 20,000,000

Stockholders' Equity (Reserved)

Stockholders' Equity (Reserved) (Details)	Jun. 30, 2017shares
Stockholders' Equity
Common stock reserved for issuance	3,335,932
Options to purchase common stock - issued
Stockholders' Equity
Common stock reserved for issuance	1,710,328
Options to purchase common stock - unissued
Stockholders' Equity
Common stock reserved for issuance	1,426,225
Employee stock purchase plan - unissued
Stockholders' Equity
Common stock reserved for issuance	180,845
Warrants to purchase common stock
Stockholders' Equity
Common stock reserved for issuance	18,534

Stockholders' Equity (SBC) (Det

Stockholders' Equity (SBC) (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Compensation cost
Share-based compensation expense	$ 546		$ 700	$ 3,243	$ 1,407
Employee Severance
Compensation cost
Share-based compensation expense		$ 2,300

Net Loss per Share (Details)

Net Loss per Share (Details) - shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Net Loss per Share
Antidilutive common stock equivalents	1,728,862	2,139,454
Options to purchase common stock - issued
Net Loss per Share
Antidilutive common stock equivalents	1,710,328	1,795,920
Inducement grants - issued
Net Loss per Share
Antidilutive common stock equivalents		325,000
Warrants to purchase common stock
Net Loss per Share
Antidilutive common stock equivalents	18,534	18,534

Plan of Merger and Reorganiza28

Plan of Merger and Reorganization (Details) - The Merger Agreement $ in Millions	3 Months Ended
	Jun. 30, 2017USD ($)
Business Acquisition [Line Items]
Contingent merger agreement termination fee	$ 2.5
Maximum contingent reimbursement of merger related costs	$ 1
Nivalis Therapeutics, Inc.
Business Acquisition [Line Items]
Expected ownership percentage immediately following merger consummation	26.00%
Alpine Immune Sciences, Inc.
Business Acquisition [Line Items]
Expected ownership percentage immediately following merger consummation	74.00%
Contingent issuance of capital stock prior to merger consummation	$ 17