Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 01, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | Strongbridge Biopharma plc | ||
Entity Central Index Key | 1,634,432 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 216,524,867 | ||
Entity Common Stock, Shares Outstanding | 45,504,848 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 57,510 | $ 66,837 |
Accounts receivable | 1,584 | |
Inventory | 511 | |
Prepaid expenses and other current assets | 1,208 | 764 |
Total current assets | 60,813 | 67,601 |
Property and equipment, net | 15 | 25 |
Deferred tax asset | 1,599 | |
Intangible assets, net | 35,155 | 60,900 |
Goodwill | 7,256 | 7,256 |
Other assets | 686 | 150 |
Total assets | 103,925 | 137,531 |
Current liabilities: | ||
Accounts payable | 1,247 | 1,089 |
Accrued liabilities | 11,232 | 14,868 |
Total current liabilities | 12,479 | 15,957 |
Long-term debt | 37,794 | 18,434 |
Warrant liability | 41,308 | 11,090 |
Supply agreement liability, noncurrent | 24,258 | 25,078 |
Total liabilities | 115,839 | 70,559 |
Commitments and contingencies (Note 9) | ||
Stockholders’ (deficit) equity: | ||
Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding at December 31, 2017 and December 31, 2016 | 44 | 44 |
Ordinary shares, $0.01 par value, 600,000,000 shares authorized at December 31, 2017 and December 31, 2016; 40,149,812 and 35,335,026 shares issued and outstanding at December 31, 2017 and December 31, 2016 | 401 | 353 |
Additional paid-in capital | 230,524 | 195,975 |
Accumulated deficit | (242,883) | (129,400) |
Total stockholders’ (deficit) equity | (11,914) | 66,972 |
Total liabilities and stockholders’ (deficit) equity | $ 103,925 | $ 137,531 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Consolidated Balance Sheets | ||
Deferred shares, par value (in dollars per share) | $ 1.098 | $ 1.098 |
Deferred shares, shares authorized | 40,000 | 40,000 |
Deferred shares, shares issued | 40,000 | 40,000 |
Deferred shares, shares outstanding | 40,000 | 40,000 |
Ordinary shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Ordinary shares, shares authorized | 600,000,000 | 600,000,000 |
Ordinary shares, shares issued | 40,149,812 | 35,335,026 |
Ordinary shares, shares outstanding | 40,149,812 | 35,335,026 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Net product sales | $ 7,046 | ||
Total revenues | 7,046 | ||
Cost and expenses: | |||
Cost of sales (excluding amortization of intangible asset) | 1,483 | ||
Selling, general and administrative | 36,292 | $ 14,875 | $ 22,719 |
Research and development | 17,268 | 20,023 | 20,135 |
Amortization of intangible asset | 5,022 | ||
Impairment of intangible assets | 20,723 | 15,828 | |
Total cost and expenses | 80,788 | 50,726 | 42,854 |
Operating loss | (73,742) | (50,726) | (42,854) |
Other income (expense), net: | |||
Unrealized (loss) gain on fair value of warrants | (30,218) | 638 | |
Interest expense | (4,313) | (20) | |
Foreign exchange loss | (41) | (69) | (124) |
Loss on early extinguishment of debt | (3,545) | ||
Other income (expense), net | 147 | (1,180) | (1,105) |
Total other income (expense), net | (37,970) | (631) | (1,229) |
Loss before income taxes | (111,712) | (51,357) | (44,083) |
Income tax (expense) benefit | (1,771) | 2,638 | 450 |
Net loss | (113,483) | (48,719) | (43,633) |
Net loss attributable to non-controlling interest | 122 | 53 | |
Net loss attributable to Strongbridge Biopharma | (113,483) | (48,597) | (43,580) |
Net loss attributable to ordinary shareholders: | |||
Basic | (113,483) | (48,597) | (43,580) |
Diluted | $ (113,483) | $ (49,236) | $ (43,580) |
Net loss per share attributable to ordinary shareholders: | |||
Basic (in dollars per share) | $ (3.11) | $ (2.26) | $ (2.62) |
Diluted (in dollars per share) | $ (3.11) | $ (2.27) | $ (2.62) |
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders: | |||
Basic (in shares) | 36,544,825 | 21,550,353 | 16,606,669 |
Diluted (in shares) | 36,544,825 | 21,655,564 | 16,606,669 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders’ Equity - USD ($) $ in Thousands | Public offering and Sale of stock concurrent with CRG credit facility borrowingOrdinary Shares | Public offering and Sale of stock concurrent with CRG credit facility borrowingAdditional Paid-In Capital | Public offering and Sale of stock concurrent with CRG credit facility borrowing | ATM FacilityOrdinary SharesMaximum | ATM FacilityOrdinary Shares | ATM FacilityAdditional Paid-In Capital | ATM Facility | Stock issued excluding initial public offeringOrdinary Shares | Stock issued excluding initial public offeringAdditional Paid-In Capital | Stock issued excluding initial public offering | IPOOrdinary Shares | IPOAdditional Paid-In Capital | IPO | Ordinary Shares | Deferred Shares | Additional Paid-In Capital | Accumulated Deficit | Non Controlling Interest | Total |
Balance at beginning of period at Dec. 31, 2014 | $ 97 | $ 55,947 | $ (37,223) | $ 18,821 | |||||||||||||||
Balance (in shares) at Dec. 31, 2014 | 9,700,789 | ||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||
Net loss | (43,580) | $ (53) | (43,633) | ||||||||||||||||
Stock-based compensation | 3,581 | 3,581 | |||||||||||||||||
Reclass of stock-based liability award to equity | 1,542 | 1,542 | |||||||||||||||||
Issuance of shares | $ 91 | $ 91,418 | $ 91,509 | $ 25 | $ 19,450 | $ 19,475 | |||||||||||||
Issuance of shares (in shares) | 9,108,169 | 2,500,000 | |||||||||||||||||
U.S. non-accredited shares repurchased | (412) | (412) | |||||||||||||||||
U.S. non-accredited shares repurchased (in shares) | (24,955) | ||||||||||||||||||
Noncontrolling interest resulting from exchange offer | $ (1) | (616) | 617 | ||||||||||||||||
Noncontrolling interest resulting from exchange offer (in shares) | (78,621) | ||||||||||||||||||
Beneficial shares issued | $ 44 | 44 | |||||||||||||||||
Beneficial shares issued (in shares) | 40,000 | ||||||||||||||||||
Balance at end of period at Dec. 31, 2015 | $ 212 | $ 44 | 170,910 | (80,803) | 564 | 90,927 | |||||||||||||
Balance (in shares) at Dec. 31, 2015 | 21,205,382 | 40,000 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||
Net loss | (48,597) | (122) | (48,719) | ||||||||||||||||
Stock-based compensation | 4,606 | 4,606 | |||||||||||||||||
Acquisition of non-controlling interest | (972) | $ (442) | (1,414) | ||||||||||||||||
Issuance of shares | $ 140 | $ 20,430 | $ 20,570 | ||||||||||||||||
Issuance of shares (in shares) | 14,000,000 | ||||||||||||||||||
Exercise of stock options | $ 1 | 119 | 120 | ||||||||||||||||
Exercise of stock options (in shares) | 129,644 | ||||||||||||||||||
Issuance of warrants related to the loan agreements, net | 882 | 882 | |||||||||||||||||
Balance at end of period at Dec. 31, 2016 | $ 353 | $ 44 | 195,975 | (129,400) | 66,972 | ||||||||||||||
Balance (in shares) at Dec. 31, 2016 | 35,335,026 | 40,000 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||
Net loss | (113,483) | (113,483) | |||||||||||||||||
Stock-based compensation | 5,167 | 5,167 | |||||||||||||||||
Issuance of shares | $ 44 | $ 26,340 | $ 26,384 | $ 1 | $ 73 | $ 73 | |||||||||||||
Issuance of shares (in shares) | 4,429,799 | 10,300 | |||||||||||||||||
Exercise of stock options | $ 2 | 624 | 626 | ||||||||||||||||
Exercise of stock options (in shares) | 196,081 | ||||||||||||||||||
Exercise of warrants | $ 2 | (2) | |||||||||||||||||
Exercise of warrants (shares) | 178,606 | ||||||||||||||||||
Issuance of warrants related to the loan agreements, net | 2,347 | 2,347 | |||||||||||||||||
Balance at end of period at Dec. 31, 2017 | $ 401 | $ 44 | $ 230,524 | $ (242,883) | $ (11,914) | ||||||||||||||
Balance (in shares) at Dec. 31, 2017 | 40,149,812 | 40,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net loss | $ (113,483) | $ (48,719) | $ (43,633) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Change in fair value of warrant liability | 30,218 | (638) | |
Impairment of intangible assets | 20,723 | 15,828 | |
Stock-based compensation | 5,167 | 4,606 | 3,940 |
Amortization of intangible asset | 5,022 | ||
Loss on early extinguishment of debt | 3,545 | ||
Interest paid in kind | 896 | ||
Amortization of debt discounts and debt issuance costs | 482 | ||
Deferred income tax expense (benefit) | 1,958 | (2,884) | (450) |
Depreciation | 10 | 10 | 11 |
Impairment/loss on investment in Antisense Therapeutics | 550 | 551 | |
Change in fair value of foreign currency forward contracts | 438 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,584) | ||
Inventory | (511) | ||
Prepaid expenses and other current assets | (444) | 848 | (1,165) |
Other assets | (536) | (88) | (52) |
Accounts payable | 158 | (1,702) | 1,737 |
Accrued liabilities and other liabilities | 3,043 | 475 | 1,263 |
Net cash used in operating activities | (45,336) | (31,714) | (37,360) |
Cash flows from investing activities: | |||
Payment for acquisition | (7,500) | (3,392) | (3,168) |
Investment in Antisense Therapeutics | (1,101) | ||
Purchase of equipment | (25) | ||
Net cash used in investing activities | (7,500) | (3,392) | (4,294) |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 38,687 | 19,316 | |
Repayment of long-term debt | (22,261) | ||
Proceeds from issuance of ordinary shares and warrants, net | 26,384 | 32,298 | 77,816 |
Proceeds from exercise of stock options | 626 | 120 | |
Proceeds from issuance of ordinary shares in connection with at-the-market offering | 73 | ||
Acquisition of non-controlling interest | (1,414) | (412) | |
Net cash provided by financing activities | 43,509 | 50,320 | 77,404 |
Effect of exchange rate changes on cash and cash equivalents | 241 | ||
Net decrease in cash and cash equivalents | (9,327) | 15,214 | 35,991 |
Cash and cash equivalents—beginning of period | 66,837 | 51,623 | 15,632 |
Cash and cash equivalents—end of period | 57,510 | 66,837 | $ 51,623 |
Supplemental disclosures of cash flow information - Cash paid during the year for: | |||
Interest | 2,935 | $ 20 | |
Income taxes other, net of refunds | $ 127 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2017 | |
Organization | |
Organization | 1. Organization Strongbridge Biopharma plc is a global commercial-stage biopharmaceutical company focused on the development and commercialization of therapies for rare diseases with significant unmet needs. Our first commercial product is Keveyis® (dichlorphenamide), the first and only treatment approved by the U.S. Food and Drug Administration ("FDA") for hyperkalemic, hypokalemic, and related variants of primary periodic paralysis. Keveyis has orphan drug exclusivity status in the United States through August 7, 2022. On January 16, 2018, we acquired the U.S. and Canadian rights to Macrilen (macimorelin), our second commercial product, from Aeterna Zentaris GmbH. Macrilen is an oral growth hormone secretagogue receptor agonist, and is the first and only oral drug approved by the FDA for the diagnosis of patients with AGHD. Macrilen has been granted orphan drug designation in the United States and has patents with expiration dates through late 2027. We expect to launch Macrilen in the United States in mid-2018. In addition to our two commercial products, we have two clinical-stage product candidates for rare endocrine diseases, Recorlev and veldoreotide. Recorlev (levoketoconazole) is a cortisol synthesis inhibitor currently being studied for the treatment of endogenous Cushing's syndrome. Veldoreotide is a next-generation somatostatin analog being investigated for the treatment of acromegaly and potential additional applications in other conditions amenable to somatostatin receptor activation. Both Recorlev and veldoreotide have received orphan designation from the FDA and the European Medicines Agency (“EMA”). Given the well-identified and concentrated prescriber base addressing our target markets, we intend to continue to use a small, focused sales force to market Keveyis, Macrilen and any future products, in the United States, the European Union and other key global markets. We believe that our ability to execute on our strategy is enhanced by the significant commercial and clinical development experience of key members of our management team. We will continue to identify and evaluate the potential acquisition of other products and product candidates that would be complementary to our existing rare neuromuscular and endocrine franchises or that would form the basis for new rare disease franchises. We believe this approach will enable us to maximize our commercial potential by further leveraging our existing resources and expertise. In October 2015 we sold 2,500,000 ordinary shares in our initial U.S. public offering (IPO) at a price of $10.00 per share. The aggregate net proceeds received by us from the IPO were $19.5 million. Our shares began trading on The NASDAQ Global Select Market under the symbol "SBBP" on October 16, 2015. On October 20, 2015, trading ceased on the Norwegian Over‑The‑Counter Market. Exchange offer On May 26, 2015, Strongbridge Biopharma plc (then named Cortendo plc) was incorporated under the laws of Ireland. On August 7, 2015, Strongbridge Biopharma plc initiated an exchange offer for the outstanding shares of Cortendo AB. The exchange offer was structured as a one‑for‑one exchange offer in which shareholders of Cortendo AB exchanged their common shares, with a par value of $0.15, for beneficial interests in ordinary shares of Strongbridge Biopharma plc, with a par value of $0.01, in the form of Norwegian depositary receipts and, as the case may be, Swedish depositary receipts (except for non‑accredited investors who hold Cortendo AB shares located in the United States, who were offered cash in an amount equivalent to the value of the Strongbridge Biopharma plc shares such investors would otherwise receive for their Cortendo AB shares exchanged). The exchange offer was settled on September 8, 2015, and Cortendo AB became a subsidiary with 99.582% of its shares being owned by Strongbridge Biopharma plc. Accordingly, Strongbridge Biopharma plc is a continuation of Cortendo AB, the predecessor, and the consolidated financial statements represent the assets, liabilities and results of operations of Cortendo AB, for all periods presented. On September 8, 2015, Strongbridge Biopharma plc effected a 1‑for‑11 reverse stock split of its ordinary shares. Accordingly, the consolidated financial statements and notes retroactively reflect the capital structure of Strongbridge Biopharma plc after giving effect to the exchange offer and the reverse stock split. With affect from September 8, 2015, the 0.418% of Cortendo AB not owned by Strongbridge Biopharma plc, is accounted for as a non‑controlling interest. In September 2016, we acquired the non-controlling interest in Cortendo AB, after which Cortendo AB became a wholly-owned subsidiary of Strongbridge Biopharma plc. Total consideration paid per share was $13.66 resulting in an aggregate payment of $1.4 million. Liquidity We believe that our cash resources of $57.5 million at December 31, 2017 along with the completed subsequent financings from January and February 2018, will be sufficient to allow us to fund planned operations for at least 12 months beyond the issuance date of these financial statements, which is after the expected receipt of data from the Recorlev SONICS and LOGICS Phase 3 clinical trials. We expect our funding requirements for operating activities to increase in 2018 and possibly beyond due to expenses associated with the commercialization of Keveyis and Macrilen, the execution of the Phase 3 SONICS and LOGICS clinical trials for Recorlev, and selling, general and administrative expenses. We also expect our cash needs to increase to fund potential in‑licenses, acquisitions or similar transactions as we pursue our strategy. These expenses may be offset only in part by sales of Keveyis and Macrilen . In addition, beginning in September 2020, we may be required to make quarterly principal payments to repay amounts borrowed under our credit facility. In January 2018, we amended our loan agreement with CRG to increase availability from $50 million to $100 million. In January 2018 and February 2018, we sold 5,255,683 of our ordinary shares for net proceeds of approximately $33.0 million (see Note 15). We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. We plan to continue to fund our operations and capital funding needs through equity or debt financing along with revenues from Keveyis and Macrilen . There can be no assurances, however, that additional funding will be available on terms acceptable to us. Our loan and security agreement, under which outstanding borrowings were $40.0 million at December 31, 2017 contains financial and non-financial covenants including minimum amounts of net revenue in 2018 and beyond. We achieved our 2017 financial covenant. Failure to comply with the covenants could result in the lenders declaring the loan immediately due and payable. Our liquidity requirements are predicated on maintaining compliance with the debt covenants and repaying outstanding borrowings in accordance with the loan term (see Note 7). |
Summary of significant accounti
Summary of significant accounting policies and basis of presentation | 12 Months Ended |
Dec. 31, 2017 | |
Summary of significant accounting policies and basis of presentation | |
Summary of significant accounting policies and basis of presentation | 2. Summary of significant accounting policies and basis of presentation Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Strongbridge US Inc. (Trevose, Pennsylvania, United States), Strongbridge Ireland Limited (Dublin, Ireland), Cortendo AB (Gothenburg, Sweden) and Cortendo Cayman (Georgetown, Cayman Islands). All intercompany balances and transactions have been eliminated in consolidation. These audited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). Revenue recognition Prior to the April 2017 launch of Keveyis, we did not generate any revenue. Therefore, we adopted Accounting Standards Codification (ASC), Topic 606, Revenue from Contracts with Customers, effective April 1, 2017. Topic 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We apply the five-step model to contracts only when it is probable that we will collect the consideration we are entitled to receive in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for net product revenue, (see Note 3). Inventory and cost of sales Inventory is stated at the lower of cost or market where cost is determined using the first-in, first-out method. Our inventory consists of only finished goods. Cost of sales includes the cost of inventory sold, which includes third-party acquisition costs, third-party warehousing and product distribution charges. Foreign currency translation The consolidated financial statements are reported in United States dollars, which is the functional currency of our subsidiaries and Cortendo AB. Transactions in foreign currencies are remeasured into our functional currency at the rate of exchange prevailing at the date of the transaction. Any monetary assets and liabilities arising from these transactions are remeasured into our functional currency at exchange rates prevailing at the balance sheet date or on settlement. Resulting gains and losses are recorded in foreign exchange loss in our consolidated statements of operations. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. We must apply significant judgment in this process. Actual results could materially differ from those estimates. Segment information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment. Our material long‑lived assets, reside in Ireland, Sweden and Cayman Islands. For the year ended December 31, 2017, revenue from product sales were derived entirely from the United States. Cash and cash equivalents We consider all short‑term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively. Concentration of credit risk and other risks and uncertainties As part of our cash and investment management processes, we perform periodic evaluations of the credit standing of the financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any credit losses from instruments held at these financial institutions. Fair value of financial instruments Fair value accounting is applied for all financial assets and liabilities and non‑financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We are required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2—Valuations based on quoted prices for similar assets or liabilities, or quoted prices in markets that are not active, and for which all significant inputs are observable, either directly or indirectly. Level 3—Valuations that require inputs that reflect our own assumptions that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In December 2016, we issued warrants in connection with our private placement of ordinary shares. Pursuant to the terms of the warrant 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 consolidated balance sheet. We recorded the fair value of the warrants upon issuance using the Black-Scholes Model and are required to revalue the warrants at each reporting date with any changes in fair value recorded on our statement of operations. The valuation of the warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that that are both significant to the fair value measurement and unobservable. The change in the fair value of the Level 3 warrant liabilities is reflected in the statement of operations and comprehensive loss for the years ended December 31, 2017 and 2016. Property and equipment, net Property and equipment, net, consists of office equipment such as furniture, fixtures and computers. Depreciation expense for the years ended December 31, 2017 and 2016 was not significant. The following useful lives were used for the various classifications of property and equipment, net: Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years Business combinations When acquiring new enterprises over which we obtain control, the acquisition method is applied. Under this method, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date. Allowance is made for the tax effect of the adjustments made. The excess of the consideration transferred, the amount of the non‑controlling interest in the acquiree and the acquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. Intangible assets Certain intangible assets were acquired as part of an asset purchase and have been capitalized at their acquisition date fair value. Acquired definite life intangible assets are amortized using the straight line method over their respective estimated useful lives. The Company evaluates the potential impairment of intangible assets if events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Purchased identifiable intangible assets with indefinite lives are evaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of these assets may not be recovered. To test these assets for impairment, we compare the fair value of the asset to its carrying value. The method we use to estimate the fair value measurements of indefinite‑lived intangible assets is based on the income approach. For the impairment analysis for the year ended December 31, 2017, significant unobservable inputs used in the income approach valuation method including discount rates, royalty rates and probabilities of product candidate advancement from one clinical trial phase to the next. The determination of fair value of indefinite lived assets is considered Level 3 for fair value measurement . Goodwill We test goodwill for impairment on an annual basis or whenever events occur that may indicate possible impairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment exists and (2) measure the amount of impairment. Because we have one operating segment, when testing for a potential impairment of goodwill, we are required to estimate the fair value of our business and determine the carrying value. If the estimated fair value is less than the carrying value of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in a manner similar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwill impairment be determined, if any. To estimate the fair value of the business, primarily a market‑based approach is applied, utilizing our public market value. We did not record a charge for impairment for our goodwill for the years ended December 31, 2017, 2016 and 2015. Research and development expenses Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include compensation and related expenses. External expenses include development, clinical trials, report writing and regulatory compliance costs incurred with clinical research organizations and other third‑party vendors. At the end of the reporting period, we compare payments made to third‑party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that we estimate has been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs. Upfront and milestone payments made to third parties who perform research and development services on our behalf are expensed as services are rendered. Stock‑based compensation We account for stock‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock‑based payments including grants of stock options and restricted stock and modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fair values. Our stock‑based awards are subject to either service‑based or performance‑based vesting conditions. Vesting of certain awards could also be accelerated upon achievement of defined market‑based vesting conditions. Certain awards also contain a combination of service and market conditions or performance and market conditions. We record compensation expense for service‑based awards over the vesting period of the award on a straight‑line basis. Compensation expense related to awards with performance‑based vesting conditions is recognized over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable. For those awards in which the performance condition was the completion of our IPO, we did not recognize compensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market‑based vesting conditions is recognized using the accelerated attribution method over the shorter of the requisite service period or the implied period associated with achievement of the market‑based vesting provisions. We estimate the fair value of our awards with service conditions using the Black‑Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk‑free interest rate and (iv) expected dividends. Due to the lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. We selected companies with comparable characteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share price information sufficient to meet the expected term of the stock‑based awards. We compute historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock‑based awards. We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine the probability of satisfying the market condition. We make this estimate using the conditions that exist at the grant date. The derived service period, which may be the requisite service period, is also determined at this time. Compensation cost for our awards with a market condition is recognized ratably using the accelerated attribution method if the award is subject to graded vesting over the requisite service period. The compensation cost for our awards with a market condition is not reversed if the market condition is not satisfied. We have estimated the expected term of employee service‑based stock options using the “simplified” method, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option, due to our lack of sufficient historical data. We have estimated the expected term of employee awards with market conditions using a Monte‑Carlo simulation model. This approach involves generating random stock‑price paths through a lattice‑type structure. Each path results in a certain financial outcome, such as accelerated vesting or specific option payout. We have estimated the expected term of nonemployee service‑ and performance‑based awards based on the remaining contractual term of such awards. The risk‑free interest rates for periods within the expected term of the option are based on the Swedish Government Bond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associated award. We have never paid dividends and do not expect to pay dividends in the foreseeable future. We account for forfeitures as they occur. Income taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, reducing the top U.S. federal corporate tax rate from 35 percent to 21 percent; requiring companies to pay a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries; generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; creating the base erosion anti-abuse tax (BEAT), a new minimum tax; creating a new limitation on deductible interest expense; and changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. The Tax Act reduces our U.S. corporate income tax rate from 34% to 21%, effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 34% to 21% under the Tax Act, we revalued our ending net deferred tax assets and liabilities at December 31, 2017. The Tax Act provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”). Strongbridge did not have to recognize any income tax expense related to the transition tax as they own no controlled foreign corporations. The global intangible low-taxed income tax and base erosion provisions are effective for taxable years beginning after December 31, 2017. The Company does not currently expect these provisions to have a material impact on its tax rate as they do not own any controlled foreign corporations and they are currently below the gross receipts threshold for purposes of the base erosion provisions. Due to the timing of the new tax law and the substantial changes it brings, the Staff of the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides registrants a measurement period to report the impact of the new US tax law. During the measurement period, provisional amounts for the effects of the law are recorded to the extent a reasonable estimate can be made. To the extent that all information necessary is not available, prepared or analyzed, companies may recognize provisional estimated amounts for a period of up to one year following enactment of the TCJA. The Company recorded amounts as provisional and will continue to monitor for future updates to guidance or interpretations issued by the IRS. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2017, 2016 and 2015, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our statements of operations. Net loss per share Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted‑average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based awards. Shares used in the diluted net loss per share calculations exclude anti‑dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units and warrants. Year Ended December 31, 2017 2016 2015 Warrants 7,555,003 7,000,000 — Stock options issued and outstanding 6,104,715 3,249,784 2,591,520 Unvested restricted stock units 267,250 184,000 — Customer concentration For the year ended December 31, 2017, we sold Keveyis to one customer, who is the exclusive distributor of Keveyis in the United States. Recently issued accounting pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ( ASU) 2017-04, Intangibles - Goodwill and Other : Simplifying the Accounting for Goodwill Impairment . ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard, which will be effective for the us beginning in the first quarter of fiscal year 2021, is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce diversity in practice. The guidance is effective for us beginning in the first quarter of fiscal year 2018. Early adoption is permitted. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Improvements to Employee Share-Based Payment Accounting , which affects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. We have adopted the standard effective January 1, 2017 and have elected to account for forfeitures as they occur as opposed to estimating forfeitures. The adoption of this standard did not have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , that discusses how an entity should account for lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for us beginning in the first quarter of fiscal year 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . ASU No. 2015-11 applies only to inventory for which cost is determined by methods other than last in, first-out and the retail inventory method, which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of this standard is required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted this standard on April 1, 2017. The adoption of this standard had no impact on the Company’s consolidated financial statements , there was no accounting impact to previously issued financial statements based on our adoption . In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that re fl ects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash fl ows arising from customer contracts, including signi fi cant judgments and changes in judgments and assets recognized from costs incurred to obtain or ful fi ll a contract. We adopted this new standard on April 1, 2017 in conjunction with the launch of Keveyis. As we did not record revenue prior to adopting this standard, there was no accounting impact to previously issued financial statements based on our adoption of ASC Topic 606. |
Revenue recognition
Revenue recognition | 12 Months Ended |
Dec. 31, 2017 | |
Revenue recognition | |
Revenue recognition | 3. Revenue recognition Product revenue, net We sell Keveyis to one specialty pharmacy provider (the “Customer”), who is the exclusive distributor of Keveyis in the United States. The Customer subsequently resells Keveyis to patients, which are covered by payors that may provide for government-mandated or privately negotiated rebates with respect to the purchase of Keveyis. Reserves for variable consideration Revenues from sales of Keveyis are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from rebates, co-pay assistance and other allowances that are offered between us and the patients’ payors. There is no variable consideration reserve for returns as we do not accept returns of Keveyis. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than the Customer). Where appropriate, these estimates may take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. We reassess our estimates on an ongoing basis. If actual results in the future vary from our estimates, we will adjust our estimates. Any such adjustments would affect net product revenue and earnings in the period such variances become known. Trade discount : We provide the Customer with a discount that is explicitly stated in our contract and is recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, we receive sales order management, data and distribution services from the Customer. To the extent, the services received are distinct from our sale of Keveyis to the Customer, these payments are classified in selling, general and administrative expenses in our consolidated statement of operations and comprehensive loss. Funded Co-pay Assistance Program : We contract with a third-party to manage the co-pay assistance program intended to provide financial assistance to qualified insured patients. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with Keveyis that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. These payments are consideration payable to the customer and the related reserve is recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet. Government rebates : We are subject to discount obligations under state Medicaid programs and Medicare. We estimate our Medicaid and Medicare rebates based upon a range of possible outcomes that are probability-weighted for the estimated patient mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the consolidated balance sheet. For Medicaid, accruals are based on estimates of future Medicaid beneficiary utilization applied to the Medicaid unit rebate formula established by the Center for Medicaid and Medicare Services. Effective January 1, 2011, manufacturers of pharmaceutical products are responsible for 50% of the patient’s cost of branded prescription drugs related to the Medicare Part D Coverage Gap. In order to estimate the cost to us of this Medicare coverage gap responsibility, we estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for these rebates consists of estimates of claims for the current quarter and estimated future claims that will be made for Keveyis that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. Temporary Supply and Patient Assistance Programs : We provide free Keveyis to uninsured patients who satisfy pre-established criteria for either the Temporary Supply Program or the Patient Assistance Program. Patients who meet the Temporary Supply Program eligibility criteria may receive a temporary supply of free Keveyis for no more than sixty days while we are determining the patient’s third-party insurance, prescription drug benefit or other third-party coverage for Keveyis. The Patient Assistance Program provides free Keveyis for up to twelve months to patients that satisfy pre-established criteria for financial need. We do not recognize any revenue related to these free products and the associated costs are classified in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss. |
Fair value measurement
Fair value measurement | 12 Months Ended |
Dec. 31, 2017 | |
Fair value measurement | |
Fair value measurement | 4. Fair value measurement The following table sets forth the fair value measurements by level within the fair value hierarchy, that are measured on a recurring basis. Our l evel 3 instrument consist of the common stock warrant liability. The fair values of the outstanding warrants were measured using the Black-Scholes option-pricing model. Inputs used to determine estimated fair value of the warrant liabilities include the estimated fair value of the underlying stock at the valuation date, the estimated term of the warrants, risk-free interest rates, expected dividends and the expected volatility of the underlying stock. The significant unobservable inputs used in the fair value measurement of the warrant liabilities were the volatility rate and the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term would result in a directionally similar impact to the fair value measurement. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands) : As of December 31, 2017 Level I Level II Level III Total Cash equivalents 57,024 — — 57,024 Total assets $ 57,024 $ — $ — $ 57,024 Warrant liability — — 41,308 41,308 Total liabilities $ — $ — $ 41,308 $ 41,308 As of December 31, 2016 Level I Level II Level III Total Warrant liability — — 11,090 11,090 Total liabilities $ — $ — $ 11,090 $ 11,090 |
Intangible assets and goodwill
Intangible assets and goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets and goodwill | |
Intangible assets and goodwill | 5. Intangible assets and goodwill The gross carrying amount of in‑process research and development, acquired developed product rights and goodwill is as follows (in thousands): As of December 31, 2017 Beginning of Period Additions Impairment Amortization End of Period IPR&D $ 20,723 $ — $ (20,723) $ — $ — Acquired developed product rights 40,177 — — (5,022) 35,155 Goodwill 7,256 — — — 7,256 Total $ 68,156 $ — $ (20,723) $ (5,022) $ 42,411 As of December 31, 2016 Beginning of Period Additions Impairment Amortization End of Period IPR&D $ 36,551 $ — $ (15,828) $ — $ 20,723 Acquired developed product rights — 40,177 — — 40,177 Goodwill 7,256 — — — 7,256 Total $ 43,807 $ 40,177 $ (15,828) $ — $ 68,156 Estimated amortization of our acquired developed product rights intangible asset for the five years subsequent to December 31, 2017 is as follows (in thousands): 2018 $ 5,022 2019 5,022 2020 5,022 2021 5,022 2022 5,022 Goodwill and in‑process research and development resulted from our acquisition of BioPancreate and our 2015 acquisition of veldoreotide from Aspireo Pharmaceuticals, Ltd. In‑process research and development is initially measured at its fair value and is not amortized until commercialization. Once commercialization occurs, in‑process research and development will be amortized over its estimated useful life. We recorded $20.7 million of impairment relating for our veldoreotide IPR&D during the year ended December 31, 2017. The significant inputs to the fair value measurement were future revenues expected to be generated, estimated costs to manufacture and appropriate risk adjusted discount rate. The impairment of veldoreotide is due to estimated increased development costs and longer time lines related to the development process; resulting in a decrease in the valuation of our intangible asset. Our finite lived intangible asset consists of acquired developed product rights obtained from the asset acquisition of Keveyis (dichlorphenamide) from a subsidiary of Taro Pharmaceutical Industries Ltd. (“Taro”). In connection with the Asset Purchase and Supply Agreement we entered into with Taro Pharmaceutical Industries Ltd, we have paid Taro an upfront payment in two installments of $1 million in December 2016 and $7.5 million in March 2017. We concluded that the supply price payable by us exceeds fair value and, therefore, have used a discounted cash flow method with a probability assumption to value the payments in excess of fair value at $29.3 million, for which we have recorded an intangible asset and corresponding liability. This liability will be amortized as we purchase inventory over the term of the agreement. In addition, we incurred transaction costs of $2.4 million resulting in the recording of an Intangible Asset of $40.2 million. This asset began being amortized in 2017 and is being amortized over an 8-year period. |
Accrued liabilities
Accrued liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accrued liabilities | |
Accrued liabilities | 6. Accrued liabilities Accrued liabilities consist of the following (in thousands): December 31, December 31, 2017 2016 Consulting and professional fees $ 3,207 $ 1,110 Accrued payable due Taro Pharmaceuticals Industries Ltd. — 7,500 Supply agreement - current portion 4,237 4,207 Employee compensation 3,668 1,554 Other 120 497 Total accrued liabilities $ 11,232 $ 14,868 |
Long-term debt
Long-term debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure | |
Long-term debt | 7. Long-term debt On July 14, 2017, we entered into a $50 million senior credit facility with CRG LP (“CRG”), a healthcare-focused investment firm, to retire our prior credit facility with Oxford Finance LLC and Horizon Technology Finance Corporation and provide additional capital to us. We initially borrowed $40 million under the term loan agreement and have the option to borrow an additional $10 million based upon the achievement of a certain revenue milestone on or prior to June 30, 2018. Concurrent with the initial borrowing, CRG purchased $3 million of our ordinary shares at a price of $6.98 per share. As a condition to the new credit facility, we issued warrants with a seven-year term to CRG to purchase 394,289 of our ordinary shares at an exercise price of $7.37 per share. The term loan agreement has a six-year term with three years of interest-only payments. The interest-only period may be extended to six years based upon the achievement of certain milestones during the first three years of the loan term. The loan agreement provides for interest payable at an annual rate of 12.5% and a final payment fee of 5% of the principal balance. The loan agreement includes a payment-in-kind (PIK) provision, which allows us to defer 4.0% of the 12.5% annual interest payable under the loan during the first three years of the term of the loan (which may be extended for the entire term of the loan, subject to the satisfaction of certain conditions) by adding such amount to the principal loan amount. We have granted a security interest in substantially all of our existing assets and assets acquired by us in the future, including intellectual property. The loan agreement contains facility and prepayment fees, and customary affirmative and negative covenants, including a financial covenant regarding minimum amounts of net revenue and restrictions on our ability to pay cash dividends, and a list of events that will constitute “events of default” under the loan agreement, and permit the lenders to declare all amounts under the loan agreement immediately due and payable, including a material adverse change in our business, operations or financial condition. We incurred $2.5 million in debt discounts and $0.8 million of debt issuance costs relating to this loan agreement which have been recorded as a reduction to the long-term debt. These amounts will be amortized over the outstanding period of the debt to interest expense using the effective interest rate method. In connection with the retirement of our prior credit facility we incurred a final payment fee of $1.6 million and a loss on early extinguishment of debt of $3.5 million. In January 2018, our term loan agreement was amended (see Note 15). Future principal payments due under the Loan Agreement are as follows (in thousands) : Principal Payments 2018 $ — 2019 — 2020 6,834 2021 13,667 2022 13,667 2023 6,591 Total future payments $ 40,759 |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | 8. Warrants Common stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging — Contracts in Entity’s Own Equity (ASC Topic 815), as either derivative liabilities or as equity instruments depending on the specific terms of the warrant agreement. Warrants outstanding and warrant activity for the year ended December 31, 2017 is as follows: Exercise Expiration Warrants Warrants December 31, Classification Price Date Issued Exercised 2017 Warrants in connection with private equity placement Liability $ 2.50 6/28/2022 7,000,000 — 7,000,000 Warrants in connection with Horizon and Oxford loan agreement Equity $ 2.45 12/28/2026 428,571 (267,857) 160,714 Warrants in connection with CRG loan agreement Equity $ 7.37 7/14/2024 394,289 — 394,289 7,822,860 7,555,003 |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and contingencies | |
Commitments and contingencies | 9. Commitments and contingencies (a) Lease On April 22, 2014, we entered into a 48‑month building lease for approximately 3,000 square feet of space in Radnor, Pennsylvania. The lease has annual rent escalations. We obtained access to the newly leased space on August 1, 2014, and this was considered the lease commencement date for accounting purposes. Thus, rent expense began on this date and is recognized on a straight‑line basis over the term of the lease. In March 2015, the Company entered into a 52‑month building sublease agreement for 14,743 square feet of office space in Trevose, Pennsylvania. The lease has annual rent escalations and is recognized on a straight‑line basis over the term of the lease. As a result of this lease, we vacated the previously leased Radnor, Pennsylvania facility as of April 13, 2015 and determined that the Radnor, Pennsylvania facility was not likely to be utilized during the remaining lease term and as such we commenced efforts to sublease the facility. The Company recorded a liability as of the April 13, 2015 cease‑use date of $0.1 million for the estimated fair value of its obligations under the lease. The most significant assumptions used in determining the amount of the estimated liability are the potential sublease revenues and the credit‑adjusted risk‑free rate utilized to discount the estimated future cash flows. In November 2017, the Company entered into a 60‑month building lease agreement for an additional 7,326 square feet of office space in Trevose, Pennsylvania. The lease has annual rent escalations and is recognized on a straight‑line basis over the term of the lease. As of December 31, 2017, future minimum commitments under facility operating leases were as follows (in thousands): Operating leases 2018 357 2019 336 2020 156 2021 160 2022 163 2023 69 Total minimum lease payments $ 1,241 Rent expense recognized under our operating lease, including additional rent charges for utilities, parking, maintenance and real estate taxes, was $314,000, $275,000 and $254,000 for the years ended December 31, 2017, 2016 and 2015, respectively. (b) Commitments to Taro Pharmaceuticals Industries Ltd. In December 2016, we acquired the U.S. marketing rights to Keveyis® (dichlorphenamide) from a subsidiary of Taro Pharmaceutical Industries Ltd. (“Taro”). Keveyis is approved in the U.S. to treat hyperkalemic, hypokalemic and related variants of primary periodic paralysis, a group of rare hereditary disorders that cause episodes of muscle weakness or paralysis. Keveyis has received orphan drug exclusivity status in the U.S. through August 7, 2022. Under the terms of an asset purchase agreement, we paid Taro an upfront payment in two installments of $1 million in December 2016 and $7.5 million in March 2017, and will pay an aggregate of $7.5 million in potential milestones upon the achievement of certain product sales targets. Taro has agreed to continue to manufacture Keveyis for us under an exclusive supply agreement through the orphan exclusivity period. We are obligated to purchase certain annual minimum amounts of product totaling approximately $29 million over a six-year period. The supply agreement may extend beyond the orphan exclusivity period unless terminated by either party pursuant to the terms of the agreement. If terminated by Taro at the conclusion of the orphan exclusivity period, we have the right to manufacture the product on our own or have the product manufactured by a third party on our behalf. |
Defined contribution plan
Defined contribution plan | 12 Months Ended |
Dec. 31, 2017 | |
Defined contribution plan | |
Defined Contribution Plan | 10. Defined contribution plan Our 401(k) Employee Savings Plan “401(k) Plan” is available to all employees. We have elected a Safe-Harbor provision for the 401(k) Plan in which participants are always fully vested in their employer contributions. During 2017, we implemented a match, where we match 100% of the first 4% of participating employee contributions. In 2017, we contributed approximately $173,000. Our contributions are made in cash. Our common stock is not an investment option available to participants in the 401(k) Plan. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income taxes | |
Income taxes | 11. Income taxes For the years ended December 31, 2017, 2016 and 2015, the components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2017 2016 2015 Sweden $ (19,249) $ (16,433) $ (33,960) Ireland (47,211) (11,653) (191) Cayman Islands (21,709) (19,550) (8,722) U.S. (23,543) (3,721) (1,210) Total $ (111,712) $ (51,357) $ (44,083) The components of income tax expense (benefit) for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands): Year Ended December 31, 2017 2016 2015 Current tax (benefit) expense: Sweden $ — $ — $ — Ireland (22) 22 — U.S. Federal (151) 151 — State (14) 73 — Total current tax (benefit) expense $ (187) $ 246 $ — Deferred tax expense (benefit): Sweden $ (4,586) $ (834) $ 212 Ireland 1,280 (1,547) (24) U.S. Federal 39 (3,412) (17,543) State (2,392) (678) (1,233) Change in valuation allowance 7,617 3,587 18,138 Total deferred tax expense (benefit) 1,958 (2,884) (450) Total tax expense (benefit) $ 1,771 $ (2,638) $ (450) With the exception of the newly formed U.S. Entity, we have incurred net operating losses since inception. For the Ireland and Swedish operations, we have not reflected any benefit of net operating loss carryforwards (NOLs) in the accompanying financial statements. Strongbridge US, Inc, as a result of the intercompany service agreements, was in taxable income and determined they were able to recognize all deferred tax assets in 2016. In 2017, Strongbridge US, Inc. generated book loss as the Company decided this entity will market and commercialize certain products. As such, given the expenses incurred, it is not more likely than not to recognize all deferred tax assets which results in the company establishing a full valuation allowance against its deferred tax assets. Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for financial statement and income tax purposes. The tax effect of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands): Year Ended December 31, 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 28,570 $ 24,433 Stock based compensation 2,824 1,870 Other deferred activity 617 96 Tax credits 9,182 9,135 Capitalized research and development costs 161 161 Total deferred tax assets 41,354 35,695 Valuation allowance (41,354) (33,738) Deferred tax assets recognized — 1,957 Deferred tax liabilities: Warrants — (358) Acquired intangible assets — — Total deferred tax liabilities — (358) Net deferred tax assets (liabilities) $ — $ 1,599 We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. Based on our history of operating losses in Ireland and Sweden and also the current year operating losses in the U.S., we have concluded that it is more likely than not that the benefit of our deferred tax assets will not be realized. The valuation allowance increased by approximately $7.6 million and $3.6 million during the years ended December 31, 2017 and 2016, respectively, due primarily to net operating losses. The Company’s effective income tax rate differs from the ultimate parent company, Strongbridge Biopharma plc, Irish domestic statutory rate of 12.5% for the year ended December 31, 2017, 2016 and 2015. Year Ended December 31, 2017 2016 2015 Ireland statutory income tax rate 12.50 % 12.50 % 12.50 % Foreign tax differential between Sweden, U.S., Cayman Island and Ireland 3.99 2.28 15.70 Federal tax credits — — 12.10 Change in valuation allowance (6.82) (6.69) (41.20) State income taxes 1.43 0.92 — Permanent differences (5.04) 1.59 — Rate change - tax impact (7.09) — — Fx remeasurement of Swedish DTA 0.83 (5.42) (5.41) Provision to return (1.33) — — Other (0.06) (0.04) 7.31 Effective income tax rate (1.59) % 5.14 % 1.00 % At December 31, 2017, we had approximately $56.0 million of Swedish NOLs and approximately $2.3 million of Ireland NOLs, which have an indefinite life, and approximately $53.4 million of U.S. federal and $51.3 million of state NOLs, which begin to expire in 2031. Through December 31, 2015 we operated through a permanent establishment in both Sweden and the United States. Relief is granted by way of crediting the U.S. tax against the Swedish tax. This tax credit can never exceed the Swedish tax on the income. Since the tax rate is higher in the United States than in Sweden, the Swedish taxable carryforward losses of $56.0 million can only generate a tax benefit if income is derived from sources other than the permanent establishment in the United States. Beginning January 1, 2016, the US operations that were not part of BioPancreate Inc occurred in a newly formed US corporation. There were no operating losses generated during 2016 in the U.S. except for a minor state NOL at BioPancreate. At December 31, 2017, we had $8.9 million of U.S. federal orphan drug tax credit carryforwards, which begin to expire in 2032, and $84,000 of U.S. federal research and development tax credit carryforwards, which begin to expire in 2031. The orphan drug credit carryforward is attributable to the permanent establishment of the Swedish entity within the U.S. Utilization of the NOLs may be subject to limitations under Swedish tax regulations or U.S. Internal Revenue Code Section 382 if there is a greater than 50% ownership change as determined under applicable regulations. The Company files income tax returns in Sweden, the U.K., the United States, and various states within the United States. In the normal course of business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. The Company’s tax years are still open under statute from inception to present. All open years may be examined to the extent that tax credit or net operating loss carryforwards are used in future periods. |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2017 | |
Ordinary shares. | |
Ordinary shares | 12. Ordinary shares Voting rights and privileges As of December 31, 2017 and December 31, 2016, there are 600,000,000 authorized shares and 40,149,812 and 35,335,026 outstanding shares, respectively. The holders of our ordinary shares are entitled to one vote for each ordinary share held at all meetings of shareholders without limitation and written actions in lieu of meetings. The holders are entitled to receive dividends if and when declared by our Board of Directors. No dividends have been declared or paid since our inception. The holders are entitled to share ratably in our assets available for distribution to stockholders, in the event of any voluntary or involuntary liquidation. In addition, on May 26, 2015 the Company issued 40,000 deferred shares with a €1.00 euro par value per share (US$1.098). The deferred shares are issued in order to satisfy an Irish legislative requirement to maintain a minimum level of issued share capital denominated in euro. The deferred shares carry no voting rights and are not entitled to any dividend or distribution. Equity financings On October 6, 2017, we sold 4,000,000 ordinary shares in a public offering at a price to the public of $6.25 per ordinary share for net proceeds of approximately $23.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Concurrent with the CRG credit facility from July 2017, CRG purchased 429,799 shares of our ordinary shares at a price of $6.98 per share for total proceeds to us of approximately $3.0 million. We entered into an equity distribution agreement with JMP on April 28, 2017, pursuant to which we may sell, at our option, from time to time, up to an aggregate of $40 million in ordinary shares of the Company through JMP, as sales agent. We will pay JMP a commission equal to 3% of the gross proceeds from the sale of ordinary shares under the ATM Facility. Pursuant to the terms of the equity distribution agreement, we reimbursed JMP for certain out-of-pocket expenses, including the fees and disbursements of counsel to JMP, incurred in connection with establishing the ATM Facility and have provided JMP with customary indemnification rights. During the year ended December 31, 2017, we sold an aggregate of 10,300 ordinary shares under the ATM Facility for net proceeds of approximately $73,000 and paid fees to JMP of $2,000. On December 22, 2016, we raised $32.7 million, net of transaction costs, in a private placement of ordinary shares and warrants. We issued and sold 14,000,000 ordinary shares of common stock at a purchase price of $2.50 per ordinary share as well as warrants to purchase 7,000,000 shares. The warrants are exercisable at a price of $2.50 per share beginning on June 28, 2017 and expire in five years from June 28, 2017. In the event of a sale of the Company, the terms of the warrants require us to use our best efforts to ensure the holders of such warrants will have a continuing right to purchase shares of the acquirer and, if our efforts are unsuccessful, to make a payment to such warrant holders based on a Black-Scholes valuation (using variables as specified in the warrant agreements). Therefore we are required to account for these warrants as liabilities and record them at fair value. Fair value for these warrants was initially determined upon issuance using the Black-Scholes Model and were revalued at fair value. The resulting change in fair value resulted in an unrealized loss of $30.2 million for December 31, 2017 and a unrealized gain of $0.6 million as of December 31, 2016. As of December 31, 2017, the fair value of these warrants of $41.3 million was recorded as a long-term liability on our consolidated balance sheet. On October 22, 2015, we closed on our initial U.S. public offering of 2,500,000 ordinary shares at a price to the public of $10.00 per ordinary share for aggregate gross proceeds of $25 million, before deducting the underwriting commission and estimated offering expenses of $5.5 million. In June 2015, we raised $32.6 million, net of transaction costs, in a private placement of 2,284,414 shares of our common stock. The subscription price was $14.54 per share. In February 2015, we raised $25.8 million, net of transaction costs, in a private placement of 4,761,078 shares of our common stock. The subscription price was $5.54 per share. Shares reserved for issuance There were 728,411 and 1,951,022 shares of common stock reserved for future issuance upon exercise of stock options as of December 31, 2017 and 2016, respectively. As of December 31, 2017, we have 7,555,003 shares reserved for outstanding warrants. |
Stock-based compensation
Stock-based compensation | 12 Months Ended |
Dec. 31, 2017 | |
Stock-based compensation | |
Stock based compensation | 13. Stock‑based compensation The Board of Directors approve the granting of awards to our officers, directors, employees and third party‑consultants. Under these grants, the beneficiaries are given the right to acquire new shares of common stock at a pre‑determined option price. The purpose of the grants is to assist us in attracting, retaining and motivating officers, employees, directors and consultants. In addition, these awards provide us with the ability to provide incentives that are directly linked to the performance of our business and the related increase in shareholder value. Our awards have terms that range from five to ten years. As determined by our Board of Directors, our awards vest over service periods ranging up to four years or upon achievement of defined performance or market criteria such as the vesting of certain awards upon our IPO or awards that are accelerated when the fair value of our stock price reaches defined targets. The exercise price for each stock option is determined by the Board of Directors based upon considerations such as the fair value of the underlying ordinary shares and certain market conditions. For options granted prior to our October 22, 2015, IPO, the determination of the fair value of our common stock takes into account the price at which our shares were being quoted on the Norwegian Over The Counter Market, recent equity financings and our valuations calculated with the assistance of third‑parties. A summary of the outstanding stock options activity for the year ended December 31, 2017 is as follows: Options Outstanding Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Term Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding—January 1, 2017 3,249,784 $ 11.00 6.89 $ — Granted 3,260,350 $ 3.73 Forfeited and cancelled (144,864) $ 7.22 $ — Exercised (260,555) $ 4.08 Outstanding—December 31, 2017 6,104,715 $ 7.50 7.70 $ 14,021 Vested and exercisable—December 31, 2017 2,073,201 $ 10.68 5.69 $ 2,533 Included in the stock options outstanding at December 31, 2017 are unvested stock options to purchase 88,908 shares at a weighted average exercise price of $18.80 per share for which the vesting of certain tranches will accelerate if the fair value per share of our stock reaches $31.46. In addition, the options outstanding include 97,652 shares that vest upon a market appreciation event, so long as it occurs prior to the date specified in the applicable award agreement and 97,652 shares that will vest upon the one year anniversary of the market appreciation event. The market appreciation event, which had not yet occurred as of December 31, 2017, is defined as the last trading day in the period in which our closing stock price on each of 20 consecutive trading days reported on NASDAQ has been at least $30.14 or $33.66 for the respective grantee. Stock‑based compensation expense We recognized stock‑based compensation expense for employees and non‑employees in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2017 2016 2015 Selling, general and administrative $ 4,027 $ 4,005 $ 3,147 Research and development 1,140 601 793 Total stock-based compensation $ 5,167 $ 4,606 $ 3,940 Included in these amounts was stock compensation expense (credit) attributed to liability‑classified awards of, $0, $0 and $359,000, for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, the total unrecognized compensation expense related to unvested options was $10.1 million, which we expect to recognize over an estimated weighted‑average period of 2.75 years. In determining the estimated fair value of the stock‑based awards, we use the Black‑Scholes option‑pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. The fair value of stock option awards was estimated with the following assumptions: Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.98 5.9 3.23 Risk-free interest rate 1.78% - 2.26% 1.21% - 2.23% 0.0% - 0.6% Expected volatility 78.2% - 85.0% 78.1% - 83.6% 79.0% - 83.1% Dividend rate —% —% —% On February 26, 2016, our board of directors approved grants of restricted stock units (“RSUs”) to employees. These RSUs vest two years from the date of issuance, provided that the employee is employed by us on such vesting date. All RSUs will fully vest upon a change of control of our company. If and when the RSUs vest, we will issue one ordinary share for each whole RSU that has vested, subject to satisfaction of the employees’ tax withholding obligations. The RSUs will cease to be outstanding upon such issuance of ordinary shares. We recorded expense, which is included in the stock-based compensation table above, of $436,000 and $280,000 for the year ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the total unrecognized compensation expense related to unvested RSUs is $0.5 million, which we expect to recognize over an estimated weighted‑average period of 1.39 years. A summary of our unvested RSUs as of December 31, 2017 is as follows: Number of Shares Unvested—January 1, 2017 184,000 Granted 92,250 Forfeited (9,000) Vested — Unvested—December 31, 2017 267,250 |
Quarterly financial information
Quarterly financial information (unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly financial information (unaudited) | |
Quarterly financial information (unaudited) | 14. Quarterly financial information (unaudited) This table summarizes the unaudited consolidated financial results of operations for the quarters ended: (in thousands, except share and per share data) March 31, June 30, September 30, December 31, 2017 Quarter Ended Total revenues $ — $ 1,529 $ 2,533 $ 2,984 Cost of sales (excluding amortization of intangible asset) — 377 591 515 Total costs and expenses 12,179 15,525 34,967 16,634 Other expenses (15,712) (15,910) (2,885) (3,463) Income tax (expense) benefit (1,594) 92 850 (1,119) Net loss (29,485) (30,191) (35,060) (18,747) Net loss per share of common stock, basic and diluted (1) (0.83) (0.86) (0.98) (0.47) 2016 Quarter Ended Total revenues $ — $ — $ — $ — Cost of sales (excluding amortization of intangible asset) — — — — Total costs and expenses 10,923 13,814 7,633 18,356 Other (expenses) income (1,337) 47 15 643 Income tax benefit 55 871 — 1,712 Net loss (12,154) (12,841) (7,601) (16,001) Net loss per share of common stock, basic (1) (0.57) (0.61) (0.36) (0.71) Net loss per share of common stock, diluted (1) (0.57) (0.61) (0.36) (0.73) (1) Net loss per share amounts may not agree to the per share for the full year due to the use of weighted average shares for each period. |
Subsequent events
Subsequent events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent events | |
Subsequent Events | 15. Subsequent events Acquisition of U.S. and Canadian rights to Macrilen On January 16, 2018 we entered into a License and Assignment Agreement with Aeterna Zentaris GmbH, pursuant to which we acquired the U.S. and Canadian rights to manufacture and commercialize Macrilen (macimorelin) for $24 million. Macrilen is an oral growth hormone secretagogue receptor agonist to be used in the diagnosis of patients with AGHD. Macrilen has been granted orphan drug designation in the United States and has patents with expiration dates through late 2027. We expect to launch Macrilen in the U.S. in mid-2018. Amendment to term loan agreement with CRG Servicing LLC On January 16, 2018 (the “Loan Amendment Effective Date”), we and our subsidiaries, Strongbridge U.S. Inc., Strongbridge Ireland Limited , Cortendo AB (publ) and Cortendo Cayman Ltd., entered into an amendment(the “Loan Amendment”), to the Term Loan Agreement (the “Loan Agreement”), dated July 14, 2017, with CRG, as administrative agent and collateral agent, and the lenders named therein (the “Lenders”). The primary purpose of the Loan Amendment was to increase the total potential borrowing under the Term Loan Agreement from $50 million to $100 million. The Loan Amendment provides for (i) an additional disbursement of $45.0 million (the “Second Tranche”), to the Company on the Loan Amendment Effective Date, and (ii) an additional disbursement of $5.0 million (the “Fourth Tranche”), to us at our election, contingent upon our achievement of certain revenue milestones and a market capitalization condition on or before December 31, 2018, as described in the Loan Amendment. We continue to be eligible to borrow up to an additional $10.0 million (the “Third Tranche”), contingent upon our achievement of certain revenue milestones on or before June 30, 2018, as previously provided in the Term Loan Agreement; provided, however, that under the Term Loan Agreement, as amended, the Third Tranche is now subject to market capitalization condition, as described in the Loan Amendment. The term of the Term Loan Agreement, as amended, remains six years, although the interest-only period has been extended by six months to December 31, 2020. We have retained the option to extend the interest-only period to six years based upon the achievement of certain milestones during the interest-only period. As a condition to the Second Tranche under the Term Loan Agreement, as amended, we issued to the Lenders on the Loan Amendment Effective Date warrants to purchase an aggregate of 1,248,250 of our ordinary shares, at an exercise price of $10.00 per share. If we borrow the Third Tranche, we must issue to the Lenders, or their designees, one or more additional warrants to purchase a number of our ordinary shares equal to an aggregate of 0.20% of our ordinary shares outstanding following such issuance on a fully diluted basis (inclusive of the ordinary shares underlying all such warrants issued), at an exercise price equal to 110% of the closing price of our ordinary shares on the date immediately preceding the Third Tranche disbursement date. If we borrow the Fourth Tranche, we must issue to the Lenders, or their designees, one or more additional warrants to purchase a number of our ordinary shares equal to an aggregate of 0.25% of our ordinary shares outstanding following such issuance on a fully diluted basis (inclusive of the ordinary shares underlying all such warrants issued), at an exercise price equal to 140% of the 10-day volume weighted average price (VWAP) per ordinary share for the consecutive 10-day trading period ending on the trading day immediately prior to the Fourth Tranche disbursement date. Each of these warrants will be exercisable at any time prior to seven years following its issue date and will contain customary provisions for assumption or exchange upon a change of control or a sale of all or substantially all of our assets. Equity financings On January 25, 2018, we sold 5,000,000 ordinary shares in a public offering at a price to the public of $6.75 per ordinary share for net proceeds of approximately $31.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us. On February 26, 2018, we sold an additional 255,683 ordinary shares as part of our January 2018 public offering at a price of $6.75 per ordinary share for net proceeds of approximately $1.6 million, after deducting underwriting discounts and commissions and offering expenses payable by us. |
Summary of significant accoun22
Summary of significant accounting policies and basis of presentation (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of significant accounting policies and basis of presentation | |
Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, Strongbridge US Inc. (Trevose, Pennsylvania, United States), Strongbridge Ireland Limited (Dublin, Ireland), Cortendo AB (Gothenburg, Sweden) and Cortendo Cayman (Georgetown, Cayman Islands). All intercompany balances and transactions have been eliminated in consolidation. These audited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). |
Revenue recognition | Revenue recognition Prior to the April 2017 launch of Keveyis, we did not generate any revenue. Therefore, we adopted Accounting Standards Codification (ASC), Topic 606, Revenue from Contracts with Customers, effective April 1, 2017. Topic 606 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We apply the five-step model to contracts only when it is probable that we will collect the consideration we are entitled to receive in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for net product revenue, (see Note 3). |
Inventory and cost of sales | Inventory and cost of sales Inventory is stated at the lower of cost or market where cost is determined using the first-in, first-out method. Our inventory consists of only finished goods. Cost of sales includes the cost of inventory sold, which includes third-party acquisition costs, third-party warehousing and product distribution charges. |
Foreign currency translation | Foreign currency translation The consolidated financial statements are reported in United States dollars, which is the functional currency of our subsidiaries and Cortendo AB. Transactions in foreign currencies are remeasured into our functional currency at the rate of exchange prevailing at the date of the transaction. Any monetary assets and liabilities arising from these transactions are remeasured into our functional currency at exchange rates prevailing at the balance sheet date or on settlement. Resulting gains and losses are recorded in foreign exchange loss in our consolidated statements of operations. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. We must apply significant judgment in this process. Actual results could materially differ from those estimates. |
Segment information | Segment information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment. Our material long‑lived assets, reside in Ireland, Sweden and Cayman Islands. For the year ended December 31, 2017, revenue from product sales were derived entirely from the United States. |
Cash and cash equivalents | Cash and cash equivalents We consider all short‑term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively. |
Concentration of credit risk and other risks and uncertainties | Concentration of credit risk and other risks and uncertainties As part of our cash and investment management processes, we perform periodic evaluations of the credit standing of the financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any credit losses from instruments held at these financial institutions. |
Fair value of financial instruments | Fair value of financial instruments Fair value accounting is applied for all financial assets and liabilities and non‑financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We are required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2—Valuations based on quoted prices for similar assets or liabilities, or quoted prices in markets that are not active, and for which all significant inputs are observable, either directly or indirectly. Level 3—Valuations that require inputs that reflect our own assumptions that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In December 2016, we issued warrants in connection with our private placement of ordinary shares. Pursuant to the terms of the warrant 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 consolidated balance sheet. We recorded the fair value of the warrants upon issuance using the Black-Scholes Model and are required to revalue the warrants at each reporting date with any changes in fair value recorded on our statement of operations. The valuation of the warrants is considered under Level 3 of the fair value hierarchy due to the need to use assumptions in the valuation that that are both significant to the fair value measurement and unobservable. The change in the fair value of the Level 3 warrant liabilities is reflected in the statement of operations and comprehensive loss for the years ended December 31, 2017 and 2016. |
Property and equipment, net | Property and equipment, net Property and equipment, net, consists of office equipment such as furniture, fixtures and computers. Depreciation expense for the years ended December 31, 2017 and 2016 was not significant. The following useful lives were used for the various classifications of property and equipment, net: Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years |
Business combinations | Business combinations When acquiring new enterprises over which we obtain control, the acquisition method is applied. Under this method, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date. Allowance is made for the tax effect of the adjustments made. The excess of the consideration transferred, the amount of the non‑controlling interest in the acquiree and the acquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. |
Intangible assets | Intangible assets Certain intangible assets were acquired as part of an asset purchase and have been capitalized at their acquisition date fair value. Acquired definite life intangible assets are amortized using the straight line method over their respective estimated useful lives. The Company evaluates the potential impairment of intangible assets if events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Purchased identifiable intangible assets with indefinite lives are evaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of these assets may not be recovered. To test these assets for impairment, we compare the fair value of the asset to its carrying value. The method we use to estimate the fair value measurements of indefinite‑lived intangible assets is based on the income approach. For the impairment analysis for the year ended December 31, 2017, significant unobservable inputs used in the income approach valuation method including discount rates, royalty rates and probabilities of product candidate advancement from one clinical trial phase to the next. The determination of fair value of indefinite lived assets is considered Level 3 for fair value measurement . |
Goodwill | Goodwill We test goodwill for impairment on an annual basis or whenever events occur that may indicate possible impairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment exists and (2) measure the amount of impairment. Because we have one operating segment, when testing for a potential impairment of goodwill, we are required to estimate the fair value of our business and determine the carrying value. If the estimated fair value is less than the carrying value of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in a manner similar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwill impairment be determined, if any. To estimate the fair value of the business, primarily a market‑based approach is applied, utilizing our public market value. We did not record a charge for impairment for our goodwill for the years ended December 31, 2017, 2016 and 2015. |
Research and development expenses | Research and development expenses Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include compensation and related expenses. External expenses include development, clinical trials, report writing and regulatory compliance costs incurred with clinical research organizations and other third‑party vendors. At the end of the reporting period, we compare payments made to third‑party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that we estimate has been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs. Upfront and milestone payments made to third parties who perform research and development services on our behalf are expensed as services are rendered. |
Stock-based compensation | Stock‑based compensation We account for stock‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock‑based payments including grants of stock options and restricted stock and modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fair values. Our stock‑based awards are subject to either service‑based or performance‑based vesting conditions. Vesting of certain awards could also be accelerated upon achievement of defined market‑based vesting conditions. Certain awards also contain a combination of service and market conditions or performance and market conditions. We record compensation expense for service‑based awards over the vesting period of the award on a straight‑line basis. Compensation expense related to awards with performance‑based vesting conditions is recognized over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable. For those awards in which the performance condition was the completion of our IPO, we did not recognize compensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market‑based vesting conditions is recognized using the accelerated attribution method over the shorter of the requisite service period or the implied period associated with achievement of the market‑based vesting provisions. We estimate the fair value of our awards with service conditions using the Black‑Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk‑free interest rate and (iv) expected dividends. Due to the lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. We selected companies with comparable characteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share price information sufficient to meet the expected term of the stock‑based awards. We compute historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock‑based awards. We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine the probability of satisfying the market condition. We make this estimate using the conditions that exist at the grant date. The derived service period, which may be the requisite service period, is also determined at this time. Compensation cost for our awards with a market condition is recognized ratably using the accelerated attribution method if the award is subject to graded vesting over the requisite service period. The compensation cost for our awards with a market condition is not reversed if the market condition is not satisfied. We have estimated the expected term of employee service‑based stock options using the “simplified” method, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option, due to our lack of sufficient historical data. We have estimated the expected term of employee awards with market conditions using a Monte‑Carlo simulation model. This approach involves generating random stock‑price paths through a lattice‑type structure. Each path results in a certain financial outcome, such as accelerated vesting or specific option payout. We have estimated the expected term of nonemployee service‑ and performance‑based awards based on the remaining contractual term of such awards. The risk‑free interest rates for periods within the expected term of the option are based on the Swedish Government Bond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associated award. We have never paid dividends and do not expect to pay dividends in the foreseeable future. We account for forfeitures as they occur. |
Income taxes | Income taxes On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, reducing the top U.S. federal corporate tax rate from 35 percent to 21 percent; requiring companies to pay a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries; generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; creating the base erosion anti-abuse tax (BEAT), a new minimum tax; creating a new limitation on deductible interest expense; and changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017. The Tax Act reduces our U.S. corporate income tax rate from 34% to 21%, effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 34% to 21% under the Tax Act, we revalued our ending net deferred tax assets and liabilities at December 31, 2017. The Tax Act provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”). Strongbridge did not have to recognize any income tax expense related to the transition tax as they own no controlled foreign corporations. The global intangible low-taxed income tax and base erosion provisions are effective for taxable years beginning after December 31, 2017. The Company does not currently expect these provisions to have a material impact on its tax rate as they do not own any controlled foreign corporations and they are currently below the gross receipts threshold for purposes of the base erosion provisions. Due to the timing of the new tax law and the substantial changes it brings, the Staff of the Securities and Exchange Commission (the "SEC") issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides registrants a measurement period to report the impact of the new US tax law. During the measurement period, provisional amounts for the effects of the law are recorded to the extent a reasonable estimate can be made. To the extent that all information necessary is not available, prepared or analyzed, companies may recognize provisional estimated amounts for a period of up to one year following enactment of the TCJA. The Company recorded amounts as provisional and will continue to monitor for future updates to guidance or interpretations issued by the IRS. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2017, 2016 and 2015, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our statements of operations. |
Net loss per share | Net loss per share Basic net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to shareholders by the weighted‑average number of ordinary shares outstanding for the period, including any dilutive effect from outstanding stock options or other equity-based awards. Shares used in the diluted net loss per share calculations exclude anti‑dilutive ordinary share equivalents, which currently consist of outstanding stock options, unvested restricted stock units and warrants. Year Ended December 31, 2017 2016 2015 Warrants 7,555,003 7,000,000 — Stock options issued and outstanding 6,104,715 3,249,784 2,591,520 Unvested restricted stock units 267,250 184,000 — |
Customer concentration | Customer concentration For the year ended December 31, 2017, we sold Keveyis to one customer, who is the exclusive distributor of Keveyis in the United States. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update ( ASU) 2017-04, Intangibles - Goodwill and Other : Simplifying the Accounting for Goodwill Impairment . ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard, which will be effective for the us beginning in the first quarter of fiscal year 2021, is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments , which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce diversity in practice. The guidance is effective for us beginning in the first quarter of fiscal year 2018. Early adoption is permitted. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Improvements to Employee Share-Based Payment Accounting , which affects all entities that issue share-based payment awards to their employees. The amendments in this ASU cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2016. This guidance can be applied either prospectively, retrospectively or using a modified retrospective transition method. Early adoption is permitted. We have adopted the standard effective January 1, 2017 and have elected to account for forfeitures as they occur as opposed to estimating forfeitures. The adoption of this standard did not have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases , that discusses how an entity should account for lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for us beginning in the first quarter of fiscal year 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We are currently evaluating the impact this new accounting guidance will have on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory . ASU No. 2015-11 applies only to inventory for which cost is determined by methods other than last in, first-out and the retail inventory method, which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of this standard is required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We adopted this standard on April 1, 2017. The adoption of this standard had no impact on the Company’s consolidated financial statements , there was no accounting impact to previously issued financial statements based on our adoption . In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that re fl ects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash fl ows arising from customer contracts, including signi fi cant judgments and changes in judgments and assets recognized from costs incurred to obtain or ful fi ll a contract. We adopted this new standard on April 1, 2017 in conjunction with the launch of Keveyis. As we did not record revenue prior to adopting this standard, there was no accounting impact to previously issued financial statements based on our adoption of ASC Topic 606. |
Summary of significant accoun23
Summary of significant accounting policies and basis of presentation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of significant accounting policies and basis of presentation | |
Schedule of useful lives of various classification of property and equipment, net | Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years |
Schedule of potentially dilutive securities excluded from computations of diluted weighted average shares outstanding | Year Ended December 31, 2017 2016 2015 Warrants 7,555,003 7,000,000 — Stock options issued and outstanding 6,104,715 3,249,784 2,591,520 Unvested restricted stock units 267,250 184,000 — |
Fair value measurement (Tables)
Fair value measurement (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair value measurement | |
Schedule of fair value of financial assets by level | The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis for the periods presented (in thousands) : As of December 31, 2017 Level I Level II Level III Total Cash equivalents 57,024 — — 57,024 Total assets $ 57,024 $ — $ — $ 57,024 Warrant liability — — 41,308 41,308 Total liabilities $ — $ — $ 41,308 $ 41,308 As of December 31, 2016 Level I Level II Level III Total Warrant liability — — 11,090 11,090 Total liabilities $ — $ — $ 11,090 $ 11,090 |
Intangible assets and goodwill
Intangible assets and goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Intangible assets and goodwill | |
Schedule of gross carrying amount of in process research and development and goodwill | The gross carrying amount of in‑process research and development, acquired developed product rights and goodwill is as follows (in thousands): As of December 31, 2017 Beginning of Period Additions Impairment Amortization End of Period IPR&D $ 20,723 $ — $ (20,723) $ — $ — Acquired developed product rights 40,177 — — (5,022) 35,155 Goodwill 7,256 — — — 7,256 Total $ 68,156 $ — $ (20,723) $ (5,022) $ 42,411 As of December 31, 2016 Beginning of Period Additions Impairment Amortization End of Period IPR&D $ 36,551 $ — $ (15,828) $ — $ 20,723 Acquired developed product rights — 40,177 — — 40,177 Goodwill 7,256 — — — 7,256 Total $ 43,807 $ 40,177 $ (15,828) $ — $ 68,156 |
Schedule of estimated amortization of our acquired developed product rights intangible asset | Estimated amortization of our acquired developed product rights intangible asset for the five years subsequent to December 31, 2017 is as follows (in thousands): 2018 $ 5,022 2019 5,022 2020 5,022 2021 5,022 2022 5,022 |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued liabilities | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): December 31, December 31, 2017 2016 Consulting and professional fees $ 3,207 $ 1,110 Accrued payable due Taro Pharmaceuticals Industries Ltd. — 7,500 Supply agreement - current portion 4,237 4,207 Employee compensation 3,668 1,554 Other 120 497 Total accrued liabilities $ 11,232 $ 14,868 |
Long-term debt (Tables)
Long-term debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure | |
Future principal payments | Future principal payments due under the Loan Agreement are as follows (in thousands) : Principal Payments 2018 $ — 2019 — 2020 6,834 2021 13,667 2022 13,667 2023 6,591 Total future payments $ 40,759 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of warrants | Exercise Expiration Warrants Warrants December 31, Classification Price Date Issued Exercised 2017 Warrants in connection with private equity placement Liability $ 2.50 6/28/2022 7,000,000 — 7,000,000 Warrants in connection with Horizon and Oxford loan agreement Equity $ 2.45 12/28/2026 428,571 (267,857) 160,714 Warrants in connection with CRG loan agreement Equity $ 7.37 7/14/2024 394,289 — 394,289 7,822,860 7,555,003 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and contingencies | |
Schedule of future minimum commitments under facility operating leases | As of December 31, 2017, future minimum commitments under facility operating leases were as follows (in thousands): Operating leases 2018 357 2019 336 2020 156 2021 160 2022 163 2023 69 Total minimum lease payments $ 1,241 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income taxes | |
Schedule of components of loss before income taxes | For the years ended December 31, 2017, 2016 and 2015, the components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2017 2016 2015 Sweden $ (19,249) $ (16,433) $ (33,960) Ireland (47,211) (11,653) (191) Cayman Islands (21,709) (19,550) (8,722) U.S. (23,543) (3,721) (1,210) Total $ (111,712) $ (51,357) $ (44,083) |
Schedule of components of income tax (benefit) | The components of income tax expense (benefit) for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands): Year Ended December 31, 2017 2016 2015 Current tax (benefit) expense: Sweden $ — $ — $ — Ireland (22) 22 — U.S. Federal (151) 151 — State (14) 73 — Total current tax (benefit) expense $ (187) $ 246 $ — Deferred tax expense (benefit): Sweden $ (4,586) $ (834) $ 212 Ireland 1,280 (1,547) (24) U.S. Federal 39 (3,412) (17,543) State (2,392) (678) (1,233) Change in valuation allowance 7,617 3,587 18,138 Total deferred tax expense (benefit) 1,958 (2,884) (450) Total tax expense (benefit) $ 1,771 $ (2,638) $ (450) |
Schedule of tax effect of temporary differences that give rise to significant portions of the deferred tax assets | The tax effect of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands): Year Ended December 31, 2017 2016 Deferred tax assets: Net operating loss carryforwards $ 28,570 $ 24,433 Stock based compensation 2,824 1,870 Other deferred activity 617 96 Tax credits 9,182 9,135 Capitalized research and development costs 161 161 Total deferred tax assets 41,354 35,695 Valuation allowance (41,354) (33,738) Deferred tax assets recognized — 1,957 Deferred tax liabilities: Warrants — (358) Acquired intangible assets — — Total deferred tax liabilities — (358) Net deferred tax assets (liabilities) $ — $ 1,599 |
Schedule of effective tax rate reconciliation to statutory rate | Year Ended December 31, 2017 2016 2015 Ireland statutory income tax rate 12.50 % 12.50 % 12.50 % Foreign tax differential between Sweden, U.S., Cayman Island and Ireland 3.99 2.28 15.70 Federal tax credits — — 12.10 Change in valuation allowance (6.82) (6.69) (41.20) State income taxes 1.43 0.92 — Permanent differences (5.04) 1.59 — Rate change - tax impact (7.09) — — Fx remeasurement of Swedish DTA 0.83 (5.42) (5.41) Provision to return (1.33) — — Other (0.06) (0.04) 7.31 Effective income tax rate (1.59) % 5.14 % 1.00 % |
Stock-based compensation (Table
Stock-based compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-based compensation | |
Schedule of summary of outstanding stock options activity | Options Outstanding Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Term Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding—January 1, 2017 3,249,784 $ 11.00 6.89 $ — Granted 3,260,350 $ 3.73 Forfeited and cancelled (144,864) $ 7.22 $ — Exercised (260,555) $ 4.08 Outstanding—December 31, 2017 6,104,715 $ 7.50 7.70 $ 14,021 Vested and exercisable—December 31, 2017 2,073,201 $ 10.68 5.69 $ 2,533 |
Schedule of stock-based compensation | We recognized stock‑based compensation expense for employees and non‑employees in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2017 2016 2015 Selling, general and administrative $ 4,027 $ 4,005 $ 3,147 Research and development 1,140 601 793 Total stock-based compensation $ 5,167 $ 4,606 $ 3,940 |
Schedule of assumptions for estimating fair value of stock option awards | Year Ended December 31, 2017 2016 2015 Expected term (in years) 5.98 5.9 3.23 Risk-free interest rate 1.78% - 2.26% 1.21% - 2.23% 0.0% - 0.6% Expected volatility 78.2% - 85.0% 78.1% - 83.6% 79.0% - 83.1% Dividend rate —% —% —% |
Schedule of summary of unvested RSUs | Number of Shares Unvested—January 1, 2017 184,000 Granted 92,250 Forfeited (9,000) Vested — Unvested—December 31, 2017 267,250 |
Quarterly financial informati32
Quarterly financial information (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly financial information (unaudited) | |
Schedule of unaudited quarterly financial information | (in thousands, except share and per share data) March 31, June 30, September 30, December 31, 2017 Quarter Ended Total revenues $ — $ 1,529 $ 2,533 $ 2,984 Cost of sales (excluding amortization of intangible asset) — 377 591 515 Total costs and expenses 12,179 15,525 34,967 16,634 Other expenses (15,712) (15,910) (2,885) (3,463) Income tax (expense) benefit (1,594) 92 850 (1,119) Net loss (29,485) (30,191) (35,060) (18,747) Net loss per share of common stock, basic and diluted (1) (0.83) (0.86) (0.98) (0.47) 2016 Quarter Ended Total revenues $ — $ — $ — $ — Cost of sales (excluding amortization of intangible asset) — — — — Total costs and expenses 10,923 13,814 7,633 18,356 Other (expenses) income (1,337) 47 15 643 Income tax benefit 55 871 — 1,712 Net loss (12,154) (12,841) (7,601) (16,001) Net loss per share of common stock, basic (1) (0.57) (0.61) (0.36) (0.71) Net loss per share of common stock, diluted (1) (0.57) (0.61) (0.36) (0.73) (1) Net loss per share amounts may not agree to the per share for the full year due to the use of weighted average shares for each period. |
Organization - Products (Detail
Organization - Products (Detail) | 12 Months Ended |
Dec. 31, 2017product | |
Organization | |
Number of commercial products | 2 |
Number of clinical-stage product candidates | 2 |
Organization - IPO (Details)
Organization - IPO (Details) - Ordinary Shares - USD ($) $ / shares in Units, $ in Millions | Oct. 06, 2017 | Oct. 22, 2015 | Oct. 31, 2015 | Dec. 31, 2015 |
IPO | ||||
Organization | ||||
Issuance of shares (in shares) | 2,500,000 | 2,500,000 | 2,500,000 | |
Price per share (in dollars per share) | $ 10 | $ 10 | ||
Net proceeds | $ 19.5 | |||
Public offering | ||||
Organization | ||||
Issuance of shares (in shares) | 4,000,000 | |||
Price per share (in dollars per share) | $ 6.25 |
Organization - Exchange offer (
Organization - Exchange offer (Details) $ / shares in Units, $ in Thousands | Sep. 08, 2015 | Aug. 07, 2015$ / shares | Sep. 30, 2016USD ($)$ / shares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) |
Exchange offer | ||||||
Exchange ratio (as a percent) | 1 | |||||
Par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||
Reverse stock split conversion ratio (as a percent) | 0.09090 | |||||
Aggregate payment | $ | $ 7,500 | $ 3,392 | $ 3,168 | |||
Cortendo AB | ||||||
Exchange offer | ||||||
Par value (in dollars per share) | $ 0.15 | |||||
Shares owned (as a percent) | 99.582% | |||||
Shares not owned (as a percent) | 0.418% | |||||
Amount paid for acquisition (in dollars per share) | $ 13.66 | |||||
Aggregate payment | $ | $ 1,400 |
Organization - Liquidity (Detai
Organization - Liquidity (Details) - USD ($) $ in Thousands | Feb. 26, 2018 | Jan. 25, 2018 | Oct. 06, 2017 | Feb. 28, 2018 | Jan. 31, 2018 | Jan. 16, 2018 | Jan. 15, 2018 | Dec. 31, 2017 | Jul. 14, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Liquidity | ||||||||||||
Cash and cash equivalents | $ 57,510 | $ 66,837 | $ 51,623 | $ 15,632 | ||||||||
Outstanding borrowings | 40,759 | |||||||||||
CRG credit facility | ||||||||||||
Liquidity | ||||||||||||
Maximum borrowing capacity | 50,000 | $ 50,000 | ||||||||||
Outstanding borrowings | $ 40,000 | |||||||||||
CRG credit facility | Subsequent event | ||||||||||||
Liquidity | ||||||||||||
Maximum borrowing capacity | $ 100,000 | $ 100,000 | $ 50,000 | |||||||||
Public offering | Subsequent event | ||||||||||||
Liquidity | ||||||||||||
Issuance of shares (in shares) | 255,683 | 5,000,000 | ||||||||||
Ordinary Shares | Public offering | ||||||||||||
Liquidity | ||||||||||||
Issuance of shares (in shares) | 4,000,000 | |||||||||||
Ordinary Shares | Public offering | Subsequent event | ||||||||||||
Liquidity | ||||||||||||
Issuance of shares (in shares) | 5,255,683 | |||||||||||
Net proceeds | $ 33,000 |
Summary of significant accoun37
Summary of significant accounting policies and basis of presentation - Segment information (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Segment information | |
Number of operating segments | 1 |
Summary of significant accoun38
Summary of significant accounting policies and basis of presentation - Property and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Computer hardware | Minimum | |
Property and equipment, net | |
Amortization Periods | 3 years |
Computer hardware | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Computer software | Minimum | |
Property and equipment, net | |
Amortization Periods | 2 years |
Computer software | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Furniture and fixtures | Minimum | |
Property and equipment, net | |
Amortization Periods | 2 years |
Furniture and fixtures | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Summary of significant accoun39
Summary of significant accounting policies and basis of presentation - Goodwill (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Goodwill | |
Number of operating segments | 1 |
Summary of significant accoun40
Summary of significant accounting policies and basis of presentation - Income taxes (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income taxes | ||||
Accrued interest or penalties related to uncertain tax positions | $ 0 | $ 0 | $ 0 | |
Interest or penalties related to uncertain tax positions | $ 0 | $ 0 | $ 0 | |
Federal corporate tax rate | 12.50% | 12.50% | 12.50% | |
U.S. | ||||
Income taxes | ||||
Federal corporate tax rate | 34.00% | |||
Forecast | U.S. | ||||
Income taxes | ||||
Federal corporate tax rate | 21.00% | |||
Maximum | U.S. | ||||
Income taxes | ||||
Federal corporate tax rate | 35.00% |
Summary of significant accoun41
Summary of significant accounting policies and basis of presentation - Net loss per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants | |||
Net loss per share | |||
Anti-dilutive shares of common stock (in shares) | 7,555,003 | 7,000,000 | |
Stock options | |||
Net loss per share | |||
Anti-dilutive shares of common stock (in shares) | 6,104,715 | 3,249,784 | 2,591,520 |
RSUs | |||
Net loss per share | |||
Anti-dilutive shares of common stock (in shares) | 267,250 | 184,000 |
Summary of significant accoun42
Summary of significant accounting policies and basis of presentation - Concentrations (Details) | 12 Months Ended |
Dec. 31, 2017item | |
Keveyis | Customer Concentration Risk | |
Customer Concentration | |
Number of customer | 1 |
Revenue recognition - General (
Revenue recognition - General (Details) | 12 Months Ended |
Dec. 31, 2017pharmacy | |
Revenue recognition | |
Number of specialty pharmacy providers | 1 |
Revenue recognition - Allowance
Revenue recognition - Allowance and reserve (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Revenue recognition | |
Reserve for returns | $ 0 |
Percentage of patient’s cost of branded prescription drugs related to the Medicare Part D Coverage Gap for which manufacturers of pharmaceutical products are responsible | 50.00% |
Temporary supply period | 60 days |
Financial need period | 12 months |
Fair value measurement (Details
Fair value measurement (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities | ||
Warrant liabilities | $ 41,308 | $ 11,090 |
Recurring | ||
Assets | ||
Cash equivalents | 57,024 | |
Total Assets | 57,024 | |
Liabilities | ||
Warrant liabilities | 41,308 | 11,090 |
Total liabilities | 41,308 | 11,090 |
Recurring | Level I | ||
Assets | ||
Cash equivalents | 57,024 | |
Total Assets | 57,024 | |
Recurring | Level III | ||
Liabilities | ||
Warrant liabilities | 41,308 | 11,090 |
Total liabilities | $ 41,308 | $ 11,090 |
Intangible assets and goodwil46
Intangible assets and goodwill - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
In-process research and development and Goodwill | ||
IPR&D, Beginning of Period | $ 20,723 | $ 36,551 |
IPR&D, Impairment | (20,723) | (15,828) |
IPR&D, End of Period | 20,723 | |
Acquired product rights, Beginning of Period | 40,177 | |
Acquired product rights, Additions | 40,177 | |
Acquired product rights, Amortization | (5,022) | |
Acquired product rights, End of Period | 35,155 | 40,177 |
Goodwill, Beginning of Period | 7,256 | 7,256 |
Goodwill, End of Period | 7,256 | 7,256 |
Total, Beginning of Period | 68,156 | 43,807 |
Total, Additions | 40,177 | |
Total Impairment | (20,723) | (15,828) |
Amortization | (5,022) | |
Total, End of Period | $ 42,411 | $ 68,156 |
Intangible assets and goodwil47
Intangible assets and goodwill - Amortization maturity schedule (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Amortization of intangible asset | |
2,018 | $ 5,022 |
2,019 | 5,022 |
2,020 | 5,022 |
2,021 | 5,022 |
2,022 | $ 5,022 |
Intangible assets and goodwil48
Intangible assets and goodwill - Asset purchase (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)payment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)payment | |
In-process research and development and Goodwill | ||||
IPR&D, Impairment | $ (20,723) | $ (15,828) | ||
Acquired product rights | $ 40,177 | 35,155 | 40,177 | |
BioPancreate Acquisition | IPR&D | ||||
In-process research and development and Goodwill | ||||
IPR&D, Impairment | $ (20,700) | |||
Keveyis | Taro | Acquired product rights | ||||
In-process research and development and Goodwill | ||||
Acquired product rights | 40,200 | 40,200 | ||
Transaction costs | $ 2,400 | $ 2,400 | ||
Estimated life | 8 years | |||
Asset Purchase Agreement | Keveyis | Taro | Acquired product rights | ||||
In-process research and development and Goodwill | ||||
Number of installment payments | payment | 2 | 2 | ||
Installment payment | $ 7,500 | $ 1,000 | ||
Supply Agreement | Keveyis | Taro | Acquired product rights | ||||
In-process research and development and Goodwill | ||||
Acquired product rights | $ 29,300 | $ 29,300 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued liabilities | ||
Consulting and professional fees | $ 3,207 | $ 1,110 |
Accrued payable due Taro Pharmaceuticals Industries Ltd | 7,500 | |
Supply agreement - current portion | 4,237 | 4,207 |
Employee compensation | 3,668 | 1,554 |
Other | 120 | 497 |
Total accrued liabilities | $ 11,232 | $ 14,868 |
Long-term debt - Agreements (De
Long-term debt - Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 14, 2017 | Jul. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Loan agreement | ||||
Proceeds from long-term debt | $ 38,687 | $ 19,316 | ||
Loss on early extinguishment of debt | (3,545) | |||
CRG credit facility | ||||
Loan agreement | ||||
Maximum borrowing capacity | $ 50,000 | $ 50,000 | ||
Proceeds from long-term debt | 40,000 | |||
Additional borrowing capacity on achievement of milestones | $ 10,000 | |||
Credit facility term | 6 years | |||
Interest-only payment period | 3 years | |||
Interest payment only extension period | 6 years | |||
Fixed interest rate (as a percent) | 12.50% | |||
Final payment fee (as a percent) | 5.00% | |||
Deferral percentage | 4.00% | |||
Debt discounts | $ 2,500 | |||
Debt issuance costs | 800 | |||
Final payment fee | 1,600 | |||
Loss on early extinguishment of debt | 3,500 | |||
Concurrent with CRG credit facility borrowing | ||||
Loan agreement | ||||
Gross proceeds from stock issuance | $ 3,000 | $ 3,000 | ||
Warrants in connection with CRG credit facility | ||||
Loan agreement | ||||
Warrant term | 7 years | |||
Securities that warrants may purchase (in shares) | 394,289 | |||
Warrant exercise price (in dollars per share) | $ 7.37 | $ 7.37 | ||
Ordinary Shares | Concurrent with CRG credit facility borrowing | ||||
Loan agreement | ||||
Price per share (in dollars per share) | $ 6.98 | $ 6.98 |
Long-term debt - Future princip
Long-term debt - Future principal payments (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Future principal payments | |
2,020 | $ 6,834 |
2,021 | 13,667 |
2,022 | 13,667 |
2,023 | 6,591 |
Total future payments | $ 40,759 |
Warrants (Details)
Warrants (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Jul. 14, 2017 | Dec. 22, 2016 | |
Warrants | |||
Warrants Issued (in shares) | 7,822,860 | ||
Warrants Outstanding (in shares) | 7,555,003 | ||
Warrants in connection with private equity placement | |||
Warrants | |||
Exercise Price (in dollars per share) | $ 2.50 | $ 2.50 | |
Warrants Issued (in shares) | 7,000,000 | ||
Warrants Outstanding (in shares) | 7,000,000 | ||
Warrants in connection with Horizon and Oxford loan agreement | |||
Warrants | |||
Exercise Price (in dollars per share) | $ 2.45 | ||
Warrants Issued (in shares) | 428,571 | ||
Warrants Exercised (in shares) | (267,857) | ||
Warrants Outstanding (in shares) | 160,714 | ||
Warrants in connection with CRG credit facility | |||
Warrants | |||
Exercise Price (in dollars per share) | $ 7.37 | $ 7.37 | |
Warrants Issued (in shares) | 394,289 | ||
Warrants Outstanding (in shares) | 394,289 |
Commitments and contingencies -
Commitments and contingencies - Lease (Details) | Apr. 22, 2014ft² | Nov. 30, 2017ft² | Mar. 31, 2015ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Apr. 13, 2015USD ($) |
Future minimum commitments under facility operating leases | |||||||
2,018 | $ 357,000 | ||||||
2,019 | 336,000 | ||||||
2,020 | 156,000 | ||||||
2,021 | 160,000 | ||||||
2,022 | 163,000 | ||||||
2,023 | 69,000 | ||||||
Total minimum lease payments | 1,241,000 | ||||||
Rent expense | $ 314,000 | $ 275,000 | $ 254,000 | ||||
Building lease, April 2014 | |||||||
Lease | |||||||
Lease term | 48 months | ||||||
Amount of space leased (in square feet) | ft² | 3,000 | ||||||
Building lease, March 2015 | |||||||
Lease | |||||||
Lease term | 52 months | ||||||
Amount of space leased (in square feet) | ft² | 14,743 | ||||||
Recorded liability for vacated leased space | $ 100,000 | ||||||
Building lease, November 2017 | |||||||
Lease | |||||||
Lease term | 60 months | ||||||
Amount of space leased (in square feet) | ft² | 7,326 |
Commitments and contingencies54
Commitments and contingencies - Commitments to Taro (Details) - Acquired product rights - Taro - Keveyis $ in Millions | 1 Months Ended | |
Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)payment | |
Asset Purchase Agreement | ||
Other Commitments | ||
Number of installment payments | payment | 2 | |
Installment payment | $ 7.5 | $ 1 |
Potential milestone payments | 7.5 | |
Supply Agreement | ||
Other Commitments | ||
Minimum amount of purchases obligated | $ 29 | |
Purchase obligation period | 6 years |
Defined contribution plan (Deta
Defined contribution plan (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Defined contribution plan | |
Percentage of employee's percentage contribution matched | 100.00% |
Percentage of employees' pay matched | 4.00% |
Amount contributed | $ 173,000 |
Income taxes - Components of lo
Income taxes - Components of loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of loss before income taxes | |||
Loss before income taxes | $ (111,712) | $ (51,357) | $ (44,083) |
Sweden | |||
Components of loss before income taxes | |||
Loss before income taxes | (19,249) | (16,433) | (33,960) |
Ireland | |||
Components of loss before income taxes | |||
Loss before income taxes | (47,211) | (11,653) | (191) |
Cayman Islands | |||
Components of loss before income taxes | |||
Loss before income taxes | (21,709) | (19,550) | (8,722) |
U.S. | |||
Components of loss before income taxes | |||
Loss before income taxes | $ (23,543) | $ (3,721) | $ (1,210) |
Income taxes - Components of in
Income taxes - Components of income tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Components of income tax (benefit) | ||||||||||
Current tax (benefit) expense | $ (187) | $ 246 | ||||||||
Change in valuation allowance | 7,617 | 3,587 | $ 18,138 | |||||||
Deferred tax expense (benefit) | 1,958 | (2,884) | (450) | |||||||
Total tax expense (benefit) | $ 1,119 | $ (850) | $ (92) | $ 1,594 | $ (1,712) | $ (871) | $ (55) | 1,771 | (2,638) | (450) |
Sweden | ||||||||||
Components of income tax (benefit) | ||||||||||
Deferred tax expense (benefit) | (4,586) | (834) | 212 | |||||||
Ireland | ||||||||||
Components of income tax (benefit) | ||||||||||
Current tax (benefit) expense | (22) | 22 | ||||||||
Deferred tax expense (benefit) | 1,280 | (1,547) | (24) | |||||||
U.S. | Federal | ||||||||||
Components of income tax (benefit) | ||||||||||
Current tax (benefit) expense | (151) | 151 | ||||||||
Deferred tax expense (benefit) | 39 | (3,412) | (17,543) | |||||||
U.S. | State | ||||||||||
Components of income tax (benefit) | ||||||||||
Current tax (benefit) expense | (14) | 73 | ||||||||
Deferred tax expense (benefit) | $ (2,392) | $ (678) | $ (1,233) |
Income taxes - Deferred taxes (
Income taxes - Deferred taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 28,570 | $ 24,433 |
Stock based compensation | 2,824 | 1,870 |
Other deferred activity | 617 | 96 |
Tax credits | 9,182 | 9,135 |
Capitalized research and development costs | 161 | 161 |
Total deferred tax assets | 41,354 | 35,695 |
Valuation allowance | (41,354) | (33,738) |
Deferred tax assets recognized | 1,957 | |
Deferred tax liabilities: | ||
Warrants | (358) | |
Total deferred tax liabilities | (358) | |
Net deferred tax assets | 1,599 | |
Increase in valuation allowance | $ 7,600 | $ 3,600 |
Income taxes - Effective tax ra
Income taxes - Effective tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Schedule of effective tax rate of our benefit for income taxes differs from the statutory rate | |||
Domestic statutory income tax rate | 12.50% | 12.50% | 12.50% |
Foreign tax differential between Sweden, U.S., Cayman Island and Ireland | 3.99% | 2.28% | 15.70% |
Federal tax credits | 12.10% | ||
Change in valuation allowance | (6.82%) | (6.69%) | (41.20%) |
State income taxes | 1.43% | 0.92% | |
Permanent differences | (5.04%) | 1.59% | |
Rate change - tax impact | (7.09%) | ||
Fx remeasurement of Swedish DTA | 0.83% | (5.42%) | (5.41%) |
Provision to return | (1.33%) | ||
Other | (0.06%) | (0.04%) | 7.31% |
Effective income tax rate | (1.59%) | 5.14% | 1.00% |
Income taxes - NOLs (Details)
Income taxes - NOLs (Details) $ in Millions | Dec. 31, 2017USD ($) |
Sweden | |
Operating Loss Carryforwards | |
NOLs | $ 56 |
Ireland | |
Operating Loss Carryforwards | |
NOLs | 2.3 |
U.S. | Federal | |
Operating Loss Carryforwards | |
NOLs | 53.4 |
U.S. | State | |
Operating Loss Carryforwards | |
NOLs | $ 51.3 |
Income taxes - Tax credit carry
Income taxes - Tax credit carryfowards (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Sweden | |
Tax credit carryforward | |
Ownership change threshold (as a percent) | 50.00% |
U.S. | |
Tax credit carryforward | |
Ownership change threshold (as a percent) | 50.00% |
U.S. | Orphan drug tax credit carryforward | Federal | |
Tax credit carryforward | |
Tax credit carryforward | $ 8,900,000 |
U.S. | Research and development tax credit carryforward | Federal | |
Tax credit carryforward | |
Tax credit carryforward | $ 84,000 |
Ordinary shares - Voting rights
Ordinary shares - Voting rights and privileges (Details) | May 26, 2015€ / sharesshares | Dec. 31, 2017item$ / sharesshares | Dec. 31, 2015shares | Dec. 31, 2017$ / sharesshares | Dec. 31, 2016$ / sharesshares | May 26, 2015$ / shares |
Voting rights and privileges | ||||||
Ordinary shares, shares authorized | shares | 600,000,000 | 600,000,000 | 600,000,000 | |||
Ordinary shares, shares outstanding | shares | 40,149,812 | 40,149,812 | 35,335,026 | |||
Number of votes per ordinary share | item | 1 | |||||
Dividends declared (in dollars per share) | $ / shares | $ 0 | |||||
Dividends paid (in dollars per share) | $ / shares | 0 | |||||
Deferred shares, par value (in dollars/euro per share) | $ / shares | $ 1.098 | $ 1.098 | $ 1.098 | |||
Deferred Shares | ||||||
Voting rights and privileges | ||||||
Beneficial shares issued (in shares) | shares | 40,000 | 40,000 | ||||
Deferred shares, par value (in dollars/euro per share) | (per share) | € 1 | $ 1.098 | ||||
Number of votes per deferred share | item | 0 |
Ordinary shares - Equity financ
Ordinary shares - Equity financings - 2017 (Details) - USD ($) | Oct. 06, 2017 | Jul. 14, 2017 | Apr. 28, 2017 | Jul. 31, 2017 | Dec. 31, 2017 |
Public offering | |||||
Equity financings | |||||
Proceeds from issuance of stock, net of transaction costs | $ 23,400,000 | ||||
Concurrent with CRG credit facility borrowing | |||||
Equity financings | |||||
Gross proceeds from stock issuance | $ 3,000,000 | $ 3,000,000 | |||
ATM Facility | |||||
Equity financings | |||||
Proceeds from issuance of stock, net of transaction costs | $ 73,000 | ||||
Aggregate shares issuable (in dollars) | $ 40,000,000 | ||||
Sales commission (as a percent) | 3.00% | ||||
Fees paid | $ 2,000 | ||||
Ordinary Shares | Public offering | |||||
Equity financings | |||||
Issuance of shares (in shares) | 4,000,000 | ||||
Price per share (in dollars per share) | $ 6.25 | ||||
Ordinary Shares | Concurrent with CRG credit facility borrowing | |||||
Equity financings | |||||
Issuance of shares (in shares) | 429,799 | ||||
Price per share (in dollars per share) | $ 6.98 | $ 6.98 | |||
Ordinary Shares | ATM Facility | |||||
Equity financings | |||||
Issuance of shares (in shares) | 10,300 |
Ordinary shares - Equity fina64
Ordinary shares - Equity financings - Shares 2016 (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 22, 2016 | Jun. 30, 2015 | Feb. 28, 2015 |
Equity financings | |||
Proceeds from issuance of common stock and warrants, net | $ 32.7 | ||
Private placement | Ordinary Shares | |||
Equity financings | |||
Issuance of shares (in shares) | 14,000,000 | 2,284,414 | 4,761,078 |
Price per share (in dollars per share) | $ 2.50 | $ 14.54 | $ 5.54 |
Ordinary shares - Equity fina65
Ordinary shares - Equity financings - Warrants 2016 (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 22, 2016 |
Warrants | ||||
Unrealized (loss) gain on fair value of warrants | $ (30,218) | $ 638 | ||
Warrant liabilities | $ 41,308 | $ 11,090 | ||
Warrants in connection with private equity placement | ||||
Warrants | ||||
Securities that warrants may purchase (in shares) | 7,000,000 | |||
Warrant exercise price (in dollars per share) | $ 2.50 | $ 2.50 | ||
Warrant term | 5 years |
Ordinary shares - Equity fina66
Ordinary shares - Equity financings - 2015 (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 22, 2016 | Oct. 22, 2015 | Oct. 31, 2015 | Jun. 30, 2015 | Feb. 28, 2015 | Dec. 31, 2015 |
IPO | ||||||
Equity financings | ||||||
Gross proceeds from stock issuance | $ 25 | |||||
Offering expenses | $ 5.5 | |||||
IPO | Ordinary Shares | ||||||
Equity financings | ||||||
Issuance of shares (in shares) | 2,500,000 | 2,500,000 | 2,500,000 | |||
Price per share (in dollars per share) | $ 10 | $ 10 | ||||
Private placement | ||||||
Equity financings | ||||||
Proceeds from issuance of stock, net of transaction costs | $ 32.6 | $ 25.8 | ||||
Private placement | Ordinary Shares | ||||||
Equity financings | ||||||
Issuance of shares (in shares) | 14,000,000 | 2,284,414 | 4,761,078 | |||
Price per share (in dollars per share) | $ 2.50 | $ 14.54 | $ 5.54 |
Ordinary shares - Shares reserv
Ordinary shares - Shares reserved for issuance (Details) - shares | Dec. 31, 2017 | Dec. 31, 2016 |
Stock Options | ||
Shares reserved for issuance | ||
Common stock reserved for future issuance (in shares) | 728,411 | 1,951,022 |
Warrants issued in private equity placement or loan agreement | ||
Shares reserved for issuance | ||
Common stock reserved for future issuance (in shares) | 7,555,003 |
Stock-based compensation - Gene
Stock-based compensation - General (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Stock-based compensation | |
Vesting period | 4 years |
Minimum | |
Stock-based compensation | |
Award term | 5 years |
Maximum | |
Stock-based compensation | |
Award term | 10 years |
Stock-based compensation - Stoc
Stock-based compensation - Stock options activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of outstanding stock options | ||
Outstanding at beginning of period (in shares) | 3,249,784 | |
Granted (in shares) | 3,260,350 | |
Forfeited and cancelled (in shares) | (144,864) | |
Exercised (in shares) | (260,555) | |
Outstanding at end of period (in shares) | 6,104,715 | 3,249,784 |
Vested and exercisable at end of period (in shares) | 2,073,201 | |
Weighted-Average Exercise Price | ||
Granted (in dollars per share) | $ 3.73 | |
Forfeited and cancelled (in dollars per share) | 7.22 | |
Exercised (in dollars per share) | 4.08 | |
Outstanding (in dollars per share) | 7.50 | $ 11 |
Vested and exercisable at end of period (in dollars per share) | $ 10.68 | |
Additional Disclosures - Options | ||
Weighted Average Remaining Contractual Term, Outstanding | 7 years 8 months 12 days | 6 years 10 months 21 days |
Weighted Average Remaining Contractual Term, Vested and exercisable | 5 years 8 months 9 days | |
Aggregate Intrinsic Value, Outstanding (in dollars) | $ 14,021 | |
Aggregate Intrinsic Value, Vested and exercisable at end of the period (in dollars) | $ 2,533 |
Stock-based compensation - Opti
Stock-based compensation - Options outstanding (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options | ||
Options outstanding (in shares) | 6,104,715 | 3,249,784 |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 7.50 | $ 11 |
Vesting subject to acceleration | ||
Stock options | ||
Options outstanding (in shares) | 88,908 | |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 18.80 | |
Share price vesting threshold (in dollars per share) | 31.46 | |
Vesting based on market appreciation event | Grantee, One | ||
Stock options | ||
Share price vesting threshold (in dollars per share) | 30.14 | |
Vesting based on market appreciation event | Grantee, Two | ||
Stock options | ||
Share price vesting threshold (in dollars per share) | $ 33.66 | |
Vesting based on market appreciation event | Vesting at market appreciation event | ||
Stock options | ||
Options outstanding (in shares) | 97,652 | |
Consecutive trading days threshold | 20 days | |
Vesting based on market appreciation event | Vesting at one year anniversary of market appreciation event | ||
Stock options | ||
Options outstanding (in shares) | 97,652 | |
Vesting period following event | 1 year | |
Consecutive trading days threshold | 20 days |
Stock-based compensation - St71
Stock-based compensation - Stock-based compensation expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock-based compensation expense | |||
Total stock-based compensation | $ 5,167,000 | $ 4,606,000 | $ 3,940,000 |
Total unrecognized compensation expense | 10,100,000 | ||
Stock options accounted for as liabilities | |||
Stock-based compensation expense | |||
Total stock-based compensation | $ 0 | 0 | 359,000 |
Employee and non-employee stock options | |||
Stock-based compensation expense | |||
Estimated weighted average period over which expense is expected to be recognized | 2 years 9 months | ||
Selling, general and administrative | |||
Stock-based compensation expense | |||
Total stock-based compensation | $ 4,027,000 | 4,005,000 | 3,147,000 |
Research and development | |||
Stock-based compensation expense | |||
Total stock-based compensation | $ 1,140,000 | $ 601,000 | $ 793,000 |
Stock-based compensation - Fair
Stock-based compensation - Fair value assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value assumptions | |||
Expected term (in years) | 5 years 11 months 23 days | 5 years 10 months 24 days | 3 years 2 months 23 days |
Minimum Risk-free interest rate (as a percent) | 1.78% | 1.21% | 0.00% |
Maximum Risk-free interest rate (as a percent) | 2.26% | 2.23% | 0.60% |
Minimum Expected volatility (as a percent) | 78.20% | 78.10% | 79.00% |
Maximum Expected volatility (as a percent) | 85.00% | 83.60% | 83.10% |
Stock-based compensation - Rest
Stock-based compensation - Restricted stock units (Details) - USD ($) | Feb. 26, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Stock-based compensation | ||||
Vesting period | 4 years | |||
Stock-based compensation | $ 5,167,000 | $ 4,606,000 | $ 3,940,000 | |
RSUs | ||||
Stock-based compensation | ||||
Vesting period | 2 years | |||
Number of shares issued for each stock award vested | 1 | |||
Stock-based compensation | 436,000 | $ 280,000 | ||
Total unrecognized compensation expense | $ 500,000 | |||
Estimated weighted average period over which expense is expected to be recognized | 1 year 4 months 21 days | |||
Summary of unvested RSUs | ||||
Unvested - Beginning of period (in shares) | 184,000 | |||
Granted (in shares) | 92,250 | |||
Forfeited (in shares) | (9,000) | |||
Unvested - End of period (in shares) | 267,250 | 184,000 |
Quarterly financial informati74
Quarterly financial information (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly financial information (unaudited) | |||||||||||
Total revenues | $ 2,984 | $ 2,533 | $ 1,529 | $ 7,046 | |||||||
Cost of sales (excluding amortization of intangible asset) | 515 | 591 | 377 | 1,483 | |||||||
Total cost and expenses | 16,634 | 34,967 | 15,525 | $ 12,179 | $ 18,356 | $ 7,633 | $ 13,814 | $ 10,923 | 80,788 | $ 50,726 | $ 42,854 |
Other (expenses) income | (3,463) | (2,885) | (15,910) | (15,712) | 643 | 15 | 47 | (1,337) | (37,970) | (631) | (1,229) |
Income tax (expense) benefit | (1,119) | 850 | 92 | (1,594) | 1,712 | 871 | 55 | (1,771) | 2,638 | 450 | |
Net loss | $ (18,747) | $ (35,060) | $ (30,191) | $ (29,485) | $ (16,001) | $ (7,601) | $ (12,841) | $ (12,154) | $ (113,483) | $ (48,719) | $ (43,633) |
Net loss per share of common stock, basic (in dollars per share) | $ (0.47) | $ (0.98) | $ (0.86) | $ (0.83) | $ (0.71) | $ (0.36) | $ (0.61) | $ (0.57) | $ (3.11) | $ (2.26) | $ (2.62) |
Net loss per share of common stock, diluted (in dollars per share) | $ (0.73) | $ (0.36) | $ (0.61) | $ (0.57) | $ (3.11) | $ (2.27) | $ (2.62) |
Subsequent events (Details)
Subsequent events (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 26, 2018 | Jan. 25, 2018 | Jan. 16, 2018 | Oct. 06, 2017 | Jul. 14, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2018 | Jan. 15, 2018 |
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Proceeds from long-term debt | $ 38,687 | $ 19,316 | |||||||
Public offering | |||||||||
Equity financings | |||||||||
Proceeds from issuance of stock, net of transaction costs | $ 23,400 | ||||||||
CRG credit facility | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Maximum borrowing capacity | $ 50,000 | $ 50,000 | |||||||
Proceeds from long-term debt | 40,000 | ||||||||
Additional borrowing capacity on achievement of milestones | $ 10,000 | ||||||||
Credit facility term | 6 years | ||||||||
Subsequent event | Public offering | |||||||||
Equity financings | |||||||||
Issuance of shares (in shares) | 255,683 | 5,000,000 | |||||||
Price per share (in dollars per share) | $ 6.75 | $ 6.75 | |||||||
Proceeds from issuance of stock, net of transaction costs | $ 1,600 | $ 31,700 | |||||||
Subsequent event | CRG credit facility | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Maximum borrowing capacity | $ 100,000 | $ 100,000 | $ 50,000 | ||||||
Credit facility term | 6 years | ||||||||
Extension added to interest-only period | 6 months | ||||||||
Option to extend the interest-only period upon achievement of milestone | 6 years | ||||||||
Period of volume weighted average price (VWAP) per ordinary share | 10 days | ||||||||
Consecutive trading period | 10 days | ||||||||
Warrant term | 7 years | ||||||||
Subsequent event | CRG credit facility | Warrants in connection with CRG loan agreement, Second Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Securities that warrants may purchase for warrants issued during the period (in shares) | 1,248,250 | ||||||||
Warrant exercise price (in dollars per share) | $ 10 | ||||||||
Subsequent event | CRG credit facility | Warrants in connection with CRG loan agreement, Third Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Warrants to be issued to Lender if proceeds received (as a percent) | 0.20% | ||||||||
Exercise price of warrants required to be issued to Lender (as a percent) | 110.00% | ||||||||
Subsequent event | CRG credit facility | Warrants in connection with CRG loan agreement, Fourth Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Warrants to be issued to Lender if proceeds received (as a percent) | 0.25% | ||||||||
Exercise price of warrants required to be issued to Lender (as a percent) | 140.00% | ||||||||
Subsequent event | CRG credit facility, Second Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Additional borrowing capacity on achievement of milestones | $ 45,000 | ||||||||
Subsequent event | CRG credit facility, Third Tranche | Warrants in connection with CRG loan agreement, Third Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Additional borrowing capacity on achievement of milestones | 10,000 | ||||||||
Subsequent event | CRG credit facility, Fourth Tranche | |||||||||
Amendment to term loan agreement with CRG Servicing LLC | |||||||||
Additional borrowing capacity on achievement of milestones | 5,000 | ||||||||
Subsequent event | License and assignment agreement | Aeterna Zentaris GmbH | |||||||||
Subsequent events | |||||||||
Collaborative arrangement consideration paid | $ 24,000 |