Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Dova Pharmaceuticals, Inc. | |
Entity Central Index Key | 1,685,071 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 25,652,457 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 100,414 | $ 28,709 |
Prepaid expenses | 998 | 37 |
Total current assets | 101,412 | 28,746 |
Property, plant and equipment, net | 35 | |
Total assets | 101,447 | 28,746 |
Current liabilities | ||
Accounts payable | 585 | 157 |
Accrued expenses | 5,451 | 7,918 |
Accrued interest | 631 | 151 |
Due to related party | 50 | 85 |
Note payable, short-term | 27,119 | |
Total current liabilities | 33,836 | 8,311 |
Note payable, long-term | 13,640 | |
Total liabilities | 33,836 | 21,951 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 0 and 982,714 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 1 | |
Common stock, $0.001 par value; 100,000,000 shares authorized; 25,652,457 and 17,332,257 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 26 | 17 |
Additional paid-in capital | 115,429 | 33,967 |
Accumulated deficit | (47,844) | (27,190) |
Total stockholders' equity | 67,611 | 6,795 |
Total liabilities and stockholders' equity | $ 101,447 | $ 28,746 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 982,714 |
Preferred stock, shares outstanding | 0 | 982,714 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 25,652,457 | 17,332,257 |
Common stock, shares outstanding | 25,652,457 | 17,332,257 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | |
Operating expenses: | ||||
Research and development | $ 4,426 | $ 6,758 | $ 13,898 | $ 11,995 |
Research and development - licenses acquired | 1,000 | 5,000 | 1,000 | |
General and administrative | 4,185 | 368 | 643 | 7,045 |
Total operating expenses | 9,611 | 7,126 | 19,541 | 20,040 |
Loss from operations | (9,611) | (7,126) | (19,541) | (20,040) |
Other income (expenses) | ||||
Other income (expense), net | 224 | (10) | (10) | 243 |
Interest expense - related party | (3) | (4) | ||
Interest expense | (336) | (35) | (35) | (857) |
Total other expenses, net | (112) | (48) | (49) | (614) |
Net loss | $ (9,723) | $ (7,174) | $ (19,590) | $ (20,654) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.38) | $ (0.41) | $ (1.13) | $ (1.03) |
Weighted average common shares outstanding, basic and diluted (in shares) | 25,290,709 | 17,332,257 | 17,297,398 | 20,014,226 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Series A preferred stock | Common stockIPO | Common stock | Additional paid-in capitalIPO | Additional paid-in capital | Accumulated deficit | IPO | Total |
Balance as at beginning of the period at Dec. 31, 2016 | $ 1 | $ 17 | $ 33,967 | $ (27,190) | $ 6,795 | |||
Balance as at beginning of the period (in shares) at Dec. 31, 2016 | 982,714 | 17,332,257 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Stock-based compensation | 2,761 | 2,761 | ||||||
Conversion of preferred stock into common stock | $ (1) | $ 4 | (3) | |||||
Conversion of preferred stock into common stock (in shares) | (982,714) | 3,242,950 | ||||||
Issuance of common stock in connection with IPO, net of offering costs | $ 5 | $ 78,704 | $ 78,709 | |||||
Issuance of common stock in connection with IPO, net of offering costs (in shares) | 5,077,250 | |||||||
Net loss | (20,654) | (20,654) | ||||||
Balance as at end of the period at Sep. 30, 2017 | $ 26 | $ 115,429 | $ (47,844) | $ 67,611 | ||||
Balance as at end of the period (in shares) at Sep. 30, 2017 | 25,652,457 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (19,590) | $ (20,654) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Research and development-licenses acquired, expensed | 5,000 | 1,000 |
Non-cash research and development expenses | 13,741 | 9,663 |
Stock-based compensation | 2,761 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses | (10) | (961) |
Accounts payable | 13 | 428 |
Accrued expenses | 93 | 1,060 |
Accrued interest | 35 | 480 |
Due to related party | 58 | (35) |
Net cash used in operating activities | (660) | (6,258) |
Cash flows from investing activities | ||
Purchase of fixed assets | (35) | |
Net cash used in investing activities | (35) | |
Cash flows from financing activities | ||
Proceeds from issuance of Series A preferred stock | 10,000 | |
Payment of offering cost in connection with issuance of Series A preferred stock | (711) | |
Capital contribution - PBM Capital | 696 | |
Proceeds from the issuance of common stock in connection with IPO | 86,313 | |
Payment of offering cost in connection with IPO | (7,604) | |
Net cash provided by financing activities | 10,696 | 77,998 |
Net increase in cash and cash equivalents | 10,036 | 71,705 |
Cash and cash equivalents at the beginning of the period | 28,709 | |
Cash and cash equivalents at the end of the period | 10,036 | 100,414 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 377 | |
Supplemental disclosure of noncash investing and financing activities: | ||
Change in note payable | 6,988 | $ 13,479 |
Capital contribution - PBM Capital Investments, LLC - payment of AkaRx upfront purchase price | 5,000 | |
Accrued offering costs in connection with issuance of preferred stock | $ 239 |
Organization and description of
Organization and description of business operations | 9 Months Ended |
Sep. 30, 2017 | |
Organization and description of business operations | |
Organization and description of business operations | Note 1—Organization and description of business operations Dova Pharmaceuticals, Inc. (“Dova”) was originally formed as PBM AKX Holdings, LLC, a limited liability company formed under the laws of the State of Delaware on March 24, 2016 (“Inception”). PBM AKX Holdings, LLC changed its name to Dova Pharmaceuticals, LLC by filing a Certificate of Amendment to its Certificate of Formation with the State of Delaware on June 15, 2016. Dova converted from a limited liability company to a corporation on September 15, 2016. Dova was founded by PBM Capital Investments, LLC and certain affiliates of PBM Capital Investments, LLC (together, “PBM Capital”). Dova is a pharmaceutical company focused on acquiring, developing and commercializing drug candidates for diseases that are treated by specialist physicians, with an initial focus on addressing thrombocytopenia, a disorder characterized by a low blood platelet count. The Company’s drug candidate, avatrombopag, recently completed two identically designed pivotal Phase 3 clinical trials that evaluated avatrombopag for the treatment of thrombocytopenia in patients with chronic liver disease scheduled to undergo a procedure. On September 21, 2017, a New Drug Application (“NDA”) was submitted to the U.S. Food and Drug Administration (the “FDA”) for this indication. The drug has not been approved by the FDA or other regulatory authorities for any use. Dova entered into a Stock Purchase Agreement (the “Purchase Agreement”), dated March 29, 2016, with Eisai, Inc., a Delaware corporation (“Eisai”). Under the terms of the Purchase Agreement, Dova acquired all the issued and outstanding shares of the capital stock of AkaRx, Inc., a Delaware corporation (“AkaRx”), which holds the worldwide rights relating to avatrombopag. Contemporaneous with the acquisition, AkaRx entered into a Transition Services Agreement (the “TSA”) with Eisai, and Eisai agreed to finance certain costs and expenses of AkaRx related to the development of avatrombopag incurred under the TSA pursuant to the terms of a Secured Promissory Note dated March 30, 2016 (the “Note”). See Note 3 for more information on the Purchase Agreement and related transactions as well as the Note. On August 31, 2017, Dova established a subsidiary, Dova Pharmaceuticals Ireland Limited (“Dova Ireland”), through which the Company intends to submit a Marketing Authorization Application to the European Medicines Agency. AkaRx and Dova Ireland are the Company’s only subsidiaries. The unaudited condensed consolidated financial statements of Dova and its wholly owned subsidiaries AkaRx and Dova Ireland (the “Company”) include the results of operations for the three and nine months ended September 30, 2017 and for the three months ended September 30, 2016 and the period from Inception through September 30, 2016. Forward stock split On June 16, 2017, the Company effected a 3.3-for-one forward stock split of the Company’s common stock. No fractional shares were issued in connection with the stock split. The par value and other terms of the common stock were not affected by the stock split. All share and per share amounts, including stock options, have been retroactively adjusted in these condensed consolidated financial statements for all periods presented to reflect the 3.3-for-one forward stock split. Further, exercise prices of stock options have been retroactively adjusted in these condensed consolidated financial statements for all periods presented to reflect the 3.3-for-one forward stock split. The number of shares of the Company’s preferred stock were not affected by the forward stock split; however, the conversion ratios have been adjusted to reflect the forward stock split. Liquidity and capital resources The Company has incurred substantial operating losses since Inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of September 30, 2017, the Company had an accumulated deficit of $47.8 million. Between September 19, 2016 and November 18, 2016, the Company closed on the sale of an aggregate of 982,714 shares of Series A Preferred Stock for gross proceeds of approximately $29.0 million (purchase price of $29.51 per share). On July 5, 2017, the Company closed an initial public offering (“IPO”) of its common stock, which resulted in the issuance and sale of 5,077,250 shares of its common stock at a public offering price of $17.00 per share, generating net proceeds of approximately $78.7 million after deducting underwriting discounts and other offering costs. Upon the closing of the IPO, all outstanding shares of the Company’s Series A convertible preferred stock were automatically converted into 3,242,950 shares of the Company’s common stock. The Company expects to use the net proceeds from the IPO to fund the commercialization of avatrombopag in the United States, if approved, for the clinical development of avatrombopag for additional indications, to repay the Eisai note and for general corporate purposes. The Company believes that it has adequate cash and cash equivalents to continue to fund operations in the normal course of business for at least the next 12 months. Amendment and restatement of certificate of incorporation and bylaws On July 5, 2017, the Company filed an Amended and Restated Certificate of Incorporation (the “Amended Certificate”) with the Secretary of State of the State of Delaware in connection with the closing of the IPO. The Company’s board of directors (the “Board”) and stockholders previously approved the Amended Certificate to be filed in connection with, and to be effective upon, the closing of the IPO, and the form of the Amended Certificate was filed as an exhibit to the Company’s Registration Statement on Form S-1 (the “Registration Statement”) filed in connection with the IPO. On July 5, 2017, the Company’s Amended and Restated Bylaws (the “Amended Bylaws”) became effective in connection with the closing of the IPO. The Board and stockholders previously approved the Amended Bylaws to become effective upon the closing of the IPO, and the form of the Amended Bylaws was filed as an exhibit to the Registration Statement. The Amended Certificate amends and restates in its entirety the Company’s Amended and Restated Certificate of Incorporation, as amended, and the Amended Bylaws amend and restate, in their entirety, the Company’s Bylaws. Collectively, the Amended Certificate and the Amended Bylaws, among other things: (i) authorize 100,000,000 shares of common stock; (ii) eliminate all references to the previously existing series of preferred stock; and (iii) authorize 10,000,000 shares of undesignated preferred stock that may be issued from time to time by the Board in one or more series. |
Significant accounting policies
Significant accounting policies | 9 Months Ended |
Sep. 30, 2017 | |
Significant accounting policies | |
Significant accounting policies | Note 2—Significant accounting policies Basis of presentation and principles of consolidation The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results for the full year or the results for any future periods. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2016 included in the Company’s final prospectus for its IPO dated as of June 28, 2017 and filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2017 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to the valuation of preferred and common stock, the valuation of stock options and the valuation allowance of deferred tax assets resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. Segments 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 in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. Cash and cash equivalents The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and money market mutual funds. Accrued expenses Accrued expenses primarily consist of Eisai FTE resource fees and out-of-pocket costs due under the TSA and other professional fees. Operating costs accrued for services received but not yet invoiced or paid under the TSA were $3.2 million as of September 30, 2017. Once the expenses under the TSA are approved for application to the Note by Eisai, these accrued expenses will be converted into the Note. The Company’s policy is to record these TSA accrued expenses as current liabilities until such accrued expenses are converted into the Note. Concentrations of credit risk and off-balance sheet risk Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss. Research and development costs Research and development costs, including acquired in-process research and development expenses for which there is no alternative future use, are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Research and development costs primarily consist of payments made to Eisai upon the Company’s acquisition of AkaRx and for ongoing costs for activities under the TSA with Eisai for research and development services associated with clinical trials, consultants, clinical trial materials, regulatory filings, laboratory costs and other supplies. In addition, Dova research and development personnel costs and contractor or consulting resources focused on research and development activities are included in this category. Derivatives The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including note payable and equity-linked financial instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. Fair value measurement ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. The carrying amount of the Company’s financial instruments, including cash and cash equivalents and accounts payable approximate their fair values. As of September 30, 2017 and December 31, 2016, the carrying amount of the Note approximates fair value as its interest rate approximates current market rates that could be obtained by the Company with a similar guarantee by PBM Capital Investments, LLC (Level 2 inputs). Stock-based compensation The Company expenses stock-based compensation to employees and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative or research and development costs in the statements of operations based upon the underlying individual’s role at the Company. Income taxes On September 15, 2016, Dova converted from an LLC to a C-corporation. Prior to September 15, 2016, Dova Pharmaceuticals, LLC elected to be taxed as a partnership. Therefore, Dova was not subject to income taxes until its conversion to a C-corporation on September 15, 2016. AkaRx was subject to income taxes from April 1, 2016 through September 30, 2017. Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. Net loss per share Upon the Company’s conversion to a C-corporation on September 15, 2016, 52,522 member units were converted into 17,332,257 shares of common stock. Member units of the LLC had similar rights and characteristics as the Company’s common stock issued upon the conversion. In calculating net loss per share, the Company retrospectively applied the effects of the conversion to member units outstanding during the period. Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period assuming the retrospective conversion of member units described above. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The computations of diluted net loss per common share for the three and nine months ended September 30, 2017 did not include the stock options to purchase 1,941,141 shares of common stock, as the inclusion of these securities would have been antidilutive. Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The Company is currently evaluating the impact of adopting this standard on the condensed consolidated financial statements and disclosures. In April 2016, the FASB issued ASU No. 2016-09, Share-Based Payment: Simplifying the Accounting for Share-Based Payments . The standard addresses several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 during the first quarter of 2017 and the Company elected to account for forfeitures as they occur. Other provisions of ASU 2016-09 had no impact on the Company’s condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting , which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending December 31, 2018 and interim periods within that annual period. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on the condensed consolidated financial statements and disclosures, but does not expect it to have a significant impact. |
The purchase agreement and rela
The purchase agreement and related transactions | 9 Months Ended |
Sep. 30, 2017 | |
The purchase agreement and related transactions | |
The purchase agreement and related transactions | Note 3—The purchase agreement and related transactions Purchase agreement with Eisai As described in Note 1, Dova entered into a Purchase Agreement dated March 29, 2016 with Eisai for all of the issued and outstanding shares of the capital stock of AkaRx. The terms of the Purchase Agreement included (i) an up-front payment of $5.0 million that was paid at closing and funded by a capital contribution by the Company’s sole member, PBM Capital Investments, LLC, (ii) milestone payments up to $135.0 million in the aggregate based on annual net sales of avatrombopag, and (iii) a commitment to negotiate in good faith to secure a long-term supply agreement with Eisai to govern manufacturing support and the purchase of avatrombopag from Eisai until the later of March 30, 2021 or the third anniversary of the commercialization of avatrombopag. The transaction was accounted for as an asset acquisition pursuant to ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, as the majority of the fair value of the assets acquired was concentrated in a group of similar assets, and the acquired assets did not have outputs or employees. The assets acquired under the Purchase Agreement included a license to avatrombopag, other associated intellectual property, inventory, documentation and records, and related materials. Because avatrombopag had not yet received regulatory approval, the $5.0 million purchase price paid to date for these assets was expensed in the Company’s statement of operations for the period from Inception to September 30, 2016. In addition, the potential milestone payments based on annual net sales are not yet considered probable, and no milestone payments have been accrued at September 30, 2017. Long-term supply agreement with Eisai In June 2017, the Company entered into a supply agreement with Eisai, pursuant to which the Company agreed to purchase finished drug product for avatrombopag from Eisai and Eisai agreed to supply finished drug product for avatrombopag. The initial term of the agreement will terminate on the later of March 30, 2021 and the third anniversary of the Company’s first commercial sale of avatrombopag. After the initial term, the supply agreement may be renewed by mutual agreement of the parties. During the initial term, Eisai is the Company’s exclusive supplier of finished drug product, except that the Company has the right to terminate the exclusivity early by payment to Eisai of a fee calculated based on the Company’s forecasted purchases of avatrombopag during the remainder of the initial term. In addition, in the event that Eisai fails to deliver substantially all of the finished drug product due to the Company under the agreement, the Company may elect to seek alternative supply arrangements so long as such failure remains uncured, subject to certain exceptions. The aggregate payments to Eisai under the supply agreement for finished drug product will be the greater of a fixed payment per tablet and a payment calculated in the mid-single digit percentages of net sales of avatrombopag. Transition services agreement Pursuant to the terms and conditions of the TSA, Eisai agreed to manage the ongoing clinical trials for the Company through regulatory approval of avatrombopag based on an agreed upon fee schedule for services plus reimbursement of certain out of pocket expenses. Services may be provided by Eisai’s full-time employees, its affiliates or third-party contractors. Payments under this agreement that exceed $51.0 million will be credited against any milestone payments due to Eisai under the Purchase Agreement. Pursuant to the TSA, payments due are being financed under the Note with Eisai as described below. The Company may terminate the services provided under the TSA on a service-by-service basis or the agreement in its entirety upon 60-days’ written notice. The TSA may also be terminated (i) by mutual consent, (ii) by either party upon 60-days’ written notice if the other party materially breaches the agreement and fails to cure such breach, (iii) by either party in the event of the other party’s bankruptcy, insolvency or certain similar occurrences, and (iv) by either party in the event that such party is unable to perform its obligations under the agreement as a result of events outside of its reasonable control. The Company has final decision-making authority related to development of avatrombopag and the regulatory approval process. Eisai note and security agreement On March 30, 2016, the Company issued the Note to Eisai, which enables the Company to finance payments due to Eisai under the TSA. The principal amount of the Note will be increased by the amount of unpaid service fees and out-of-pocket expenses due and owed to Eisai under the TSA. As of September 30, 2017, the Company had outstanding borrowings of $27.1 million under the Note, additional TSA expenses of $3.2 million included in accrued expenses and the Company owed Eisai $0.6 million in accrued interest. The Note matures on March 30, 2018 and bears interest at a rate of 5% per annum. Interest is payable annually in arrears to Eisai on March 31, 2017 and 2018. The maturity of the Note may be accelerated by Eisai upon a change of control defined as any investor or group gaining more than 50% of the equity interests of AkaRx. Principal and interest under the Note can be prepaid at any time without penalty. The Note is secured by a blanket security interest on all of the assets of AkaRx, including the worldwide rights to avatrombopag. Payments due to Eisai under the Note are currently guaranteed by PBM Capital Investments, LLC. License agreement with Astellas Pharma Inc. The primary intellectual property related to avatrombopag is licensed from Astellas Pharma Inc. (“Astellas”) on an exclusive, worldwide basis under the terms of a license agreement that the Company acquired from Eisai under the Purchase Agreement. Under the terms of the license agreement, the Company is required to make payments upon the achievement of certain milestones. On September 21, 2017, upon the filing of the NDA, the Company became obligated to make a milestone payment of $1.0 million within 30 days, which is included in accrued expenses as of September 30, 2017. The Company will be required to make additional aggregate milestone payments of up to $4.0 million to Astellas if certain other regulatory milestones are achieved. In addition, the Company will be required to pay Astellas tiered royalties ranging from the mid to high single digits on net sales of avatrombopag. No amounts have been accrued for any potential milestone payments as the payments were not deemed probable. Unless earlier terminated, this license agreement with Astellas will expire on a country-by-country and product-by-product basis upon the latest of (i) the expiration of the last-to-expire claim of the licensed patents, (ii) the expiration of any government-granted marketing exclusivity period for avatrombopag, and (iii) 10 years after the last date of launch of avatrombopag to have occurred in any country. Thereafter, the term of the license agreement may be extended for successive one-year terms if the Company notifies Astellas in writing of its desire to extend such term at least three months before it is otherwise set to expire. |
Related party agreements
Related party agreements | 9 Months Ended |
Sep. 30, 2017 | |
Related party agreements | |
Related party agreements | Note 4—Related party agreements Dova and AkaRx management services agreements On April 1, 2016, Dova and AkaRx each entered into a Services Agreement (each, an “SA”) with PBM Capital Group, LLC. Pursuant to the terms of each of the SAs, which have terms of twelve months each (and are automatically renewable for successive one-year periods), PBM Capital Group, LLC will render advisory and consulting services to Dova and AkaRx. Services provided under the SAs may include certain scientific and technical, accounting, operations and back office support services. In consideration for these services, Dova and AkaRx are each obligated to pay PBM Capital Group, LLC a monthly management fee of $25,000. For the three and nine months ended September 30, 2017, the Company incurred expenses under the SAs of $150,000 and $450,000, respectively, which were included in general and administrative expenses. For the three months ended September 30, 2016 the Company incurred expenses under the SAs of $150,000 and for the period from March 24, 2016 (Inception) to September 30, 2016, the Company incurred expenses under the SAs of $300,000, which were included in general and administrative expenses. No expenses under the SA were incurred prior to April 1, 2016. As of September 30, 2017, the Company owed PBM Capital Group, LLC and its affiliates approximately $50,000. As described more fully in Note 3, PBM Capital Investments, LLC has guaranteed payments due by the Company to Eisai. |
Stockholders' equity
Stockholders' equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' equity | |
Stockholders' equity | Note 5—Stockholders’ equity Conversion to a C-Corporation and common stock On March 29, 2016, in connection with the Purchase Agreement with Eisai for all of the issued and outstanding shares of the capital stock of AkaRx, the Company issued PBM Capital Investments, LLC an aggregate of 50,000 units in exchange for its payment to Eisai of $5.0 million on the Company’s behalf in connection with the acquisition of worldwide rights to avatrombopag. On April 1, 2016, pursuant to a co-investment agreement (the “Co-Investment Agreement”), the Company issued and sold to certain affiliates of PBM Capital Investments, LLC, an aggregate of 2,522 units at a purchase price of $100.00 per unit for an aggregate purchase price of $252,200. Shortly prior to the conversion from an LLC to a C-corporation on September 15, 2016, each of the members of Dova Pharmaceuticals, LLC made a pro rata capital contribution of an aggregate $0.4 million with no increase in member units. On September 15, 2016, the Company converted from an LLC to a C-corporation and issued 17,332,257 shares of common stock, par value $0.001, in exchange for all 52,522 outstanding membership units. Prior to the Company’s IPO, pursuant to agreements with the Company’s common stockholders, Paul B. Manning, a director of the Company and the controlling person of the Company’s largest stockholder, PBM Capital Investments, LLC, had sole voting and dispositive power over all outstanding shares of the Company’s common stock. Mr. Manning relinquished sole voting and dispositive power over the shares of common stock held by certain affiliates of PBM Capital Investments, LLC in connection with the IPO. After the IPO, PBM Capital Investments, LLC and funds under common control with PBM Capital Investments, LLC beneficially own a majority of the Company’s common stock. Series A preferred stock Between September 19, 2016 and November 18, 2016, the Company closed on the sale of an aggregate of 982,714 shares of Series A preferred stock for gross proceeds of $29.0 million (at a purchase price of $29.51 per share). The Series A preferred stock was entitled to non-cumulative, non-compounding dividends at 8.0% per annum (based on the original issue price), when, as and if any dividends are declared by the Board. Each share of Series A preferred stock was convertible, at the option of the holder and at any time, into a number of fully paid and non-assessable shares of common stock determined by dividing the Series A Original Issue Price by the Series A Conversion Price in effect at the time of conversion. The Series A preferred stock was mandatorily convertible under certain conditions (i) when the Company issued shares of common stock in a public offering generating gross proceeds of at least $60.0 million to the Company, at a price per share of at least $17.88, or (ii) by majority vote of the then outstanding shares of Series A preferred stock. The Series A Conversion Price was $8.94, and was subject to adjustment based on events including the issuance of additional equity securities, certain dividends and distributions, mergers and reorganizations, and stock splits and combinations. The Series A preferred stock was not mandatorily redeemable and did not embody an unconditional obligation to settle in a variable number of equity shares. As such, the Series A preferred stock was classified as permanent equity on the consolidated balance sheet. The holders’ contingent redemption right in the event of certain deemed liquidation events did not preclude permanent equity classification. Further, the Series A preferred stock was considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation. The embedded conversion feature is considered to be clearly and closely related to the associated preferred stock host instrument and therefore was not bifurcated from the equity host. The contingent put right upon certain deemed liquidation events was not clearly and closely related to the associated preferred stock host instrument but did not meet the definition of a derivative and therefore was not bifurcated from the equity host. Upon the closing of the IPO on July 5, 2017, all outstanding shares of the Company’s Series A convertible preferred stock were automatically converted into 3,242,950 shares of the Company’s common stock. Issuance of common stock in connection with the Company’s initial public offering On July 5, 2017, the Company closed its IPO, which resulted in the issuance and sale of 5,077,250 shares of its common stock at a public offering price of $17.00 per share, generating net proceeds of approximately $78.7 million after deducting underwriting discounts and other offering costs. |
Stock-based compensation
Stock-based compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock-based compensation | |
Stock-based compensation | Note 6—Stock-based compensation Options In June 2017, the Board adopted and approved the Amended and Restated 2017 Equity Incentive Plan (the “IPO Plan”), which amended and restated the Company’s prior 2017 Equity Incentive Plan (the “2017 Plan”) and became effective in connection with the IPO pricing on June 28, 2017. Prior to the effectiveness of the IPO Plan, the 2017 Plan provided for the grant of share-based awards to employees, directors and consultants of the Company. As a result of the effectiveness of the IPO Plan, no further grants may be made under the 2017 Plan. The IPO Plan provides for the grant of incentive stock options to employees, and for the grant of nonstatutory options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards and other forms of stock awards to employees, including officers, consultants and directors. The IPO Plan also provides for the grant of performance-based cash awards to employees, including officers, consultants and directors. The Company has initially reserved 4,285,250 shares of common stock for issuance under the IPO Plan, which is the sum of (1) 2,000,000 new shares, plus (2) the number of shares reserved for issuance under the Company’s 2017 Equity Incentive Plan (the “2017 Plan”) at the time the IPO Plan became effective, plus (3) any shares subject to outstanding stock options or other stock awards that would have otherwise returned to the 2017 Plan (such as upon the expiration or termination of a stock award prior to exercise). The number of shares of common stock reserved for issuance under the IPO Plan will automatically increase on January 1 each year, for a period of ten years, from January 1, 2018 through January 1, 2027, by 4% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Board. As of September 30, 2017, 2,344,109 shares were available for grant under the IPO Plan. As of September 30, 2017, options to purchase 1,941,141 shares of the Company’s common stock were outstanding at a weighted average exercise price of $6.20 per share. Stock Option Valuation The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. Due to the lack of historical exercise history, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Prior to the IPO, the fair values of the shares of common stock underlying the Company options were estimated on each grant date by the Company. In order to determine the fair value, the Company considered, among other things, contemporaneous valuations of the Company’s common stock and preferred stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Since the IPO, the fair value of the common stock underlying the Company’s options has been based upon the closing price of the Company’s common stock on the grant date. Option awards The fair value of the Company’s option awards was estimated using the assumptions below: For the nine 2017 Exercise price $3.73 - $24.28 Risk-free rate of interest 1.71% - 2.16% Term (years) 5.2 - 7.1 Expected stock price volatility 87.21% - 89.38% The following table summarizes the Company’s stock option activity under the 2017 Plan and IPO Plan for the nine months ended September 30, 2017: Number of shares Weighted average Weighted average Aggregate Outstanding as of December 31, 2016 — $ — — $ — Employee options granted Outstanding as of September 30, 2017 $ $ Options vested and exercisable as of September 30, 2017 — $ — — $ — The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s closing common stock price on September 29, 2017, or $24.28 per share, and the exercise price of the stock options that had strike prices below $24.28 per share. The weighted average grant date fair value per share of options granted during the nine months ended September 30, 2017 was $7.22. Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017 is as follows (in thousands): For the three For the nine 2017 2017 General and administrative $ $ Research and development Total stock-based compensation $ $ The Company’s stock options generally vest as follows: 25% after 12 months of continuous services and the remaining 75% on a ratable basis over a 36-month period from 12 months after the grant date. Stock options granted during the nine months ended September 30, 2017 have a maximum contractual term of 10 years. As of September 30, 2017, there was approximately $11.2 million of total unrecognized compensation expense, related to the unvested stock options shown in the table above, which is expected to be recognized over a weighted average period of 1.6 years. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and contingencies | |
Commitments and contingencies | Note 7—Commitments and contingencies Office Lease In June 2017, the Company entered into a lease consisting of approximately 7,351 square feet of office space in Durham, North Carolina. This lease provides for current monthly payments of approximately $15,000 and expires on April 30, 2020. On September 22, 2017, the Company entered into an amendment to its lease agreement, effective October 1, 2017, to increase the total amount of leased office space to an aggregate of approximately 14,378 square feet. The amended lease agreement requires future rental payments of $38,000 during the final three months of the year ending December 31, 2017, and payments of $0.3 million, $0.3 million and $0.1 million during the years ending December 31, 2018, 2019 and 2020, respectively. Litigation The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. |
Significant accounting polici14
Significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Significant accounting policies | |
Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results for the full year or the results for any future periods. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2016 included in the Company’s final prospectus for its IPO dated as of June 28, 2017 and filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2017 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s condensed consolidated financial statements relate to the valuation of preferred and common stock, the valuation of stock options and the valuation allowance of deferred tax assets resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected. |
Segments | Segments 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 in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and money market mutual funds. |
Accrued expenses | Accrued expenses Accrued expenses primarily consist of Eisai FTE resource fees and out-of-pocket costs due under the TSA and other professional fees. Operating costs accrued for services received but not yet invoiced or paid under the TSA were $3.2 million as of September 30, 2017. Once the expenses under the TSA are approved for application to the Note by Eisai, these accrued expenses will be converted into the Note. The Company’s policy is to record these TSA accrued expenses as current liabilities until such accrued expenses are converted into the Note. |
Concentrations of credit risk and off-balance sheet risk | Concentrations of credit risk and off-balance sheet risk Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no financial instruments with off-balance sheet risk of loss. |
Research and development costs | Research and development costs Research and development costs, including acquired in-process research and development expenses for which there is no alternative future use, are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made. Research and development costs primarily consist of payments made to Eisai upon the Company’s acquisition of AkaRx and for ongoing costs for activities under the TSA with Eisai for research and development services associated with clinical trials, consultants, clinical trial materials, regulatory filings, laboratory costs and other supplies. In addition, Dova research and development personnel costs and contractor or consulting resources focused on research and development activities are included in this category. |
Derivatives | Derivatives The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including note payable and equity-linked financial instruments, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. |
Fair value measurement | Fair value measurement ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. The carrying amount of the Company’s financial instruments, including cash and cash equivalents and accounts payable approximate their fair values. As of September 30, 2017 and December 31, 2016, the carrying amount of the Note approximates fair value as its interest rate approximates current market rates that could be obtained by the Company with a similar guarantee by PBM Capital Investments, LLC (Level 2 inputs). |
Stock-based compensation | Stock-based compensation The Company expenses stock-based compensation to employees and Board members over the requisite service period based on the estimated grant-date fair value of the awards. Stock-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative or research and development costs in the statements of operations based upon the underlying individual’s role at the Company. |
Income taxes | Income taxes On September 15, 2016, Dova converted from an LLC to a C-corporation. Prior to September 15, 2016, Dova Pharmaceuticals, LLC elected to be taxed as a partnership. Therefore, Dova was not subject to income taxes until its conversion to a C-corporation on September 15, 2016. AkaRx was subject to income taxes from April 1, 2016 through September 30, 2017. Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. |
Net loss per share | Net loss per share Upon the Company’s conversion to a C-corporation on September 15, 2016, 52,522 member units were converted into 17,332,257 shares of common stock. Member units of the LLC had similar rights and characteristics as the Company’s common stock issued upon the conversion. In calculating net loss per share, the Company retrospectively applied the effects of the conversion to member units outstanding during the period. Net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period assuming the retrospective conversion of member units described above. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The computations of diluted net loss per common share for the three and nine months ended September 30, 2017 did not include the stock options to purchase 1,941,141 shares of common stock, as the inclusion of these securities would have been antidilutive. |
Recent accounting pronouncements | Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which supersedes FASB ASC Topic 840, Leases (Topic 840) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of classification. Leases with a term of twelve months or less will be accounted for similar to existing guidance for operating leases. The standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted upon issuance. The Company is currently evaluating the impact of adopting this standard on the condensed consolidated financial statements and disclosures. In April 2016, the FASB issued ASU No. 2016-09, Share-Based Payment: Simplifying the Accounting for Share-Based Payments . The standard addresses several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 during the first quarter of 2017 and the Company elected to account for forfeitures as they occur. Other provisions of ASU 2016-09 had no impact on the Company’s condensed consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting , which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the annual period ending December 31, 2018 and interim periods within that annual period. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on the condensed consolidated financial statements and disclosures, but does not expect it to have a significant impact. |
Stock-based compensation (Table
Stock-based compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock-based compensation | |
Summary of assumptions used to estimate fair value of option awards | For the nine 2017 Exercise price $3.73 - $24.28 Risk-free rate of interest 1.71% - 2.16% Term (years) 5.2 - 7.1 Expected stock price volatility 87.21% - 89.38% |
Summary of stock option activity | Number of shares Weighted average Weighted average Aggregate Outstanding as of December 31, 2016 — $ — — $ — Employee options granted Outstanding as of September 30, 2017 $ $ Options vested and exercisable as of September 30, 2017 — $ — — $ — |
Schedule of stock-based compensation expense | Stock-based compensation expense has been reported in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2017 is as follows (in thousands): For the three For the nine 2017 2017 General and administrative $ $ Research and development Total stock-based compensation $ $ |
Organization and description 16
Organization and description of business operations (Details) $ / shares in Units, $ in Thousands | Jul. 05, 2017USD ($)$ / sharesshares | Jun. 16, 2017shares | Nov. 18, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)shares | Dec. 31, 2016USD ($)shares |
Forward stock split | ||||||
Forward stock split ratio | 3.3 | |||||
Number of fractional shares issued (in shares) | 0 | |||||
Liquidity and capital resources | ||||||
Accumulated deficit | $ | $ (47,844) | $ (27,190) | ||||
Gross proceeds from sale of shares | $ | $ 10,000 | |||||
Amendment and restatement of certificate of incorporation and bylaws | ||||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||
Series A preferred stock | ||||||
Liquidity and capital resources | ||||||
Shares issued | 982,714 | |||||
Gross proceeds from sale of shares | $ | $ 29,000 | |||||
Share price | $ / shares | $ 29.51 | |||||
Common stock | ||||||
Liquidity and capital resources | ||||||
Shares issued upon conversion | 3,242,950 | |||||
IPO | Common stock | ||||||
Liquidity and capital resources | ||||||
Shares issued | 5,077,250 | |||||
Share price | $ / shares | $ 17 | |||||
Net proceeds from initial public offering | $ | $ 78,700 |
Significant accounting polici17
Significant accounting policies (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)segmentitem | |
Segments | |
Number of operating segments | segment | 1 |
Concentrations of credit risk and off-balance sheet risk | |
Number of financial instruments with off-balance sheet risk of loss | item | 0 |
Accrued expenses | |
Accrued expenses | |
Accrued operating costs | $ | $ 3.2 |
Significant accounting polici18
Significant accounting policies - Net loss per share (Details) - shares | Sep. 15, 2016 | Sep. 30, 2017 | Sep. 30, 2017 |
Stock Options | |||
Net loss per share | |||
Antidilutive shares | 1,941,141 | 1,941,141 | |
Member Units | |||
Net loss per share | |||
Shares converted | 52,522 | ||
Common stock | |||
Net loss per share | |||
Shares issued upon conversion | 17,332,257 |
The purchase agreement and re19
The purchase agreement and related transactions - Eisai (Details) - USD ($) $ in Thousands | Mar. 29, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Purchase agreement and related transactions | |||||
Capital contribution - PBM Capital | $ 696 | ||||
Research and development-licenses acquired, expensed | $ 1,000 | 5,000 | $ 1,000 | ||
Outstanding borrowings | 27,119 | 27,119 | |||
Accrued expenses | 5,451 | 5,451 | $ 7,918 | ||
Accrued interest | 631 | 631 | $ 151 | ||
Purchase agreement | AkaRx | Eisai | |||||
Purchase agreement and related transactions | |||||
Payment made on closing date | $ 5,000 | ||||
Capital contribution - PBM Capital | 5,000 | ||||
Maximum milestone payments due | $ 135,000 | ||||
Research and development-licenses acquired, expensed | $ 5,000 | ||||
Milestone payments accrued | 0 | 0 | |||
Transition services agreement | AkaRx | Eisai | |||||
Purchase agreement and related transactions | |||||
Threshold amount after which amounts in excess will be credited against milestone payments | $ 51,000 | ||||
Termination notice period, mutual consent | 60 days | ||||
Termination notice period, breach of agreement | 60 days | ||||
Note and security agreement | Eisai | Notes payable | |||||
Purchase agreement and related transactions | |||||
Outstanding borrowings | 27,100 | $ 27,100 | |||
Accrued expenses | 3,200 | 3,200 | |||
Accrued interest | $ 600 | $ 600 | |||
Interest rate (as a percent) | 5.00% | 5.00% |
The purchase agreement and re20
The purchase agreement and related transactions - Astellas Pharma Inc (Details) - License agreement - Astellas Pharma Inc - USD ($) $ in Millions | Sep. 21, 2017 | Sep. 30, 2017 |
License agreement with Astellas Pharma Inc | ||
Maximum milestone payments due | $ 4 | |
Milestone payments accrued | $ 0 | |
Agreement term | 10 years | |
Agreement term, extensions | 1 year | |
Termination notice period | 3 months | |
Accrued expenses | ||
License agreement with Astellas Pharma Inc | ||
Milestone payments due | $ 1 | |
Accrued expenses | Maximum | ||
License agreement with Astellas Pharma Inc | ||
Time limit for milestone payment | 30 days |
Related party agreements (Detai
Related party agreements (Details) - USD ($) | Apr. 01, 2016 | Mar. 31, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Related party agreements | |||||||
Due to related party | $ 50,000 | $ 50,000 | $ 85,000 | ||||
PBM Capital Group, LLC | Services Agreement | |||||||
Related party agreements | |||||||
Expenses incurred included in general and administrative expenses | $ 0 | 150,000 | $ 150,000 | $ 300,000 | 450,000 | ||
Due to related party | $ 50,000 | $ 50,000 | |||||
Dova Pharmaceuticals | PBM Capital Group, LLC | Services Agreement | |||||||
Related party agreements | |||||||
Agreement term | 12 months | ||||||
Renewal term | 1 year | ||||||
Monthly management fees payable | $ 25,000 | ||||||
AkaRx | PBM Capital Group, LLC | Services Agreement | |||||||
Related party agreements | |||||||
Agreement term | 12 months | ||||||
Renewal term | 1 year | ||||||
Monthly management fees payable | $ 25,000 |
Stockholders' equity - Conversi
Stockholders' equity - Conversion to a C-Corporation and common stock (Details) - USD ($) | Sep. 15, 2016 | Apr. 01, 2016 | Mar. 29, 2016 | Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' equity | ||||||
Capital contribution | $ 696,000 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Member Units | ||||||
Stockholders' equity | ||||||
Shares converted | 52,522 | |||||
Common stock | ||||||
Stockholders' equity | ||||||
Shares issued upon conversion | 17,332,257 | |||||
Common stock, par value (in dollars per share) | $ 0.001 | |||||
Eisai | AkaRx | Purchase agreement | ||||||
Stockholders' equity | ||||||
Capital contribution | $ 5,000,000 | |||||
PBM Capital Investments, LLC | AkaRx | Purchase agreement | Member Units | ||||||
Stockholders' equity | ||||||
Shares issued | 50,000 | |||||
PBM Capital Investments, LLC | Eisai | AkaRx | Purchase agreement | ||||||
Stockholders' equity | ||||||
Payment made by PBM Capital on behalf of AkaRx | $ 5,000,000 | |||||
Certain affiliates of PBM Capital Group, LLC | Co-Investment Agreement | Member Units | ||||||
Stockholders' equity | ||||||
Shares issued | 2,522 | |||||
Share price | $ 100 | |||||
Aggregate purchase price of shares issued | $ 252,200 | |||||
Members of the company | ||||||
Stockholders' equity | ||||||
Capital contribution | $ 400,000 | |||||
Members of the company | Member Units | ||||||
Stockholders' equity | ||||||
Increase (decrease) in shares issued during the period | 0 |
Stockholders' equity - Series A
Stockholders' equity - Series A preferred stock and common stock initial public offering (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 05, 2017 | Nov. 18, 2016 | Sep. 30, 2016 | Sep. 30, 2017 |
Stockholders' equity | ||||
Gross proceeds from sale of shares | $ 10,000 | |||
Series A preferred stock | ||||
Stockholders' equity | ||||
Shares issued | 982,714 | |||
Gross proceeds from sale of shares | $ 29,000 | |||
Share price | $ 29.51 | |||
Non-cumulative, non-compounding dividends | 8.00% | |||
Common stock | ||||
Stockholders' equity | ||||
Shares issued upon conversion | 3,242,950 | |||
Common stock | IPO | ||||
Stockholders' equity | ||||
Shares issued | 5,077,250 | |||
Share price | $ 17 | |||
Proceeds from issuance of common stock | $ 78,700 | |||
Conditions when preferred shares are mandatorily convertible | Series A preferred stock | ||||
Stockholders' equity | ||||
Conversion price | $ 8.94 | |||
Conditions when preferred shares are mandatorily convertible | Common stock | IPO | ||||
Stockholders' equity | ||||
Share price | $ 17.88 | |||
Proceeds from issuance of common stock | $ 60,000 |
Stock-based compensation - Opti
Stock-based compensation - Options (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Common stock | |
Stock-based compensation | |
Outstanding options | 1,941,141 |
Weighted average exercise price | $ / shares | $ 6.20 |
2017 Plan | |
Stock-based compensation | |
Shares available for grant | 0 |
IPO Plan | |
Stock-based compensation | |
Shares available for grant | 2,344,109 |
Common stock reserved for future issuance | 4,285,250 |
Shares issued | 2,000,000 |
Period in which reserved shares will increase annually | 10 years |
Annual increase in reserved shares (as a percent) | 4.00% |
Stock-based compensation - Op25
Stock-based compensation - Option Awards (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | |
Assumptions used to estimate fair value of options | ||
Risk-free rate of interest, Minimum | 1.71% | |
Risk-free rate of interest, Maximum | 2.16% | |
Expected stock price volatility, Minimum | 87.21% | |
Expected stock price volatility, Maximum | 89.38% | |
Stock-based compensation | ||
Stock-based compensation | $ | $ 2,142,000 | $ 2,761,000 |
Minimum | ||
Assumptions used to estimate fair value of options | ||
Exercise price | $ 3.73 | $ 3.73 |
Term (years) | 5 years 2 months 12 days | |
Maximum | ||
Assumptions used to estimate fair value of options | ||
Exercise price | $ 24.28 | $ 24.28 |
Term (years) | 7 years 1 month 6 days | |
Ratable basis over a 36-month period from 12 months after the grant date | ||
Stock-based compensation | ||
Vesting percentage | 75.00% | |
Vesting period | 36 months | |
Continuous service | 12 months after grant date | ||
Stock-based compensation | ||
Vesting percentage | 25.00% | |
Vesting period | 12 months | |
General and administrative | ||
Stock-based compensation | ||
Stock-based compensation | $ | $ 1,690,000 | $ 2,179,000 |
Research and development | ||
Stock-based compensation | ||
Stock-based compensation | $ | $ 452,000 | $ 582,000 |
Common stock | ||
Stock-based compensation | ||
Share Price | $ 24.28 | $ 24.28 |
Number of Shares | ||
Outstanding, ending balance (in shares) | shares | 1,941,141 | 1,941,141 |
Stock Options | ||
Stock-based compensation | ||
Weighted average grant date fair value | $ 7.22 | |
Maximum contractual term | 10 years | |
Total unrecognized compensation expense | $ | $ 11,200,000 | $ 11,200,000 |
Unrecognized compensation expense, weighted average recognition period | 1 year 7 months 6 days | |
Stock Options | Maximum | ||
Assumptions used to estimate fair value of options | ||
Exercise price | $ 24.28 | $ 24.28 |
Stock Options | 2017 Plan and IPO Plan | ||
Number of Shares | ||
Outstanding, beginning balance (in shares) | shares | ||
Employee options granted (in shares) | shares | 1,941,141 | |
Outstanding, ending balance (in shares) | shares | 1,941,141 | 1,941,141 |
Options vested and exercisable (in shares) | shares | ||
Weighted Average Exercise Price | ||
Employee options granted (in dollars per share) | $ 6.20 | |
Outstanding, ending balance (in dollars per share) | $ 6.20 | $ 6.20 |
Weighted Average Remaining Contractual Life (in years) | ||
Employee options granted | 9 years 7 months 6 days | |
Outstanding | 9 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Employee options granted | $ | $ 35,102,000 | $ 35,102,000 |
Outstanding, ending balance | $ | $ 35,102,000 | $ 35,102,000 |
Commitments and contingencies (
Commitments and contingencies (Details) | 1 Months Ended | |
Jun. 30, 2017USD ($)ft² | Sep. 22, 2017USD ($)ft² | |
Office Lease | ||
Leased office space | ft² | 7,351 | 14,378 |
Monthly payments | $ 15,000 | |
Future rental payments | ||
2,017 | $ 38,000 | |
2,018 | 300,000 | |
2,019 | 300,000 | |
2,020 | $ 100,000 |