Heron Therapeutics (HRTX) 10-Q 10 May 17 2017 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 17, 2017
Document Information [Line Items]
Entity Registrant Name	HERON THERAPEUTICS, INC. /DE/
Entity Central Index Key	818,033
Trading Symbol	hrtx
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		53,696,906
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 83,513	$ 13,414
Short-term investments	81,703	37,724
Accounts receivable, net	10,327	1,960
Inventory	4,641	5,340
Prepaid expenses and other current assets	3,431	3,705
Total current assets	183,615	62,143
Property and equipment, net	5,680	5,076
Other assets	263	263
Total assets	189,558	67,482
Current liabilities:
Accounts payable	4,477	6,814
Accrued clinical liabilities	11,224	13,207
Accrued payroll and employee liabilities	6,122	8,414
Other accrued liabilities	7,244	6,288
Deferred revenue	5,235	1,099
Convertible notes payable to related parties, net of discount	3,096	2,911
Total current liabilities	37,398	38,733
Notes Payable, Related Parties, Noncurrent	50,000	50,000
Total liabilities	87,398	88,733
Stockholders’ equity (deficit):
Common stock	537	394
Additional paid-in capital	737,953	564,343
Accumulated other comprehensive loss	(30)	(17)
Accumulated deficit	(636,300)	(585,971)
Total stockholders’ equity (deficit)	102,160	(21,251)
Total liabilities and stockholders’ equity (deficit)	$ 189,558	$ 67,482

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Net product sales	$ 3,632
Operating expenses:
Cost of product sales	1,186
Research and development	33,384	16,092
General and administrative	6,742	5,367
Sales and marketing	11,619	11,853
Total operating expenses	52,931	33,312
Loss from operations	(49,299)	(33,312)
Interest expense, net	(1,030)	(133)
Net loss	(50,329)	(33,445)
Other comprehensive loss:
Unrealized gains (losses) on short-term investments	(13)	41
Comprehensive loss	$ (50,342)	$ (33,404)
Basic and diluted net loss per share (in dollars per share)	$ (1)	$ (0.92)
Shares used in computing basic and diluted net loss per share (in shares)	50,530	36,229

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities:
Net loss	$ (50,329)	$ (33,445)
Adjustments to reconcile net loss to net cash used for operating activities:
Stock-based compensation expense	8,021	5,355
Depreciation and amortization	329	238
Amortization of debt discount	185	166
Loss on disposal of property and equipment	5
(Accretion of discount) amortization of premium on short-term investments	(13)	145
Change in operating assets and liabilities:
Accounts receivable	(8,367)
Prepaid expenses and other current assets	274	(1,420)
Inventory	699	(2,744)
Accounts payable	(2,337)	3,561
Accrued clinical liabilities	(1,983)	(1,496)
Accrued payroll and employee liabilities	(2,292)	(1,859)
Deferred revenue	4,136
Other accrued liabilities	1,091	(852)
Net cash (used for) provided by operating activities	(50,581)	(32,351)
Investing activities:
Purchases of short-term investments	(69,374)
Maturities of short-term investments	25,395	23,491
Purchases of property and equipment	(938)	(834)
Net cash (used for) provided by investing activities	(44,917)	22,657
Financing activities:
Net proceeds from sale of common stock	163,747
Proceeds from stock option exercises	1,850	2,530
Net cash provided by financing activities	165,597	2,530
Net increase (decrease) in cash and cash equivalents	70,099	(7,164)
Cash and cash equivalents at beginning of year	13,414	75,180
Cash and cash equivalents at end of year	83,513	68,016
Supplemental disclosure of cash flow information:
Interest paid	$ 1,000

Note 1 - Business

Note 1 - Business	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Business Description and Basis of Presentation [Text Block]	1. Overview We are a commercial-stage biotechnology company focused on improving the lives of patients by developing best-in-class treatments that address some of the biggest unmet patient needs. We are developing novel, patient-focused solutions that apply our innovative science and technologies to already approved pharmacological agents for patients suffering from cancer or pain. On August 9, 2016, first ® October 2016. We have two 019), 1 November 12, 2017. HTX- 011 011 011 2 2 3 2017 2018. We have incurred significant operating losses and negative cash flows from operations. As of March 31, 2017, $636.3 $165.2 one 10

Note 2 - Basis Presentation

Note 2 - Basis Presentation	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Basis of Accounting [Text Block]	2 . B asis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10 10 three March 31, 2017, may December 31, 2017. December 31, 2016, 10 December 31, 2016, February 23, 2017 .

Note 3 - Accounting Policies

Note 3 - Accounting Policies	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Significant Accounting Policies [Text Block]	3. Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Heron Therapeutics, Inc. and its wholly owned subsidiary, Heron Therapeutics, B.V., which was organized in the Netherlands in March 2015. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Our critical accounting policies that involve significant judgment and estimates include revenue recognition, inventory, accrued clinical liabilities, income taxes and stock-based compensation. Actual results could differ materially from those estimates. Cash, Cash Equivalents and Short-Term Investments Cash and cash equivalents consist of cash and highly liquid investments with original maturities from purchase date of three Short-term investments consist of securities with contractual maturities of one The following is a summary of our short-term, available-for-sale securities (in thousands): March 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States government and agency $ 24,971 $ — $ — $ 24,971 United States corporate debt 35,052 — (29 ) 35,023 Foreign corporate debt 8,301 — (1 ) 8,300 United States commercial paper 36,897 — — 36,897 Foreign commercial paper 16,933 — — 16,933 Total $ 122,154 $ — $ (30 ) $ 122,124 December 31, 2016 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States corporate debt $ 12,048 $ — $ (9 ) $ 12,039 Foreign corporate debt 14,065 — (8 ) 14,057 United States commercial paper 8,635 — — 8,635 Foreign commercial paper 2,993 — — 2,993 Total $ 37,741 $ — $ (17 ) $ 37,724 The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. We regularly monitor and evaluate the realizable value of our marketable securities. We did not three March 31, 2017 2016. Realized gains and losses associated with our investments, if any, are reported in the statement of comprehensive loss. There were no three March 31, 2017 2016. Our bank and investment accounts have been placed under control agreements in accordance with our Senior Secured Convertible Notes (the “Convertible Notes”) and Subordinated Secured Promissory Note (the “Promissory Note”) (see Note 6). Concentration of Risk Cash, cash equivalents and short-term investments are financial instruments that potentially subject us to concentrations of credit risk. We deposit our cash in financial institutions. At times, such deposits may may Sales of SUSTOL to ASD Specialty Healthcare, Inc. and Cardinal Health, Inc. each accounted for 10% March 31, 2017. Inventory Inventory is stated at the lower of cost or estimated net realizable value, on a first first may As of March 31, 2017, $4.6 $1.6 $3.0 three March 31, 2017, $0.3 first 2017 one $0.9 Revenue Recognition Product Sales SUSTOL is distributed in the U.S. through a limited number of specialty distributors (“Customers”) that resell SUSTOL to healthcare providers, the end users of SUSTOL. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees, and other deductions. Product sales are recognized as revenue when there is persuasive evidence that an arrangement exists, delivery has occurred and title has passed, the price is fixed or determinable and we are reasonably assured of collecting the resulting receivable. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees and other deductions. At this point in the SUSTOL commercial launch, we do not yet have sufficient historical data regarding the third March 31, 2017, $5.2 Product Sales Allowances We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product, and specific known market events, such as competitive pricing and new product introductions. If actual future results vary from our estimates, we may ● Product Returns — We allow our Customers to return product for credit 12 may ● Distributor Fees — We offer contractually determined discounts to our Customers. These discounts are paid on a quarterly basis within two ● Group Purchasing Organization (“GPO”) Discounts and Rebates — We offer cash discounts to GPO members. These discounts are taken when the GPO members purchase SUSTOL from our Customers, who then charge back to us the discount amount. Additionally, we offer volume and contract-tier rebates to GPO members. Rebates are estimated based on actual purchase levels during the quarterly or semi-annual rebate purchase period. ● GPO Administrative Fees — We pay administrative fees to GPO’s for services and access to data. These fees are based on contracted terms and are paid after the quarter in which the product was purchased by the GPO’s members. ● Medicaid Rebates — We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each individual state's guidelines regarding eligibility and services. Under the Medicaid rebate programs, we pay a rebate to each participating state, generally within three We believe our estimated allowance for product returns requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We believe our estimated allowances for distributor fees, GPO discounts, rebates and administrative fees, and Medicaid rebates do not require a high degree of judgement because the amounts are settled within a relatively short period of time. Our product sales allowances and related accruals are evaluated each reporting period and adjusted when trends or significant events indicate that a change in estimate is appropriate. Changes in sales allowance estimates could materially affect our results of operations and financial position. The following provides a summary of activity with respect to our accrued distributor fees, rebates and chargebacks and product returns for the quarter ended March 31, 2017 Product Returns Distributor Fees Rebates and Chargebacks Total Balance at December 31, 2016 $ 49 $ 72 $ 221 $ 342 Provision 153 215 1,114 1,482 Payments/credits — (119 ) (243 ) (362 ) Balance at March 31, 2017 $ 202 $ 168 $ 1,092 $ 1,462 Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Unrealized gains and losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our net loss and comprehensive loss for both periods presented. Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration of common share equivalents. Diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, warrants and common stock underlying Convertible Notes are considered to be common stock equivalents and are included in the calculation of diluted EPS only when their effect is dilutive. Because we have incurred a net loss for all periods presented in the unaudited condensed consolidated statements of comprehensive loss, stock options, warrants and shares of common stock underlying Convertible Notes are not included in the computation of net loss per share because their effect would be anti-dilutive. The following table includes the number of stock options, warrants and shares of common stock underlying Convertible Notes not included in the computation as of the dates shown below (in thousands): As of March 31, 2017 2016 Stock options outstanding 11,849 8,961 Warrants outstanding 625 3,565 Shares of common stock underlying Convertible Notes outstanding 7,634 7,193 Recent Accounting Pronouncements Recently Adopted In March 2016, 2016 09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting 2016 09”). 2016 09 2016 09 first 2017. 2016 09 $3.6 2016 09 In July 2015, 2015 11, Inventory (Topic 330) 2015 11”). 2015 11 2015 11 first 2017, Not Yet Adopted In February 2016, 2016 02, Leases 2016 02”). 2016 02 12 2016 02 2016 02 December 15, 2018, 2016 02 first 2019, In May 2014, 2014 09, Revenue from Contracts with Customers (Topic 606) 2014 09”). 2014 09 2014 09 December 15, 2017, 2014 09 2014 09 first 2018. 2014 09, 2014 09 March 31, 2017. 2014 09

Note 4 - Fair Value Measurement

Note 4 - Fair Value Measurements	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Fair Value Disclosures [Text Block]	4. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy based on three first two may ● Level 1 ● Level 2 1 ● Level 3 We measure the following financial assets at fair value on a recurring basis. The fair values of these financial assets at March 31, 2017 December 31, 2016 Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant Balance at for Identical Observable Unobservable March 31, Assets Inputs Inputs 201 7 (Level 1) (Level 2) (Level 3) Cash and money market funds $ 43,092 $ 43,092 $ — $ — United States government and agency 24,971 14,982 9,989 — United States corporate debt securities 35,023 — 35,023 — Foreign corporate debt securities 8,300 — 8,300 — United States commercial paper 36,897 — 36,897 — Foreign commercial paper 16,933 — 16,933 — Total $ 165,216 $ 58,074 $ 107,142 $ — Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant Balance at for Identical Observable Unobservable December 31, Assets Inputs Inputs 201 6 (Level 1) (Level 2) (Level 3) Cash and money market funds $ 13,414 $ 13,414 $ — $ — United States corporate debt securities 12,039 — 12,039 — Foreign corporate debt securities 14,057 — 14,057 — United States commercial paper 8,635 — 8,635 — Foreign commercial paper 2,993 — 2,993 — Total $ 51,138 $ 13,414 $ 37,724 $ — As of March 31, 2017, $40.4 three $81.7 one December 31, 2016, $37.7 one March 31, 2017 December 31, 2016 A company may third We consider the carrying amount of cash and cash equivalents, receivables, inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities to be representative of their respective fair values because of the short-term nature of those instruments.

Note 5 - Realignment of Goals a

Note 5 - Realignment of Goals and Objectives and New Development Focus	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Restructuring and Related Activities Disclosure [Text Block]	5. Following the approval of SUSTOL and consistent with our transition into a commercial-stage biotechnology company, we realigned our goals and objectives and refocused our development efforts to the area of post-operative pain management. On October 18, 2016, December 2016. September 30, 2016, three one We expect to incur total expenses of $10.3 $6.3 $4.0 September 30, 2016 March 31, 2017 $8.9 $1.4 fourth 2017 The Company expects to make the final payment resulting from the realignment of our goals and objectives and new development focus in the second 2018. March 31, 2017, $3.0 $6.3 For the three March 31, 2017, $1.1 $0.8 $0.3 The expenses we expect to incur are subject to a number of assumptions, and actual results may may may 420, Exit or Disposal Cost Obligations

Note 6 - Secured Notes to Relat

Note 6 - Secured Notes to Related Party	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Debt Disclosure [Text Block]	6. Convertible Notes In April 2011, $4.5 $4.3 The Convertible Notes are secured by substantially all of our assets, including placing our bank and investment accounts under a control agreement. The Convertible Notes bear interest at 6% May 2, 2021; may The Convertible Notes are convertible into shares of our common stock at a rate of 1,250 $1,000 9.99% 61 As of March 31, 2017, In 2011, 3.5 July 29, 2011. The Convertible Notes contain an embedded conversion feature that was in-the-money on the issuance dates. Based on an effective fixed conversion rate of 1,250 $1,000 10 three March 31, 2017, $0.1 $0.1 three March 31, 2017 2016, $0.1 $0.1 $0.2 $0.2 As of March 31, 2017, $3.1 $6.1 $3.0 $6.1 7.6 Promissory Note In August 2016, $100.0 two 8% first $50.0 August 5, 2016. second $50.0 $50.0 no no no second For the three March 31, 2017, $1.0 no three March 31, 2016. March 31, 2017, $50.0

Note 7 - Stockholders' Equity

Note 7 - Stockholders' Equity	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Stockholders' Equity Note Disclosure [Text Block]	7. 2017 In January 2017, 14.1 $12.20 $163.7 $8.8 Private Placement Warrants In June 2011, 4.0 $3.60 July 1, 2016. Stock Option Activity The following table summarizes the stock option activity for the three March 31, 2017: Weighted- Average Weighted- Remaining Average Contractual Shares Exercise Term (in thousands) Price (Years) Balance at January 1, 2017 11,845 $ 14.44 7.60 Granted 416 $ 13.65 Exercised (197 ) $ 9.38 Expired and forfeited (215 ) $ 19.73 Balance at March 31, 2017 11,849 $ 14.40 7.47 For the three March 31, 2017, 197,000 $1.8 Stock-Based Compensation The following table summarizes stock-based compensation expense related to stock-based payment awards granted pursuant to all of our equity compensation arrangements for the three March 31, 2017 2016 Three Months Ended March 31, 2017 2016 Research and development $ 3,208 $ 2,073 General and administrative 2,374 1,667 Sales and marketing 2,439 1,615 Stock-based compensation expense included in operating expenses $ 8,021 $ 5,355 Impact on basic and diluted net loss per share $ 0.16 $ 0.15 As of March 31, 2017, 79.4 2.9 We estimated the fair value of each option grant on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions: Three Months Ended March 31, 20 17 20 16 Risk-free interest rate 2.1 % 1.6 % Dividend yield 0.0 % 0.0 % Volatility 87.3 % 90.6 % Expected life (years) 6 6 We estimate the fair value of each purchase right granted under our 1997 three March 31, 2017 2016.

Note 8 - Income Taxes

Note 8 - Income Taxes	3 Months Ended
	Mar. 31, 2017
Notes to Financial Statements
Income Tax Disclosure [Text Block]	8. Deferred income tax assets and liabilities are recognized for temporary differences between financial statements and income tax carrying values using tax rates in effect for the years such differences are expected to reverse. Due to uncertainties surrounding our ability to generate future taxable income and consequently realize such deferred income tax assets, a full valuation allowance has been established. We continue to maintain a full valuation allowance against our deferred tax assets as of March 31, 2017. The impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will be recognized when it is more likely than not of being sustained. In 2017, 2016 09, $3.6 2016 10 December 31, 2016 three March 31, 2017.

Significant Accounting Policies

Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Consolidation, Policy [Policy Text Block]	Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of Heron Therapeutics, Inc. and its wholly owned subsidiary, Heron Therapeutics, B.V., which was organized in the Netherlands in March 2015.
Use of Estimates, Policy [Policy Text Block]	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosures made in the accompanying notes to the financial statements. Our critical accounting policies that involve significant judgment and estimates include revenue recognition, inventory, accrued clinical liabilities, income taxes and stock-based compensation. Actual results could differ materially from those estimates.
Cash, Cash Equivalents, and Short-Term Investments [Policy Text Block]	Cash, Cash Equivalents and Short-Term Investments Cash and cash equivalents consist of cash and highly liquid investments with original maturities from purchase date of three Short-term investments consist of securities with contractual maturities of one The following is a summary of our short-term, available-for-sale securities (in thousands): March 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States government and agency $ 24,971 $ — $ — $ 24,971 United States corporate debt 35,052 — (29 ) 35,023 Foreign corporate debt 8,301 — (1 ) 8,300 United States commercial paper 36,897 — — 36,897 Foreign commercial paper 16,933 — — 16,933 Total $ 122,154 $ — $ (30 ) $ 122,124 December 31, 2016 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States corporate debt $ 12,048 $ — $ (9 ) $ 12,039 Foreign corporate debt 14,065 — (8 ) 14,057 United States commercial paper 8,635 — — 8,635 Foreign commercial paper 2,993 — — 2,993 Total $ 37,741 $ — $ (17 ) $ 37,724 The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. We regularly monitor and evaluate the realizable value of our marketable securities. We did not recognize any impairment losses for each of the three March 31, 2017 2016. Realized gains and losses associated with our investments, if any, are reported in the statement of comprehensive loss. There were no realized gains or losses for each of the three March 31, 2017 2016. Our bank and investment accounts have been placed under control agreements in accordance with our Senior Secured Convertible Notes (the “Convertible Notes”) and Subordinated Secured Promissory Note (the “Promissory Note”) (see Note 6).
Concentration Risk, Credit Risk, Policy [Policy Text Block]	Concentration of Risk Cash, cash equivalents and short-term investments are financial instruments that potentially subject us to concentrations of credit risk. We deposit our cash in financial institutions. At times, such deposits may may Sales of SUSTOL to ASD Specialty Healthcare, Inc. and Cardinal Health, Inc. each accounted for 10% March 31, 2017.
Inventory, Policy [Policy Text Block]	Inventory Inventory is stated at the lower of cost or estimated net realizable value, on a first first may As of March 31, 2017, $4.6 $1.6 $3.0 three March 31, 2017, $0.3 first 2017 one $0.9
Revenue Recognition, Policy [Policy Text Block]	Revenue Recognition Product Sales SUSTOL is distributed in the U.S. through a limited number of specialty distributors (“Customers”) that resell SUSTOL to healthcare providers, the end users of SUSTOL. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees, and other deductions. Product sales are recognized as revenue when there is persuasive evidence that an arrangement exists, delivery has occurred and title has passed, the price is fixed or determinable and we are reasonably assured of collecting the resulting receivable. Product sales are recorded net of sales allowances and estimated rebates, chargebacks, distributor fees and other deductions. At this point in the SUSTOL commercial launch, we do not yet have sufficient historical data regarding the third March 31, 2017, $5.2 Product Sales Allowances We recognize product sales allowances as a reduction of product sales in the same period the related revenue is recognized. Product sales allowances are based on amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of our agreements with Customers, historical product returns, rebates or discounts taken, the shelf life of the product, and specific known market events, such as competitive pricing and new product introductions. If actual future results vary from our estimates, we may ● Product Returns — We allow our Customers to return product for credit 12 may ● Distributor Fees — We offer contractually determined discounts to our Customers. These discounts are paid on a quarterly basis within two ● Group Purchasing Organization (“GPO”) Discounts and Rebates — We offer cash discounts to GPO members. These discounts are taken when the GPO members purchase SUSTOL from our Customers, who then charge back to us the discount amount. Additionally, we offer volume and contract-tier rebates to GPO members. Rebates are estimated based on actual purchase levels during the quarterly or semi-annual rebate purchase period. ● GPO Administrative Fees — We pay administrative fees to GPO’s for services and access to data. These fees are based on contracted terms and are paid after the quarter in which the product was purchased by the GPO’s members. ● Medicaid Rebates — We participate in Medicaid rebate programs, which provide assistance to certain low-income patients based on each individual state's guidelines regarding eligibility and services. Under the Medicaid rebate programs, we pay a rebate to each participating state, generally within three We believe our estimated allowance for product returns requires a high degree of judgment and is subject to change based on our experience and certain quantitative and qualitative factors. We believe our estimated allowances for distributor fees, GPO discounts, rebates and administrative fees, and Medicaid rebates do not require a high degree of judgement because the amounts are settled within a relatively short period of time. Our product sales allowances and related accruals are evaluated each reporting period and adjusted when trends or significant events indicate that a change in estimate is appropriate. Changes in sales allowance estimates could materially affect our results of operations and financial position. The following provides a summary of activity with respect to our accrued distributor fees, rebates and chargebacks and product returns for the quarter ended March 31, 2017 Product Returns Distributor Fees Rebates and Chargebacks Total Balance at December 31, 2016 $ 49 $ 72 $ 221 $ 342 Provision 153 215 1,114 1,482 Payments/credits — (119 ) (243 ) (362 ) Balance at March 31, 2017 $ 202 $ 168 $ 1,092 $ 1,462
Comprehensive Income, Policy [Policy Text Block]	Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Unrealized gains and losses on available-for-sale securities are included in other comprehensive loss and represent the difference between our net loss and comprehensive loss for both periods presented.
Earnings Per Share, Policy [Policy Text Block]	Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration of common share equivalents. Diluted EPS is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, warrants and common stock underlying Convertible Notes are considered to be common stock equivalents and are included in the calculation of diluted EPS only when their effect is dilutive. Because we have incurred a net loss for all periods presented in the unaudited condensed consolidated statements of comprehensive loss, stock options, warrants and shares of common stock underlying Convertible Notes are not included in the computation of net loss per share because their effect would be anti-dilutive. The following table includes the number of stock options, warrants and shares of common stock underlying Convertible Notes not included in the computation as of the dates shown below (in thousands): As of March 31, 2017 2016 Stock options outstanding 11,849 8,961 Warrants outstanding 625 3,565 Shares of common stock underlying Convertible Notes outstanding 7,634 7,193
New Accounting Pronouncements, Policy [Policy Text Block]	Recent Accounting Pronouncements Recently Adopted In March 2016, 2016 09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting 2016 09”). 2016 09 2016 09 first 2017. 2016 09 $3.6 2016 09 In July 2015, 2015 11, Inventory (Topic 330) 2015 11”). 2015 11 2015 11 first 2017, Not Yet Adopted In February 2016, 2016 02, Leases 2016 02”). 2016 02 12 2016 02 2016 02 December 15, 2018, 2016 02 first 2019, In May 2014, 2014 09, Revenue from Contracts with Customers (Topic 606) 2014 09”). 2014 09 2014 09 December 15, 2017, 2014 09 2014 09 first 2018. 2014 09, 2014 09 March 31, 2017. 2014 09

Note 3 - Accounting Policies (T

Note 3 - Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2017
Notes Tables
Available-for-sale Securities [Table Text Block]	March 31, 2017 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States government and agency $ 24,971 $ — $ — $ 24,971 United States corporate debt 35,052 — (29 ) 35,023 Foreign corporate debt 8,301 — (1 ) 8,300 United States commercial paper 36,897 — — 36,897 Foreign commercial paper 16,933 — — 16,933 Total $ 122,154 $ — $ (30 ) $ 122,124 December 31, 2016 Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value United States corporate debt $ 12,048 $ — $ (9 ) $ 12,039 Foreign corporate debt 14,065 — (8 ) 14,057 United States commercial paper 8,635 — — 8,635 Foreign commercial paper 2,993 — — 2,993 Total $ 37,741 $ — $ (17 ) $ 37,724
Valuation Allowances and Reserves [Table Text Block]	Product Returns Distributor Fees Rebates and Chargebacks Total Balance at December 31, 2016 $ 49 $ 72 $ 221 $ 342 Provision 153 215 1,114 1,482 Payments/credits — (119 ) (243 ) (362 ) Balance at March 31, 2017 $ 202 $ 168 $ 1,092 $ 1,462
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]	As of March 31, 2017 2016 Stock options outstanding 11,849 8,961 Warrants outstanding 625 3,565 Shares of common stock underlying Convertible Notes outstanding 7,634 7,193

Note 4 - Fair Value Measureme15

Note 4 - Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2017
Notes Tables
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]	Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant Balance at for Identical Observable Unobservable March 31, Assets Inputs Inputs 201 7 (Level 1) (Level 2) (Level 3) Cash and money market funds $ 43,092 $ 43,092 $ — $ — United States government and agency 24,971 14,982 9,989 — United States corporate debt securities 35,023 — 35,023 — Foreign corporate debt securities 8,300 — 8,300 — United States commercial paper 36,897 — 36,897 — Foreign commercial paper 16,933 — 16,933 — Total $ 165,216 $ 58,074 $ 107,142 $ — Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant Balance at for Identical Observable Unobservable December 31, Assets Inputs Inputs 201 6 (Level 1) (Level 2) (Level 3) Cash and money market funds $ 13,414 $ 13,414 $ — $ — United States corporate debt securities 12,039 — 12,039 — Foreign corporate debt securities 14,057 — 14,057 — United States commercial paper 8,635 — 8,635 — Foreign commercial paper 2,993 — 2,993 — Total $ 51,138 $ 13,414 $ 37,724 $ —

Note 7 - Stockholders' Equity (

Note 7 - Stockholders' Equity (Tables)	3 Months Ended
	Mar. 31, 2017
Notes Tables
Share-based Compensation, Stock Options, Activity [Table Text Block]	Weighted- Average Weighted- Remaining Average Contractual Shares Exercise Term (in thousands) Price (Years) Balance at January 1, 2017 11,845 $ 14.44 7.60 Granted 416 $ 13.65 Exercised (197 ) $ 9.38 Expired and forfeited (215 ) $ 19.73 Balance at March 31, 2017 11,849 $ 14.40 7.47
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]	Three Months Ended March 31, 2017 2016 Research and development $ 3,208 $ 2,073 General and administrative 2,374 1,667 Sales and marketing 2,439 1,615 Stock-based compensation expense included in operating expenses $ 8,021 $ 5,355 Impact on basic and diluted net loss per share $ 0.16 $ 0.15
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]	Three Months Ended March 31, 20 17 20 16 Risk-free interest rate 2.1 % 1.6 % Dividend yield 0.0 % 0.0 % Volatility 87.3 % 90.6 % Expected life (years) 6 6

Note 1 - Business (Details Text

Note 1 - Business (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Retained Earnings (Accumulated Deficit)	$ (636,300)	$ (585,971)
Cash, Cash Equivalents, and Short-term Investments	$ 165,200

Note 3 - Accounting Policies (D

Note 3 - Accounting Policies (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Inventory, Net	$ 4,641		$ 5,340
Inventory, Raw Materials, Net of Reserves	1,600
Inventory, Finished Goods, Net of Reserves	3,000
Cost of Goods Sold	1,186
Deferred Revenue, Current	5,235		$ 1,099
Asset Impairment Charges	0	0
Available-for-sale Securities, Gross Realized Gains	0	0
Available-for-sale Securities, Gross Realized Losses	0	$ 0
Accounting Standards Update 2016-09 [Member]
Deferred Tax Assets, Gross	3,600
Deferred Tax Assets, Valuation Allowance	3,600
Cost of Sales [Member]
Inventory Write-down	900
SUSTOL [Member]
Cost of Goods Sold	$ 300

Note 3 - Accounting Policies -

Note 3 - Accounting Policies - Available-for-sale Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale, amortized cost	$ 122,154	$ 37,741
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses	(30)	(17)
Available-for-sale, current	122,124	37,724
US Government Agencies Debt Securities [Member]
Available-for-sale, amortized cost	24,971
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses
Available-for-sale, current	24,971
Domestic Corporate Debt Securities [Member]
Available-for-sale, amortized cost	35,052	12,048
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses	(29)	(9)
Available-for-sale, current	35,023	12,039
Foreign Corporate Debt Securities [Member]
Available-for-sale, amortized cost	8,301	14,065
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses	(1)	(8)
Available-for-sale, current	8,300	14,057
United States Commercial Paper [Member]
Available-for-sale, amortized cost	36,897	8,635
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses
Available-for-sale, current	36,897	8,635
Foreign Commercial Paper [Member]
Available-for-sale, amortized cost	16,933	2,993
Available-for-sale, gross unrealized gains
Available-for-sale, gross unrealized losses
Available-for-sale, current	$ 16,933	$ 2,993

Note 3 - Accounting Policies 20

Note 3 - Accounting Policies - Summary of Product Sales Allowances (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Balance	$ 342
Provision	1,482
Payments/credits	(362)
Balance	1,462
Allowance for Sales Returns [Member]
Balance	49
Provision	153
Payments/credits
Balance	202
Allowance for Distributor Fees [Member]
Balance	72
Provision	215
Payments/credits	(119)
Balance	168
Allowance for Rebates and Chargebacks [Member]
Balance	221
Provision	1,114
Payments/credits	(243)
Balance	$ 1,092

Note 3 - Accounting Policies 21

Note 3 - Accounting Policies - Equity Excluded From Calculation of Diluted Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Stock Option [Member]
Shares excluded (in shares)	11,849	8,961
Warrant [Member]
Shares excluded (in shares)	625	3,565
Convertible Debt Securities [Member]
Shares excluded (in shares)	7,634	7,193

Note 4 - Fair Value Measureme22

Note 4 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Cash Equivalents, at Carrying Value	$ 40,400
Available-for-sale Securities, Current	$ 81,703	$ 37,724

Note 4 - Fair Value Measureme23

Note 4 - Fair Value Measurements - Financial Assets Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Available-for-sale, current	$ 122,124	$ 37,724
US Government Agencies Debt Securities [Member]
Available-for-sale, current	24,971
Domestic Corporate Debt Securities [Member]
Available-for-sale, current	35,023	12,039
Foreign Corporate Debt Securities [Member]
Available-for-sale, current	8,300	14,057
United States Commercial Paper [Member]
Available-for-sale, current	36,897	8,635
Foreign Commercial Paper [Member]
Available-for-sale, current	16,933	2,993
Fair Value, Measurements, Recurring [Member]
Cash and money market funds	43,092	13,414
Assets, fair value	165,216	51,138
Fair Value, Measurements, Recurring [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale, current	24,971
Fair Value, Measurements, Recurring [Member] | Domestic Corporate Debt Securities [Member]
Available-for-sale, current	35,023	12,039
Fair Value, Measurements, Recurring [Member] | Foreign Corporate Debt Securities [Member]
Available-for-sale, current	8,300	14,057
Fair Value, Measurements, Recurring [Member] | United States Commercial Paper [Member]
Available-for-sale, current	36,897	8,635
Fair Value, Measurements, Recurring [Member] | Foreign Commercial Paper [Member]
Available-for-sale, current	16,933	2,993
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and money market funds	43,092	13,414
Assets, fair value	58,074	13,414
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale, current	14,982
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Domestic Corporate Debt Securities [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Corporate Debt Securities [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | United States Commercial Paper [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Foreign Commercial Paper [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and money market funds
Assets, fair value	107,142	37,724
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale, current	9,989
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Domestic Corporate Debt Securities [Member]
Available-for-sale, current	35,023	12,039
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Corporate Debt Securities [Member]
Available-for-sale, current	8,300	14,057
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | United States Commercial Paper [Member]
Available-for-sale, current	36,897	8,635
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Foreign Commercial Paper [Member]
Available-for-sale, current	16,933	2,993
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and money market funds
Assets, fair value
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | US Government Agencies Debt Securities [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Domestic Corporate Debt Securities [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Corporate Debt Securities [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | United States Commercial Paper [Member]
Available-for-sale, current
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Foreign Commercial Paper [Member]
Available-for-sale, current

Note 5 - Realignment of Goals24

Note 5 - Realignment of Goals and Objectives and New Development Focus (Details Textual) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2017USD ($)	Mar. 31, 2017USD ($)
Restructuring and Related Cost, Expected Cost	$ 10.3	$ 10.3
Payments for Restructuring	3
Restructuring Plan [Member]
Restructuring Charges	1.1	8.9
Restructuring Plan [Member] | Research and Development Expense [Member]
Restructuring Charges	0.8
Restructuring Plan [Member] | General and Administrative Expense [Member]
Restructuring Charges	0.3
Restructuring Plan [Member] | Employee Severance [Member]
Restructuring and Related Cost, Expected Cost	6.3	6.3
Restructuring Plan [Member] | Accelerated Non-Cash Stock Option Expense [Member]
Restructuring and Related Cost, Expected Cost	4	4
Restructuring Plan [Member] | Employee Related Liabilities [Member]
Restructuring and Related Cost, Expected Cost Remaining	$ 1.4	$ 1.4

Note 6 - Secured Notes to Rel25

Note 6 - Secured Notes to Related Party (Details Textual) - USD ($)	Aug. 05, 2016	Aug. 02, 2016	Jul. 29, 2011	Apr. 30, 2011	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Convertible Debt Issuable in Connection with Private Placement				$ 4,500,000
Proceeds from Convertible Debt				$ 4,300,000
Common Shares Registered for Resale in Connection with Convertible Notes			3,500,000
Interest Expense, Debt, Excluding Amortization					$ 100,000	$ 100,000
Amortization of Debt Discount (Premium)					185,000	166,000
Convertible Notes Payable, Related Parties, Current					3,096,000		$ 2,911,000
Interest Expense					1,030,000	133,000
Notes Payable, Related Parties, Noncurrent					50,000,000		$ 50,000,000
Convertible Debt [Member]
Debt Instrument, Interest Rate, Stated Percentage				6.00%
Debt Instrument Conversion Ratio Multiple of Principal				$ 1,000
Beneficial Ownership after Conversion				9.99%
Notice Period Associated with Beneficial Ownership Percentage Limitation Convertible Notes				61 days
Paid-in-Kind Interest					100,000
Debt Instrument, Increase (Decrease), Other, Net					100,000
Debt Instrument, Face Amount					6,100,000
Debt Instrument, Unamortized Discount					$ 3,000,000
Debt Instrument, Convertible, Number Shares of Equity Insturments					7,600,000
Debt Instrument, Term				10 years
Convertible Debt [Member] | In Case of Debt Conversion [Member]
Debt Instrument, Face Amount					$ 6,100,000
Convertible Debt [Member] | Common Stock [Member]
Debt Instrument Conversion Ratio Shares				1,250
Term Loan [Member] | Tang Capital [Member]
Debt Instrument, Interest Rate, Stated Percentage		8.00%
Debt Agreement, Maximum Borrowing Capacity		$ 100,000,000
Debt Instrument, Term		2 years
Proceeds from Issuance of Long-term Debt	$ 50,000,000
Proceeds from Issuance of Long-term Debt, Subject to Achievement of Corporate Milestone		$ 50,000,000
Interest Expense					1,000,000	$ 0
Notes Payable, Related Parties, Noncurrent					$ 50,000,000
Debt Instrument, Fee Amount	$ 0
Debt Instrument, Number of Warrants	0
Debt Instrument, Convertible, Beneficial Conversion Feature	$ 0

Note 7 - Stockholders' Equity26

Note 7 - Stockholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended
	Jan. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Jun. 30, 2011
Proceeds from Issuance of Common Stock	$ 163,700
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Net		197,000
Proceeds from Stock Options Exercised		$ 1,850	$ 2,530
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 79,400
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		2 years 328 days
Private Placement 2011 [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights				4
Class of Warrant or Right, Exercise Price of Warrants or Rights				$ 3.60
Common Stock [Member]
Stock Issued During Period, Shares, New Issues	14,100,000
Share Price	$ 12.20
Payments of Stock Issuance Costs	$ 8,800

Note 7 - Stockholders' Equity -

Note 7 - Stockholders' Equity - Option Summary (Details) - $ / shares shares in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Number of shares outstanding (in shares)	11,845
Number of shares outstanding, weighted average exercise price (in dollars per share)	$ 14.44
Number of shares outstanding, weighted average remaining contractual term (Year)	7 years 171 days	7 years 219 days
Number of shares granted (in shares)	416
Number of shares granted, weighted average exercise price (in dollars per share)	$ 13.65
Number of shares exercised (in shares)	(197)
Number of shares exercised, weighted average exercise price (in dollars per share)	$ 9.38
Number of shares expired and forfeited (in shares)	(215)
Number of shares expired and forfeited, weighted average exercise price (in dollars per share)	$ 19.73
Number of shares outstanding (in shares)	11,849	11,845
Number of shares outstanding, weighted average exercise price (in dollars per share)	$ 14.40	$ 14.44

Note 7 - Stockholders' Equity28

Note 7 - Stockholders' Equity - Allocation of the Recognized Cost (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based compensation expense	$ 8,021	$ 5,355
Impact on basic and diluted net loss per share (in dollars per share)	$ 0.16	$ 0.15
Research and Development Expense [Member]
Share-based compensation expense	$ 3,208	$ 2,073
General and Administrative Expense [Member]
Share-based compensation expense	2,374	1,667
Selling and Marketing Expense [Member]
Share-based compensation expense	$ 2,439	$ 1,615

Note 7 - Stockholders' Equity29

Note 7 - Stockholders' Equity - Option Valuation Assumptions (Details) - Employee Stock Option [Member]	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Risk-free interest rate	2.10%	1.60%
Dividend yield	0.00%	0.00%
Volatility	87.30%	90.60%
Expected life (years) (Year)	6 years	6 years

Note 8 - Income Taxes (Details

Note 8 - Income Taxes (Details Textual) - Accounting Standards Update 2016-09 [Member] $ in Thousands	Mar. 31, 2017USD ($)
Deferred Tax Assets, Gross	$ 3,600
Deferred Tax Assets, Valuation Allowance	$ 3,600