Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 15, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Adamas Pharmaceuticals Inc | ||
Entity Central Index Key | 1,328,143 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 301,001,186 | ||
Entity Common Stock, Shares Outstanding (in shares) | 26,807,221 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 91,316 | $ 23,735 |
Available-for-sale securities | 82,126 | 89,917 |
Accounts receivable, net | 367 | 794 |
Inventory | 1,704 | 0 |
Prepaid expenses and other current assets | 3,662 | 2,541 |
Total current assets | 179,175 | 116,987 |
Property and equipment, net | 3,132 | 3,156 |
Available-for-sale securities, non-current | 2,991 | 22,292 |
Other assets | 878 | 38 |
Total assets | 186,176 | 142,473 |
Current liabilities | ||
Accounts payable | 3,878 | 3,589 |
Accrued liabilities | 12,385 | 5,867 |
Other current liabilities | 344 | 287 |
Total current liabilities | 16,607 | 9,743 |
Long-term debt | 102,647 | 0 |
Other non-current liabilities | 796 | 547 |
Total liabilities | 120,050 | 10,290 |
Commitments and Contingencies (Note 8) | ||
Stockholders’ equity | ||
Preferred stock, $0.001 par value — 5,000,000 shares authorized, and zero shares issued and outstanding at December 31, 2017 and December 31, 2016 | 0 | 0 |
Common stock, $0.001 par value — 100,000,000 shares authorized, 23,320,551 and 22,013,644 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 28 | 27 |
Additional paid-in capital | 277,964 | 254,558 |
Accumulated other comprehensive loss | (167) | (193) |
Accumulated deficit | (211,699) | (122,209) |
Total stockholders’ equity | 66,126 | 132,183 |
Total liabilities and stockholders’ equity | $ 186,176 | $ 142,473 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 23,320,551 | 22,013,644 |
Common stock, shares outstanding (in shares) | 23,320,551 | 22,013,644 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Product sales, net | $ 568 | $ 0 | $ 0 |
License and grant revenue | 3 | 572 | 1,916 |
Total net revenues | 571 | 572 | 1,916 |
Costs and operating expenses: | |||
Cost of product sales | 17 | 0 | 0 |
Research and development | 27,168 | 31,230 | 35,895 |
Selling, general and administrative, net | 61,312 | 30,326 | 23,458 |
Total costs and operating expenses | 88,497 | 61,556 | 59,353 |
Loss from operations | (87,926) | (60,984) | (57,437) |
Interest and other income, net | 1,351 | 811 | 363 |
Interest expense | (4,645) | 0 | 0 |
Loss before income taxes | (91,220) | (60,173) | (57,074) |
Benefit for income taxes | (1,730) | (115) | (5,272) |
Net loss | $ (89,490) | $ (60,058) | $ (51,802) |
Net loss per share, basic and diluted (in dollars per share) | $ (3.97) | $ (2.77) | $ (2.86) |
Weighted average shares used in computing net loss per share, basic and diluted (in shares) | 22,558 | 21,711 | 18,111 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (89,490) | $ (60,058) | $ (51,802) |
Unrealized gain (loss) on available-for-sale securities | 26 | (35) | 22 |
Comprehensive loss | $ (89,464) | $ (60,093) | $ (51,780) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2014 | 17,551,375 | ||||
Beginning balance at Dec. 31, 2014 | $ 147,074 | $ 22 | $ 157,581 | $ (180) | $ (10,349) |
Increase (decrease) in shareholders' equity | |||||
Exercise of stock options (in shares) | 409,683 | ||||
Exercise of stock options | 761 | $ 0 | 761 | ||
Vesting of common stock | 112 | 112 | |||
Issuance of common stock in conjunction with Controlled Equity Offering, net of commissions and issuance costs (in shares) | 509,741 | ||||
Issuance of common stock in conjunction with Controlled Equity Offering, net of commissions and issuance costs | 9,657 | $ 1 | 9,656 | ||
Issuance of common stock in conjunction with warrant exercises (in shares) | 3,484 | ||||
Net unrealized gain (loss) on available-for-sale securities | 22 | 22 | |||
Stock issued under employee stock purchase plan (in shares) | 31,179 | ||||
Stock issued under employee stock purchase plan | 407 | 407 | |||
Stock-based compensation | 9,956 | 9,956 | |||
Net loss | (51,802) | (51,802) | |||
Ending balance (in shares) at Dec. 31, 2015 | 18,505,462 | ||||
Ending balance at Dec. 31, 2015 | 116,187 | $ 23 | 178,473 | (158) | (62,151) |
Increase (decrease) in shareholders' equity | |||||
Exercise of stock options (in shares) | 586,956 | ||||
Exercise of stock options | 3,042 | $ 1 | 3,041 | ||
Vesting of common stock | 34 | 34 | |||
Issuance of common stock in conjunction with Secondary Offering, net of commissions and issuance costs (in shares) | 2,875,000 | ||||
Issuance of common stock in conjunction with Secondary Offering, net of commissions and issuance costs | 61,822 | $ 3 | 61,819 | ||
Net unrealized gain (loss) on available-for-sale securities | (35) | (35) | |||
Stock issued under employee stock purchase plan (in shares) | 46,226 | ||||
Stock issued under employee stock purchase plan | 620 | 620 | |||
Stock-based compensation | 10,571 | 10,571 | |||
Net loss | (60,058) | (60,058) | |||
Ending balance (in shares) at Dec. 31, 2016 | 22,013,644 | ||||
Ending balance at Dec. 31, 2016 | 132,183 | $ 27 | 254,558 | (193) | (122,209) |
Increase (decrease) in shareholders' equity | |||||
Exercise of stock options (in shares) | 1,183,353 | ||||
Exercise of stock options | $ 9,034 | $ 1 | 9,033 | ||
Restricted stock units vested (in shares) | 64,471 | ||||
Restricted stock units vested | $ 201 | ||||
Net unrealized gain (loss) on available-for-sale securities | 26 | 26 | |||
Stock issued under employee stock purchase plan (in shares) | 59,083 | ||||
Stock issued under employee stock purchase plan | 766 | 766 | |||
Stock-based compensation | 13,406 | 13,406 | |||
Net loss | (89,490) | (89,490) | |||
Ending balance (in shares) at Dec. 31, 2017 | 23,320,551 | ||||
Ending balance at Dec. 31, 2017 | $ 66,126 | $ 28 | $ 277,964 | $ (167) | $ (211,699) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net loss | $ (89,490) | $ (60,058) | $ (51,802) |
Adjustments to reconcile net loss to net cash used in operating activities | |||
Depreciation | 1,194 | 808 | 435 |
Stock-based compensation | 13,367 | 10,571 | 9,956 |
Non-cash interest expense | 4,645 | 0 | 0 |
Change in fair value of embedded derivative liability | (294) | 0 | 0 |
Net accretion of discounts and amortization of premiums of available-for-sale securities | 456 | (301) | 875 |
Changes in assets and liabilities | |||
Accrued interest of available-for-sale securities | (161) | (2) | 110 |
Inventory | (1,646) | 0 | 0 |
Prepaid expenses and other assets | (2,036) | 2,643 | (4,416) |
Accounts receivable, net | 427 | 490 | (760) |
Accounts payable | 333 | 502 | (788) |
Accrued liabilities and other liabilities | 6,378 | (2,721) | (820) |
Net cash used in operating activities | (66,827) | (48,068) | (47,210) |
Cash flows from investing activities | |||
Purchases of property and equipment | (1,258) | (1,624) | (1,399) |
Purchases of available-for-sale securities | (62,510) | (103,528) | (59,828) |
Maturities of available-for-sale securities | 89,333 | 78,443 | 69,285 |
Net cash provided by (used in) investing activities | 25,565 | (26,709) | 8,058 |
Cash flows from financing activities | |||
Proceeds from issuance of long-term debt | 99,600 | 0 | 0 |
Proceeds from public offerings, net of offering costs | 0 | 61,822 | 9,657 |
Payment of debt issuance costs | (633) | 0 | 0 |
Proceeds from issuance of common stock upon exercise of stock options | 9,110 | 2,966 | 746 |
Proceeds from employee stock purchase plan | 766 | 620 | 407 |
Net cash provided by financing activities | 108,843 | 65,408 | 10,810 |
Net increase (decrease) in cash and cash equivalents | 67,581 | (9,369) | (28,342) |
Cash and cash equivalents at beginning of period | 23,735 | 33,104 | 61,446 |
Cash and cash equivalents at end of period | 91,316 | 23,735 | 33,104 |
Supplemental disclosure | |||
Cash paid for income taxes | 0 | 0 | 4,691 |
Supplemental disclosure of noncash investing and financing activities | |||
Purchases of property and equipment in accounts payable and accrued expense | 61 | 148 | 161 |
Stock-based compensation capitalized in inventory | 39 | 0 | 0 |
Stock option exercise settled after period end | $ 0 | $ 76 | $ 0 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | DESCRIPTION OF BUSINESS Adamas Pharmaceuticals, Inc. (the “Company”) focuses on time-dependent biology to redefine the treatment experience for patients suffering from chronic neurological diseases. In August 2017, the U.S. Food and Drug Administration (FDA) approved GOCOVRI™ (amantadine) extended release capsules (previously ADS-5102), the first and only FDA-approved medicine for the treatment of dyskinesia in patients with Parkinson's disease receiving levodopa-based therapy, with or without concomitant dopaminergic medications. The Company is also advancing its pipeline of differentiated investigational programs, which includes ADS-5102 in development for the treatment of multiple sclerosis walking impairment; and ADS-4101, a high-dose, modified-release lacosamide in development for the treatment of partial onset seizures in patients with epilepsy. The Company’s goal is to create and commercialize a new generation of medicines intended to lessen the burden of disease on patients, caregivers and society. The Company was incorporated in the State of Delaware on November 15, 2000, and operates as one segment. The Company’s headquarters and operations are located in Emeryville, California. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, clinical trial accruals, fair value of assets and liabilities including short-term and long-term classification, embedded derivatives, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates. Liquidity and Financial Condition To date, a significant portion of the Company’s resources have been dedicated to the research and development of its products. The Company made GOCOVRI available for physician and patient use in the fourth quarter of 2017, with a full commercial launch via the deployment of the Company’s sales team in January 2018. Prior to the generation of revenue from GOCOVRI, the Company had not generated any commercial revenue from the sale of its products. Based upon the current status of, and plans for, its product development and commercialization, the Company believes that the existing cash, cash equivalents, and investments of $ 176.4 million as of December 31, 2017 , will be adequate to satisfy the Company’s capital needs through at least the next twelve months from the issuance of this annual report on Form 10-K. However, the process of developing and commercializing products requires significant research and development, preclinical testing and clinical trials, manufacturing arrangements, as well as regulatory approvals. These activities, together with the Company’s selling, general and administrative expenses, are expected to result in significant operating losses until the commercialization of the Company’s products or license agreements generate sufficient revenue to offset expenses. Under its license agreement with Allergan, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for net sales of Namzaric ® until mid-2020. Although the Company is eligible to receive royalties on net sales of Namenda XR ® in mid-2018, it does not expect to receive such royalties because of the potential entry of generic versions of Namenda XR. In January 2018, the Company completed a follow-on public offering of 3,450,000 shares of its common stock, which includes the exercise in full by the underwriters of their option to purchase 450,000 shares of common stock, at an offering price of $41.50 per share. Proceeds from the follow-on public offering were approximately $134.1 million , net of underwriting discounts, commissions, and offering-related transaction costs. Inventory Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. Inventory consists of raw materials, work-in-process, and GOCOVRI finished goods. Raw materials and work-in-process that may be utilized for both commercial and clinical programs are identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance and are included in inventory. Amounts in inventory associated with clinical development programs are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have “alternative future use”. Costs include active pharmaceutical ingredient (API), third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. If the Company identifies excess, obsolete or unsalable product, the Company will write down its inventory to its net realizable value in the period it is identified. To date, the Company has determined that a reserve for potentially excess, obsolete or unsalable inventory is not required. The Company begins capitalizing costs as inventory when the product candidate receives regulatory approval. Prior to regulatory approval, inventory costs related to product candidates are recorded as research and development expense. The Company received FDA approval for GOCOVRI on August 24, 2017, and began capitalizing inventory manufactured at the FDA approved location, after FDA approval. Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities, when purchased, of less than three months. Investments The Company classifies its investments as “available-for-sale.” In general, these investments are free of trading restrictions. The Company carries these investments at fair value, based on quoted market prices or other readily available market information. Quoted market prices for U.S. government and corporate bonds include both principal and accrued interest components. Unrealized gains and losses are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in its Consolidated Balance Sheets. Gains and losses are recognized when realized in its Consolidated Statements of Income. When the Company determines that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is recognized in income. Gains and losses are determined using the specific identification method. The Company considers all marketable debt securities with a maturity of less than one year to be short-term investments, with all others considered to be long-term investments. All of the Company’s available-for-sale securities are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investments’ fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, extent of the loss related to credit of the issuer, the expected cash flows from the security, its intent to sell or hold the security, and whether or not the Company will be required to sell the security before the recovery of its amortized cost. Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Segments In accordance with ASC 280-10-50, Segment Reporting, 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 operates in one reportable segment: the development and commercialization of therapeutics targeting chronic disorders of the central nervous system. All revenues for the years ended December 31, 2017 , 2016 , and 2015 were generated in the United States. Revenue Recognition The Company recognizes revenue when all four of the following criteria have been met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Revenue under license arrangements is recognized based on the performance requirements of the contract. Determinations of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fees charged for deliverables and the collectability of those fees. Should changes in conditions cause management to determine that these criteria are not met for any new or modified transactions, revenue recognized could be adversely affected. Product sales, net The Company’s product sales, net, consist of U.S. sales of GOCOVRI and is recognized once all four revenue recognition criteria described above have been met. GOCOVRI was approved by the FDA on August 24, 2017 and the Company commenced shipments of GOCOVRI to a specialty pharmacy (SP) during October 2017. The SP dispenses product to a patient based on the fulfillment of a prescription. The Company’s agreement with its SP provides for transfer of title to the product at the time the product is delivered to the SP. In addition, except for limited circumstances, the SP has no right of product return to the Company. The Company has determined it can reasonably estimate its allowances for rebates and returns at the time title and risk of loss transfers to the SP. Therefore, the Company records revenue when the product is delivered to the SP, which is an approach frequently referred to as the “sell-in” revenue recognition model. The Company recognizes revenue from product sales net of the following allowances at the time of revenue recognition: Distribution fees : Distribution fees include fees paid to the SP for data and prompt payment discounts. Distribution fees are recorded as an offset to revenue based on contractual terms. Rebates : Rebates include mandated discounts under the Medicaid Drug Rebate Program, Medicare Part D Prescription Drug Benefit Program, and TRICARE Retail Pharmacy Refunds Program (TRICARE). Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or statutory requirements with benefit providers. The allowance for rebates is estimated based on statutory discount rates and expected utilization at the time of sale. The Company estimates for expected utilization of rebates based on data received from the SP. The allowance for rebates is adjusted quarterly to reflect actual experience. Product Returns : Consistent with industry practice, the Company offers limited product return rights. The Company generally allows for the return of product that is damaged or defective, and within a few months prior to and up to a few months after the product expiration date. The Company does not allow product returns for product that has been dispensed to a patient. The Company considers several factors in the estimation of potential product returns, including, expiration dates of the product shipped, the limited product return rights, third-party data in monitoring channel inventory levels, shelf life of the product, prescription trends, and other relevant factors. Medicare Part D coverage gap : Medicare Part D coverage gap is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States, which mandates manufacturers to fund a portion of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Funding of the coverage gap is generally invoiced and paid in arrears. Medicare Part D coverage gap is accrued at the time of sale based on an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters and is adjusted quarterly based on actual experience. Co-payment assistance : The Company provides co-payment assistance to patients who have commercial insurance and meet certain eligibility requirements. Co-payment assistance is accrued based on actual program participation and estimates of program redemption using data provided by third-party administrators. Each of the above adjustments are recorded at the time of revenue recognition, resulting in a reduction in product sales, net, and an increase in accrued expenses or a reduction in accounts receivable, net. The above adjustments require significant estimates, judgment and information obtained from external sources. If management's estimates differ from actuals, the Company will record adjustments that would affect product sales, net in the period of adjustment. License agreement revenue The Company generates revenue from collaboration and license agreements for the development and commercialization of products. Collaboration and license agreements may include non-refundable upfront license fees, partial or complete reimbursement of research and development costs, contingent consideration payments based on the achievement of defined objectives, and royalties on sales of commercialized products. The Company’s performance obligations under the collaboration and license agreements may include the license or transfer of intellectual property rights, obligations to provide research and development services and related materials, and obligations to participate on certain development and/or commercialization committees with the partners. For revenue agreements with multiple-element arrangements, the Company allocates revenue to each non-contingent element based on the relative-selling-price of each element in an arrangement. When applying the relative-selling-price method, the Company determines the selling price for each deliverable using the following estimation hierarchy: (i) vendor-specific objective evidence of fair value of the deliverable, if it exists, (ii) third-party evidence of selling price, if vendor-specific objective evidence is not available, or (iii) the vendor’s best estimate of selling price, if neither vendor-specific nor third-party evidence is available. Revenue allocated is then recognized when the four basic revenue recognition criteria, mentioned above, are met for each element. The Company recognizes payments that are contingent upon achievement of a substantive milestone in their entirety in the period in which the milestone is achieved. Milestones are defined as events that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones subject to this guidance. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Amounts related to research and development funding and full-time equivalent employees assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. Cost of Product Sales Cost of product sales consists primarily of direct and indirect costs related to the manufacturing of GOCOVRI products sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs. Cost of product sales may also include period costs related to certain inventory manufacturing services, inventory adjustment charges, as well as manufacturing variances. In connection with the FDA approval of GOCOVRI on August 24, 2017, the Company began capitalizing inventory manufactured at the FDA approved location starting in August 2017. Prior to receiving regulatory approval for GOCOVRI from the FDA, the Company expensed all costs incurred in the manufacture of GOCOVRI as research and development. Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and short and long-term investments. Cash, cash equivalents, and investments are deposited with financial institutions or invested in security issuers that management believes are credit worthy. Deposits may, at times, exceed the amount of insurance provided on such deposits. To date, the Company has not experienced any losses on invested cash and cash equivalents. Risk and Uncertainties The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of results of clinical trials and reaching milestones, uncertainty of market acceptance of the Company’s products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships, and dependence on key individuals. Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the products will receive the necessary approvals. If the Company is denied approval, approval is delayed, or the Company is unable to maintain approval, it could have a materially adverse impact on the Company. The Company has expended and will continue to expend substantial funds to conduct research, development, and clinical testing of its product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. The Company may require additional funds to conduct research and development activities and commercialize its products. Additional funds may not be available on acceptable terms, if at all. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs or alter its product commercialization plans, which may materially and adversely affect its business, financial condition, and operations. Accounts Receivable, net The Company’s accounts receivable balance consists of amounts due from sales of GOCOVRI and amounts due from Allergan, in accordance with the contract terms of the license agreement. Receivables from sales of GOCOVRI are recorded net of allowances which generally include chargebacks, distribution fees, doubtful accounts, and discounts. Allergan receivables are for research and development funding and full-time equivalent employees assigned to the Allergan license agreement, as well as for reimbursement of external costs, recorded as contra-expense, associated with supporting prosecution and litigation of intellectual property rights. The Company’s estimate of the allowance for doubtful accounts is based on an evaluation of the aging of its receivables. Accounts receivable balances are written off against the allowance when it is probable that the receivable will not be collected. To date, the Company has determined that an allowance for doubtful accounts is not required. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Estimated useful lives by major asset category are as follows: Useful Lives Computer equipment and software 3 years Equipment 5 years Furniture and fixtures 10 years Leases At the inception of a lease, the Company evaluates the lease agreement to determine whether the lease is an operating, capital or build-to-suit lease using the criteria in ASC 840, “Leases.” Certain lease agreements also require the Company to make additional payments for taxes, insurance, and other operating expenses incurred during the lease period, which are expensed as incurred. For operating leases, the Company recognizes rent expense on a straight-line basis over the lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred liability. Where lease agreements contain rent escalation clauses, rent abatements and/or concessions, such as rent holidays and tenant improvement allowances, the Company applies them in the determination of straight-line expense over the lease term. Accounting for Long-Lived Assets The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by the comparison of the carrying amount to the future net cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets as of December 31, 2017 . Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites, as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates clinical trial expenses based on the services performed pursuant to contracts with research institutions and CROs that conduct and manage clinical trials on its behalf. In accruing service fees, the Company obtains the reported level of patient enrollment at each site and estimates the time period over which services are to be performed and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. Research and Development Research and development (“R&D”) expenses include salaries and related compensation, contractor and consultant fees, external clinical trial expenses performed by CROs, licensing fees, acquired intellectual property with no alternative future use, and facility and administrative expense allocations. In addition, the Company funds R&D at research institutions under agreements that are generally cancelable at its option. Research costs typically consist of applied research and preclinical and toxicology work. Pharmaceutical manufacturing development costs consist of pre-approval inventory purchases, product formulation, chemical analysis, and the transfer and scale-up of manufacturing at facilities operated by the Company’s contract manufacturers. Clinical development costs include the costs of Phase 1, Phase 2, and Phase 3 clinical trials. These costs are a significant component of the Company’s research and development expenses. The Company accrues costs for clinical trial activities performed by CROs and other third parties based upon the estimated amount of work completed on each study as provided by the CRO. These estimates are reviewed for reasonableness by the Company’s internal clinical personnel, and the Company aims to match the accrual to actual services performed by the organizations as determined by patient enrollment levels and related activities. The Company monitors patient enrollment levels and related activities using available information; however, if the Company underestimates activity levels associated with various studies at a given point in time, the Company could be required to record significant additional R&D expenses in future periods when the actual activity level becomes known. The Company charges all such costs to R&D expenses. Non-refundable advance payments are capitalized and expensed as the related goods are delivered or services are performed. Long-Term Debt Long-term debt consists of the Company’s loan agreement with HealthCare Royalty Partners (“HCRP”). The Company accounted for the loan agreement as a debt financing arrangement. Interest expense is accrued using the effective interest rate method over the estimated period the debt will be repaid. Debt issuance costs have been recorded as a debt discount in the Company’s consolidated balance sheets and are being amortized and recorded as interest expense throughout the life of the loan using the effective interest rate method. The Company must make certain assumptions and estimates, including future royalties and net product sales, in determining the expected repayment term and amortization period of the debt discount, as well as the classification between current and long-term portions. The Company periodically assesses these assumptions and estimates, and adjusts the liabilities accordingly. See Note 9 for further details of the Company’s long-term debt. Embedded Derivatives Related to Debt Instruments Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the debt instrument. Under the Company’s loan agreement with HCRP, upon the occurrence of a default or a change in control, the Company may be required to make mandatory prepayments of the borrowings. The prepayment premium is considered an embedded derivative, as the holder of the loans may exercise the option to require prepayment by the Company. Further, in the event of a regulatory change that results in a material adverse effect on HCRP’s rate of return, the Company shall pay directly to HCRP an amount that compensates HCRP for such reduction. The embedded derivative is presented as a component of other non-current liabilities. The Company will remeasure the embedded derivatives each reporting period and report changes in the estimated fair value as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, short-term investments, accounts receivable, long-term investments and other current assets, other assets, accounts payable, accrued liabilities approximate fair value due to the short-term nature or determinable value of these items. See also Note 4 for further details of the Company’s fair value instruments. Income Taxes The Company accounts for income taxes under the asset and liability approach. Under this method, 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 affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company follows the provisions of ASC 740, Income Taxes, under which it assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted under the Company’s stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and unvested restricted stock units are excluded from the computation when there is a loss as their effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. Stock-Based Compensation The Company accounts for stock-based compensation of stock options granted to employees and directors and for employee stock purchase plan shares by estimating the fair value of stock-based awards using the Black-Scholes option-pricing model. The Company accounts for stock-based compensation of restricted stock units granted to employees based on the closing price of the Company’s common stock on the date of grant. The fair value of stock-based awards, net of estimated forfeitures, is recognized and amortized over the applicable vesting period. All stock options awarded to non-employees are accounted for at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model. Stock options granted to non-employees are subject to periodic revaluation at each reporting date as the underlying equity instruments vest. In order to estimate the value of share-based awards, the Company uses the Black-Scholes model, which requires the use of certain subjective assumptions. The most significant subjective assumptions are management’s estimates of the expected volatility and the expected term of the award. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from any of these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted. Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard will replace most existing revenue recognition guidance. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard to 2018 for public companies, with an option that would permit companies to adopt the standard as early as the original effective date of 2017. Early adoption prior to the original effective date is not permitted. Since the issuance of ASU 2014-09, the FASB has issued several amendments which clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ; ASU 2016-10, Identifying Performance Obligations and Licensing ; ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting ; ASU 2016-12, Narrow-Scope Improvements and Practical Expedients ; ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers ; and ASU 2017-14, Income Statement-Reporting Comprehensive Income (Topic 220), Re |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | BALANCE SHEET COMPONENTS Prepaid expenses and other current assets (in thousands) December 31, 2017 2016 Prepaid expenses $ 2,638 $ 1,316 Income tax receivable 1,007 168 Other current assets 17 1,057 Prepaid expenses and other current assets $ 3,662 $ 2,541 Property and equipment, net (in thousands) December 31, 2017 2016 Computer equipment and software $ 3,289 $ 2,128 Equipment 252 252 Furniture and fixtures 466 466 Leasehold improvements 1,645 1,645 5,652 4,491 Less: Accumulated depreciation and amortization (2,520 ) (1,335 ) Property and equipment, net $ 3,132 $ 3,156 Depreciation expense was $1,194,000 , $ 808,000 , and $ 435,000 for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Accrued liabilities (in thousands) December 31, 2017 2016 Accrued employee related costs $ 5,499 $ 3,696 Clinical trial accruals 1,720 1,041 Accrued consulting and other professional fees 4,897 864 Other 269 266 Accrued liabilities $ 12,385 $ 5,867 |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS In accordance with ASC 820-10, Fair Value Measurements and Disclosures, the Company determines the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows: • Level 1 inputs, which include quoted prices in active markets for identical assets or liabilities; • Level 2 inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For available-for-sale securities, the Company reviews trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and • Level 3 inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques, as well as significant management judgment or estimation. The following table represents the fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis (in thousands): December 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market $ 68,501 $ 68,501 $ — $ — Corporate debt 23,471 — 23,471 — U.S. Treasury notes 61,646 — 61,646 — Total assets measured at fair value $ 153,618 $ 68,501 $ 85,117 $ — Liabilities: Embedded derivative liability $ 470 $ — $ — $ 470 Total liabilities measured at fair value $ 470 $ — $ — $ 470 December 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market $ 192 $ 192 $ — $ — Corporate debt 51,233 — 51,233 — U.S. Treasury notes 60,976 — 60,976 — Total assets measured at fair value $ 112,401 $ 192 $ 112,209 $ — Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments are readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy. Corporate debt and U.S. Treasury notes are measured at fair value using Level 2 inputs. The Company reviews trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy. In certain cases where there is limited activity or less transparency around inputs to valuation, the related assets or liabilities are classified as Level 3. The Company classified an embedded derivative related to the Royalty-Backed Loan as a Level 3 liability. The fair value of the embedded derivative as a result of a change in control was calculated using a probability-weighted discounted cash flow model. The model used in valuing this embedded derivative requires the use of significant estimates and assumptions including but not limited to: 1) expected cash flows the Company expects to receive on U.S. net sales of GOCOVRI and on royalties from Allergan on U.S. net sales of Namzaric; 2) the Company’s risk adjusted discount rates; 3) the probability of receipt of orphan drug exclusivity for GOCOVRI for the treatment of dyskinesia in patients with Parkinson’s disease; and 4) the probability of a change in control occurring during the term of the note based on the percentage of similar companies that were acquired over the previous five year period. Changes in the estimated fair value of the bifurcated embedded derivative are reported as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. In the periods presented, the Company evaluated the embedded derivative value as a result of an event of default and the value as a result of increased costs due to a regulatory change and considered both to have no material value based on current assessment of probability, but could become material in future periods if a specified event of default or regulatory change became more probable than is currently estimated. See Note 9 “Long-Term Debt” for further description. The following table sets forth a summary of the changes in the estimated fair value of the Company’s embedded derivative, which is measured at fair value as a Level 3 liability on a recurring basis (in thousands): Balance as of December 31, 2016 $ — Issuance of long-term debt with embedded derivative 764 Change in fair value included in interest and other income, net (294 ) Balance as of December 31, 2017 $ 470 There were no transfers between any of the levels of the fair value hierarchy during the years ended December 31, 2017 and 2016 . |
Investments
Investments | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS The Company’s investments consist of corporate debt and U.S. Treasury notes classified as available-for-sale securities. The Company limits the amount of investment exposure as to institution, maturity, and investment type. To mitigate credit risk, the Company invests in investment grade corporate debt and United States Treasury notes. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and shown separately as a component of accumulated other comprehensive loss within stockholders’ equity. Realized gains and losses are reclassified from other comprehensive loss to other income on the condensed consolidated statements of operations when incurred. The Company may pay a premium or receive a discount upon the purchase of available-for-sale securities. Interest earned and gains realized on available-for-sale securities and amortization of discounts received and accretion of premiums paid on the purchase of available-for-sale securities are included in investment income. The following table is a summary of amortized cost, unrealized gain and loss, and the fair value of available-for-sale securities as of December 31, 2017 and 2016 (in thousands): December 31, 2017 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ 23,507 $ — $ (36 ) $ 23,471 U.S. Treasury notes 61,777 — (131 ) 61,646 Total $ 85,284 $ — $ (167 ) $ 85,117 Reported as: Short-term investments $ 82,280 $ (154 ) $ 82,126 Long-term investments 3,004 (13 ) 2,991 Total $ 85,284 $ — $ (167 ) $ 85,117 December 31, 2016 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ 51,354 $ — $ (121 ) $ 51,233 U.S. Treasury notes 61,048 5 (77 ) 60,976 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Reported as: Short-term investments $ 90,050 $ 1 $ (134 ) $ 89,917 Long-term investments 22,352 4 (64 ) 22,292 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Short-term and long-term investments include accrued interest of $ 0.6 million and $ 14,000 , respectively, as of December 31, 2017 . Short-term and long-term investments includes accrued interest of $ 0.3 million and $ 0.1 million , respectively, as of December 31, 2016 . The Company has not incurred any realized gains or losses on investments for the years ended December 31, 2017 and 2016 . Investments are classified as short-term or long-term depending on the underlying investment’s maturity date. Long-term investments held by the Company have a maturity date range of greater than 12 months and a maximum of 13 months as of December 31, 2017 . All investments with unrealized losses at December 31, 2017 have been in a loss position for less than twelve months or the loss is not material and were temporary in nature. The Company does not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | INVENTORY The Company began capitalizing inventory in August 2017 once the FDA approved GOCOVRI. Inventory consists of the following (in thousands): December 31, 2017 December 31, 2016 Raw materials $ 859 $ — Work-in-process 817 — Finished goods 28 — Total inventory $ 1,704 $ — |
License Agreements
License Agreements | 12 Months Ended |
Dec. 31, 2017 | |
License Agreements | |
License Agreements | LICENSE AGREEMENTS In November 2012, the Company granted Allergan an exclusive license, with right to sublicense, certain of the Company’s intellectual property rights relating to human therapeutics containing memantine in the United States. In connection with these rights, Allergan markets and sells Namzaric ® and Namenda XR ® for the treatment of moderate to severe dementia related to Alzheimer’s disease. Pursuant to the agreement, Allergan made an upfront payment of $65.0 million . The Company earned and received additional cash payments totaling $ 95.0 million upon achievement by Allergan of certain development and regulatory milestones. Under the agreement, external costs incurred related to the prosecution and litigation of intellectual property rights are reimbursable. For the twelve months ended December 31, 2017 and 2016 , reimbursed expenses amounting to $33,000 and $2.4 million , respectively, are reflected as a reduction to selling, general and administrative, net. In addition, the Company may earn tiered royalty payments based on future net sales of Namzaric and Namenda XR. The Company identified the following two non-contingent performance deliverables under the license agreement: (i) transfer of intellectual property rights, inclusive of the related technology know-how conveyance (“license and know-how” or “license”) and (ii) the obligation to participate on the Joint Development Committee (“JDC”). The Company concluded that the license and the know-how together represent a single deliverable, and therefore the two together have been accounted for as a single unit of accounting. There was no separate consideration identified in the agreement for the deliverables and there was no right of return under the agreement. The Company considered the provisions of the multiple-element arrangement guidance in determining whether the deliverables outlined above have standalone value. The transfer of license and know-how has standalone value separate from the obligation to participate on the JDC, as the agreement allows Allergan to sublicense its rights to the acquired license to a third party. Further, the Company believes that Allergan has research and development expertise with compounds similar to those licensed under the agreement and has the ability to engage other third parties to develop these compounds, allowing Allergan to realize the value of the license and know-how without receiving the JDC participation. The Company developed its best estimates of selling prices (“BESP”) for each deliverable in order to allocate the non‑contingent arrangement consideration to the two units of accounting. Based on BESP analysis, value assigned to the obligation to participate on the JDC was a negligible amount. Accordingly, the entire upfront license fee of $ 65.0 million was allocated to the transfer of license and technical know-how. Revenue recognition commenced upon delivery of the license and was recognized on a straight-line basis through the period of the transfer of the know-how. Allergan was able to derive value from the license as the know-how was transferred. A straight-line pattern of revenue recognition is only acceptable when a more precise pattern cannot be discerned. The way in which the transfer of know-how occurred did not give rise to a more precise pattern of recognition, and the Company therefore recognized revenue on a straight-line basis over the period of the transfer of the know-how (from November 2012 to February 2013). In November and December 2013, the Company received a total of $ 40.0 million in milestone payments under its license agreement with Allergan. The milestone payments were for the successful completion of studies that supported the New Drug Application (“NDA”) filing with the FDA for Namzaric by Allergan. In May 2014, the Company received an additional $ 25.0 million milestone payment under the license agreement. This milestone payment was a result of the FDA’s acceptance of the NDA for Namzaric. In December 2014, the Company received a final $ 30.0 million milestone payment in connection with the FDA approval of Namzaric. These amounts have been recorded as revenue when received in the consolidated statements of operations and comprehensive income during 2013 and 2014, respectively. The Company is entitled to receive royalties on net sales in the United States by Allergan, its affiliates, or any of its sublicensees of controlled-release versions of memantine products covered by the terms of the license agreement. Beginning in May 2020, the Company will be entitled to receive royalties in the low to mid-teens from Allergan for sales of Namzaric in the United States. Beginning in June 2018, the Company will be entitled to receive royalties in the low to mid-single digits for sales of Namenda XR in the United States. Allergan’s obligation to pay royalties with respect to fixed-dose memantine-donepezil products, including Namzaric, continues until the later of (i) 15 years after the commercial launch of the first fixed-dose memantine-donepezil product by Allergan in the United States or (ii) the expiration of the Orange Book listed patents for which Allergan obtained rights from the Company covering such product. Allergan’s obligation to pay royalties with respect to Namenda XR continues until the expiration of the Orange Book listed patents covering such products. However, Allergan’s obligation to pay royalties for any product covered by the license is eliminated in any quarter where there is significant competition from generics. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases approximately 18,500 square feet of office space in Emeryville, California under an operating lease that expires April 30, 2020. The lease provides for periods of escalating rent. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period. The Company’s total rent expense was approximately $ 667,000 , $ 625,000 , and $ 628,000 for the years ended December 31, 2017 , 2016 , and 2015 , respectively. Purchase Commitments The Company has entered into agreements for the supply of API and the manufacture of commercial supply of GOCOVRI, with Moehs Ibérica, S.L. and Catalent Pharma Solutions, LLC, respectively. Under the terms of the agreements, the Company will supply the vendors with non-cancelable firm commitment purchase orders. The Company has also entered into other agreements with certain vendors for the provision of services, including services related to data access and packaging, under which the Company is contractually obligated to make certain payments to the vendors. The Company enters into contracts in the normal course of business that include, among others, arrangements with CROs for clinical trials, vendors for pre-clinical research, and vendors for manufacturing. These contracts generally provide for termination upon notice, and therefore the Company believes that its obligations under these agreements are not material. As of December 31, 2017 , future minimum lease payments under the non-cancelable facility operating lease and non-cancelable purchase commitments were as follows (in thousands): December 31, 2017 2018 $ 3,782 2019 2,019 2020 591 2021 — 2022 — Thereafter — Total $ 6,392 Contingencies In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown, because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Indemnification In accordance with the Company’s amended and restated certificate of incorporation and amended and restated bylaws, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving in such capacity. There have been no claims to date, and the Company has a directors and officers liability insurance policy that may enable it to recover a portion of any amounts paid for future claims. Litigation and Other Legal Proceedings In November 2012, the Company granted Forest an exclusive license to certain of the Company’s intellectual property rights relating to human therapeutics containing memantine in the United States. Under the terms of that license agreement, Forest has the right to enforce such intellectual property rights which are related to its right to market and sell Namzaric and Namenda XR for the treatment of moderate to severe dementia related to Alzheimer’s disease. The Company has a right to participate in, but not control, such enforcement actions by Forest. As of the date of this filing, several companies have submitted Abbreviated New Drug Applications, or ANDAs, including one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv) to the FDA requesting approval to manufacture and market generic versions of Namenda XR, on which the Company is entitled to receive royalties from Forest beginning in June 2018. In the notices, these companies allege that the patents associated with Namenda XR, some of which are owned by Forest or licensed by Forest from Merz Pharma GmbH & Co. KGaA, and others of which are owned by the Company and licensed by the Company exclusively to Forest in the United States, are invalid, unenforceable, and/or will not be infringed by the companies’ manufacture, use, or sale of generic versions of Namenda XR. The Company, Forest, Merz Pharma GmbH & Co. KGaA, and Merz Pharmaceuticals GmbH (together Merz) filed lawsuits in the U.S. District Court for the District of Delaware for infringement of the relevant patents against all of these companies. The Company and Forest will continue to enforce the patents associated with Namenda XR. The Company and Forest have entered into a series of settlement agreements with all Namenda XR ANDA filers, except for one ANDA filer. Entry dates for generic Namenda XR are governed by the settlement agreements in that action. Subject to those agreements, the earliest date on which any of these agreements grants a license to market generic version of Namenda XR is January 31, 2020 or in the alternative, an option to launch an authorized generic version of Namenda XR beginning on January 31, 2021. In January 2016, the Delaware District Court issued a claim construction (Markman) ruling in the Namenda XR litigation that includes findings of indefiniteness as to certain claim terms in the asserted patents licensed by the Company to Forest. On July 26, 2016, the District Court issued a final judgment of invalidity on those patents based upon the Markman ruling. The Company and Forest filed the notice of appeal of that final judgment to the United States Court of Appeals for the Federal Circuit (“Federal Circuit”). On December 11, 2017, the Federal Circuit issued a non-precedential opinion affirming the final judgment of the district court. On January 10, 2018, the Company and Forest filed a petition for rehearing/rehearing en banc with the Federal Circuit. On February 12, 2018, the appellate court denied that petition and on February 20, 2018, the mandate of the court was issued. Based upon the terms of certain settlement agreements with generic filers related to Namenda XR, certain generic filers can now commercialize generic versions of Namenda XR, if approved by the FDA. On June 2, 2017, the Company and Forest filed a lawsuit against the remaining ANDA filer in the U.S. District Court for the District of Delaware for infringement of certain patents based on that filer’s filing of an ANDA seeking FDA approval to manufacture and market generic versions of Namenda XR that included one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv). This action is ongoing and in a very early stage. On July 24, 2017, an ANDA filer that previously entered into a settlement agreement with Forrest and the Company filed a complaint against the Company and Forest in the Court of Chancery of the State of Delaware alleging that Forest and the Company breached the license agreement and settlement agreement entered into with that filer to settle the litigation related to its ANDA referencing Namenda XR as the reference listed drug. As of the date of this filing, this action has been settled by the parties. Additionally, as of the date of this filing, a number of companies have submitted ANDAs including one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv) to the FDA requesting approval to manufacture and market generic versions of Namzaric, on which the Company is entitled to receive royalties from Forest beginning in May 2020. The Company and Forest have filed lawsuits alleging infringement of the relevant patents against Namzaric ANDA filers, who are seeking to launch generic versions of Namzaric, in the same court as heard the Namenda XR litigation. As of the date of this filing, the Company and Forest have settled with all but one of the ANDA filers, including all first filers on all the available dosage forms of Namzaric. Entry dates for generic Namzaric are governed by the settlement agreements in those actions. Subject to those agreements, the earliest date on which any of these agreements grants a license to market generic version of Namzaric is January 1, 2025 or in the alternative, an option to launch an authorized generic version of Namzaric beginning on January 1, 2026 or earlier in certain circumstances. The Company and Forest intend to continue to enforce the patents associated with Namzaric. On June 2, 2017, the Company and Forest filed a lawsuit against the remaining ANDA filer in the U.S. District Court for the District of Delaware for infringement of certain patents based on its filing of an ANDA seeking FDA approval to manufacture and market generic versions of Namzaric that included one or more certifications pursuant to 21 U.S.C. § 355(j)(2)(A)(vii)(iv). This action is ongoing and in a very early stage. On April 20, 2017, an opposition was filed against the Company’s European Patent EP 2 506 709 B1, which relates to extended release compositions comprising amantadine or a pharmaceutically acceptable salt thereof. On May 26, 2017, the Company received a Communication of Notices of Opposition (R. 79(1) EPC) from the European Patent Office that requested the Company file its observations in response to the opposition within a period of four months from May 26, 2017. The Company filed its response to the opposition on October 5, 2017. On February 16, 2018, Osmotica Pharmaceuticals LLC and Vertical Pharmaceuticals LCC (“Osmotica”) filed an action against the Company in U.S. District Court for the state of Delaware, requesting a declaratory judgment that Osmotica’s newly-approved product Osmolex ER™ (amantadine) extended release tablets does not infringe certain of Adamas’ patents. As of the date of this filing, Adamas has not received service of a summons and complaint. From time to time, the Company may be party to legal proceedings, investigations, and claims in the ordinary course of its business. Other than the matters described above, the Company is not currently party to any material legal proceedings. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-term Debt | LONG-TERM DEBT Royalty-Backed Loan Agreement In May 2017, the Company, through a new wholly-owned subsidiary, Adamas Pharma, LLC, entered into a Royalty-Backed Loan with HCRP, whereby the Company initially borrowed $35.0 million , followed by an additional $65.0 million received in the fourth quarter upon FDA approval and FDA’s recognition in the Orange Book of the seven -year orphan drug exclusivity, which GOCOVRI earned upon approval on August 24, 2017. Principal and interest will be payable quarterly from the proceeds of a 12.5% royalty on U.S. net sales of GOCOVRI and up to $15.0 million of the Company’s annual royalties from Allergan on U.S. net sales of Namzaric starting in May 2020, pursuant to the Company’s license agreement with Allergan. The royalty rate on net sales of GOCOVRI will drop to 6.25% after the principal amount of the loan has been repaid in full, until the Company has made total payments of 200% of the funded amounts. The Company may elect to voluntarily prepay the loan at any time; or may be required to prepay, subject to specified prepayment trigger events as described below, in which case the amount due will be 200% of the funded amounts, less total payments made to date. Royalty rates are subject to increase to 17.5% and 22.5% if total principal and interest payments have not reached minimum specified levels at measurement dates on December 2021 and December 2022, respectively. Under the terms of the loan, HCRP has recourse to Adamas Pharma, LLC, not the Company. The loan agreement matures in December 2026 but as the repayment of the loan amount is contingent upon the sales volumes of GOCOVRI and royalties from Allergan, the repayment term may be shortened depending on the actual sales of GOCOVRI and actual royalties received from Allergan. The loans bear interest at an annual rate of 11% on the outstanding principal amount and includes an interest-only period until the interest payment date following the ninth full calendar quarter after the $65.0 million additional loan. To the extent that royalties are insufficient to pay interest in full during the first nine quarters of the loan, any unpaid portion of the quarterly interest payment will be added to the principal amount of the loans. For the twelve months ended December 31, 2017 , accrued interest in the amount of $4.4 million was added to the principal balance of the loan. In connection with the Royalty-Backed Loan, the Company paid HCRP a lender expense amount of $0.4 million and incurred additional debt issuance costs totaling $0.8 million . The lender expense and additional debt issuance costs have been recorded as a debt discount and are being amortized and recorded as interest expense over the estimated term of the loan using the effective interest method. The Company recorded interest expense, including amortization of the debt discount, related to the Royalty-Backed Loan, of $4.6 million for the twelve months ended December 31, 2017 . Interest expense over the life of the Royalty-Backed Loan includes an annual interest rate of 11% on the outstanding principal, a royalty rate of 6.25% on net sales of GOCOVRI after the principal amount is paid, and amortization of the debt discount. The effective interest rate as of December 31, 2017 on the amounts borrowed under the Royalty-Backed Loan, including the amortization of the debt discount, was 19.1% . The assumptions used in determining the expected repayment term of the loan and amortization period of the debt discount require that the Company make estimates that could impact the short and long-term classification of these costs, as well as the period over which these costs will be amortized and the effective interest rate. The Company may be required to make mandatory prepayments of the borrowings under the Royalty-Backed Loan, subject to specified prepayment trigger events, including: (1) the occurrence of any event of default or (2) the occurrence of a change in control. Upon the prepayment of all or any of the outstanding principal balance, the Company shall pay in addition to such prepayment, a prepayment premium. As the holder of the loans may exercise the option to require prepayment by the Company, the prepayment premium is considered to be an embedded derivative which is required to be bifurcated from its host contract and accounted for as a separate financial instrument. The valuation of the embedded derivative is described further in Note 4. Long-term debt and unamortized debt discount balances are as follows (in thousands): December 31, 2017 December 31, 2016 Loans payable, gross $ 100,000 $ — Less: Unamortized debt discount and issuance costs (1,747 ) — Plus: Unpaid portion of quarterly interest payment 4,394 — Carrying value of loans payable $ 102,647 $ — Less: Current portion of long-term debt — — Non-current portion of long-term debt $ 102,647 $ — The estimated fair value of the long-term debt, as measured using Level 3 inputs, approximates $109.5 million as of December 31, 2017 . The estimated fair value was calculated in the same methodology as the valuation of the embedded derivative as described further in Note 4. There are no contractual minimum principal payments due until the loan matures in December 2026 as the repayment of the loan amount is contingent upon the sales volumes of GOCOVRI and royalties from Allergan. |
Convertible Preferred Stock
Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Temporary Equity Disclosure [Abstract] | |
Convertible Preferred Stock | CONVERTIBLE PREFERRED STOCK The Company’s amended and restated certificate of incorporation filed on April 15, 2014, authorizes 5,000,000 shares of preferred stock, of which there were no shares outstanding as of December 31, 2017 and 2016 . |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS’ EQUITY Common Stock The amended and restated certificate of incorporation authorizes the Company to issue 100,000,000 shares of common stock. Common stockholders are entitled to dividends as and when declared by the board of directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. Each share of common stock is entitled to one vote. Public Offering In January 2016, the Company completed a follow-on public offering of 2,875,000 shares of common stock, which includes the exercise in full by the underwriters of their option to purchase 375,000 shares of common stock, at an offering price of $23.00 per share. Proceeds from the follow-on public offering were approximately $61.8 million , net of underwriting discounts and offering-related transaction costs. Sales Agreements In June 2015, the Company entered into a sales agreement (“2015 Sales Agreement”) with a sales agent, pursuant to which the Company was able to, at its discretion, issue and sell common stock from time to time with a value of up to a maximum of $ 25.0 million in an at-the-market offering. The sales agent earned a 3% commission on gross proceeds for any sales of common stock made under the 2015 Sales Agreement. The 2015 Sales Agreement was terminated in November 2016. During the year ended December 31, 2016 , there were no shares sold under the 2015 Sales Agreement. The Company sold a total of 509,741 shares under the 2015 Sales Agreement in 2015 at prevailing market prices with an average price of $20.04 for net proceeds of $9.7 million . In May 2017, the Company entered into a sales agreement (“2017 Sales Agreement”) with Cowen and Company, LLC (“Cowen”), as sales agent, pursuant to which the Company may, from time to time, issue and sell at its option, shares of the Company’s common stock for an aggregate offering price of up to $50.0 million under an at-the-market offering (“ATM Offering”). Sales of the common stock, if any, will be made pursuant to a shelf registration statement that was declared effective by the Securities and Exchange Commission (“SEC”) on November 21, 2016. Cowen is acting as sole sales agent for any sales made under the Sales Agreement and the Company will pay Cowen a commission of up to 3% of the gross proceeds. The Company’s common stock will be sold at prevailing market prices at the time of the sale, and, as a result, prices may vary. The Company is not obligated to make any sales of shares of common stock under the Sales Agreement. Unless otherwise terminated earlier, the Sales Agreement continues until all shares available under the Sales Agreement have been sold. As of December 31, 2017 , no shares have been sold under the Sales Agreement. Shares reserved for Future Issuance Shares of Company’s common stock reserved for future issuance are as follows: December 31, 2017 December 31, 2016 Common stock awards issued and outstanding 5,564,635 5,483,557 Authorized for future issuance under 2014 Equity Incentive Plan 1,723,733 1,576,926 Authorized for future issuance under 2016 Inducement Plan 188,715 334,062 Employee stock purchase plan 693,856 532,849 Total 8,170,939 7,927,394 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION Stock Compensation Plans In October 2002, the Company established its 2002 Employee, Director, and Consultant Stock Plan and in December 2007, the Company established its 2007 Stock Plan. No further grants were then made under the 2002 Plan. In February 2014, the Company’s board of directors adopted, and in March 2014 the Company’s stockholders approved, the 2014 Equity Incentive Plan (the “2014 Plan”), which became effective on the completion of the IPO. No further grants were then made under the 2007 Plan. Under the 2014 Plan, 1,993,394 shares of the Company’s common stock were made available for issuance which included all shares that, as of the effective time, were reserved for issuance pursuant to the 2007 Plan, and is subject to further increase for shares that were subject to outstanding options under the 2007 Plan and the 2002 Plan as of the effective time that thereafter expire, terminate, or otherwise are forfeited or reacquired. The number of shares of the Company’s common stock reserved for issuance pursuant to the 2014 Plan will automatically increase on the first day of each fiscal year for a period of up to 10 years , commencing on the first day of the fiscal year following 2014, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding fiscal year, or a lesser number of shares as determined by the Company’s board of directors. For 2017 , 2016 , and 2015 , the common stock available for issuance under the 2014 Plan increased by 880,362 , 739,708 , and 701,763 shares of common stock, respectively. As of December 31, 2017 , the number of shares available for issuance under the 2014 Plan was 1,723,733 . Options granted under the 2014 Stock Plan may have terms of up to ten years. All options issued to date have had a ten year life. The exercise price of an ISO shall not be less than 100% of the estimated fair value of the shares on the date of grant, as determined by the board of directors. The exercise price of an ISO and NSO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, respectively, as determined by the board of directors. The exercise price of a NSO shall not be less than the par value per share of common stock. The options granted generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48th per month thereafter. Restricted stock units granted vest at a rate of 25% per year over four years. In March 2016, the Company’s board of directors approved the 2016 Inducement Plan (the “Inducement Plan”) under which 450,000 shares of the Company’s common stock were made available for issuance. In January 2017, an amendment to the Inducement Plan was approved to increase the number of shares available for issuance an additional 450,000 shares for a total of 900,000 shares. Options granted under the Inducement Plan may have terms of up to ten years. All options issued to date have had a ten year life. Consistent with the 2014 Plan, options granted generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48th per month thereafter. Restricted stock units granted vest at a rate of 25% per year over four years. The Inducement Plan was adopted by the board of directors without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. Stock Option Activity The stock option and related activity under all of the Company’s stock compensation plans is summarized as follows: Outstanding Options Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands) Number of Shares Weighted Average Exercise Price Stock Options Balances, December 31, 2016 5,270,196 $ 9.60 Options granted 1,444,675 18.87 Options exercised (1,183,353 ) 7.63 Options forfeited (383,243 ) 16.42 Options expired (10,691 ) 20.29 Balances, December 31, 2017 5,137,584 $ 12.12 6.48 $ 111,981 Vested and expected to vest, December 31, 2017 4,991,486 $ 11.99 6.43 $ 109,438 Exercisable, December 31, 2017 3,363,191 $ 9.01 5.31 $ 83,688 The aggregate intrinsic value of options outstanding, vested and expected to vest, and exercisable were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of December 31, 2017 of $33.89 . The intrinsic value of options exercised, calculated as the difference between the exercise price and the fair value of the Company’s common stock on the date of exercise, was approximately $18.1 million , $6.6 million , and $6.6 million for the years ended December 31, 2017 , 2016 , and 2015 , respectively. During the years ended December 31, 2017 , 2016 , and 2015 , the Company granted stock options to employees to purchase 1,439,675 , 1,030,375 , and 917,150 shares of common stock, respectively, with a weighted-average grant date fair value of $11.93 , $9.15 , and $11.47 , respectively. As of December 31, 2017 , there was total unrecognized compensation cost related to unvested options of approximately $21.4 million . This cost is expected to be recognized over a period of 2.6 years . The total fair value of employee stock options vested for the years ended December 31, 2017 , 2016 , and 2015 was $10.6 million , $8.4 million and $10.0 million , respectively. Restricted Stock Unit Activity The restricted stock unit and related activity under all of the Company’s stock compensation plans is summarized as follows: Outstanding Units Weighted-Average Restricted Stock Units Number of Shares Unvested, December 31, 2016 213,361 $ 14.66 Granted 349,896 19.97 Vested (64,471 ) 14.96 Forfeited (71,735 ) 16.13 Unvested, December 31, 2017 427,051 $ 18.72 The aggregate intrinsic value of RSUs outstanding on December 31, 2017 was $14.5 million based on the fair value of the Company’s common stock on that date. The aggregate intrinsic value of RSUs vested was approximately $1.2 million for the year ended December 31, 2017 and zero for both years ended December 31, 2016 and 2015 . As of December 31, 2017 , there was total unrecognized compensation cost related to unvested RSUs of approximately $7.0 million . This cost is expected to be recognized over a period of 3.4 years . Employee Stock Purchase Plan In February 2014, the Company’s board of directors adopted and, in March 2014, the Company’s stockholders approved, the 2014 Employee Stock Purchase Plan (the “ESPP”), which became effective on the completion of the Company’s IPO. The ESPP authorized the issuance of 262,762 shares. Under the ESPP, employees, subject to certain restrictions, may purchase shares of common stock at 85% of the fair market value at either the beginning of the offering period or the date of purchase, whichever is less. Purchases are limited to the lesser of 15% of each employee’s eligible annual compensation or $25,000 . Through the end of 2017 , the Company has issued a total of 149,363 shares under the ESPP. The number of shares available for future issuance under the plan were 693,856 at December 31, 2017 . Beginning January 1, 2015 and continuing through and including January 1, 2024, the amount of common stock reserved for issuance under the ESPP will increase annually on that date by the lesser of (i) one percent ( 1% ) of the total number of shares of common stock outstanding on such December 31, (ii) 520,000 shares of common stock, or (iii) a number of shares as determined by the board of directors prior to the beginning of each year, which shall be the lesser of (i) or (ii) above. For 2017 , 2016 , and 2015 , the common stock available for issuance under the ESPP increased by 220,090 , 184,927 , and 175,440 shares of common stock, respectively. Stock-Based Compensation Expense The following table reflects stock-based compensation expense recognized for the years ended December 31, 2017 , 2016 , and 2015 (in thousands): Years Ended December 31, 2017 2016 2015 Research and development $ 3,597 $ 2,855 $ 3,156 Selling, general and administrative 9,770 7,716 6,800 Total stock-based compensation expense $ 13,367 $ 10,571 $ 9,956 Stock-based compensation of $39,000 was capitalized into inventory for the twelve months ended December 31, 2017 . Stock-based compensation capitalized into inventory is recognized as cost of sales when the related product is sold. The Company’s method of valuation for share-based awards is based on the Black-Scholes model. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. A description of the assumptions follows: • The expected stock price volatility assumption was determined by examining the historical volatilities of a group of industry peers, as well as taking into consideration the Company’s own historical volatility since its IPO in 2014. • The risk-free interest rate is based on the U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. • The expected term of the options granted represents the average period the stock options are expected to remain outstanding. The Company has elected to use the “simplified method” for estimating the expected term, which is calculated as the mid-point between the vesting period and the contractual term of the options. • The expected dividend yield assumption was based on the Company’s historical and expectation of dividend payouts. • Determination of the fair value of the shares of common stock underlying the stock options historically has been the responsibility of the Company’s board of directors. Subsequent to the IPO in April 2014, the fair value of common stock is determined based on the closing price of the Nasdaq Global Market. As stock-based compensation expense recognized in the Consolidated Statement of Operations for fiscal years 2017 , 2016 , and 2015 is based on awards ultimately expected to vest, each has been reduced for estimated forfeitures, based on historical experience. ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimated the fair value of employee stock options and ESPP shares on the date of grant using the Black-Scholes model with the following weighted-average assumptions: Years Ended December 31, 2017 2016 2015 Stock Options Expected price volatility 68% - 70% 69% - 71% 68% - 80% Risk-free interest rate 1.83% - 2.17% 1.23% - 1.81% 1.37% - 1.95% Expected term (in years) 5.50 - 6.25 5.50 - 6.25 5.50 - 6.25 Dividend yield — — — Years Ended December 31, 2017 2016 2015 Employee Stock Purchase Plan Expected price volatility 51% - 71% 68% - 73% 56% - 62% Risk-free interest rate 0.60% - 1.45% 0.49% - 0.60% 0.07% - 0.41% Expected term (in years) 0.50 0.50 0.50 Dividend yield — — — Stock-based compensation expense related to employee stock options for the years ended December 31, 2017 , 2016 , and 2015 was $11.2 million , $9.3 million , and $8.7 million , respectively. Stock-based compensation expense related to the ESPP plan for the years ended December 31, 2017 , 2016 , and 2015 was $0.3 million , $0.3 million , and $0.2 million , respectively. Stock-based compensation expense related to restricted stock units was $1.3 million , $0.5 million , and zero for the years ended December 31, 2017 , 2016 and 2015 , respectively. Non-Employee Stock-Based Compensation The Company granted 5,000 options to purchase common stock and 12,437 restricted stock units to consultants during the year ended December 31, 2017 , 12,600 options to purchase common stock during the year ended 2016 , and zero shares during the year ended 2015 . These restricted stock units and options are granted in exchange for consulting services to be rendered and are measured and recognized as they are earned. Options issued during the year ended 2016 were granted to a member of the Company’s board of directors. The Company believes that the estimated fair value of the restricted stock units and stock options is more readily measurable than the fair value of the services rendered. The Company estimated the fair value of non-employee stock options using the Black-Scholes model with the following weighted-average assumptions: Years Ended December 31, 2017 2016 2015 Expected price volatility 68% - 80% 71% - 77% 76% - 82% Risk-free interest rate 1.94% - 2.36% 1.47% - 2.46% 1.84% - 2.26% Expected term (in years) 6.00 - 9.75 7.00 - 9.75 8.00 - 9.00 Dividend yield — — — Compensation expense related to non-employee restricted stock units and options for years ended December 31, 2017 , 2016 , and 2015 was approximately $0.6 million , $0.5 million , and $1.1 million , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Loss before provision for income tax is summarized as follows (in thousands): Year Ended December 31, 2017 2016 2015 United States $ (91,220 ) $ (60,147 ) $ (57,074 ) International — (26 ) — Total $ (91,220 ) $ (60,173 ) $ (57,074 ) The provision for income taxes is summarized as follows (in thousands): December 31, 2017 2016 2015 Current: Federal $ (1,730 ) $ (116 ) $ (5,273 ) State — 1 1 Foreign — — — (1,730 ) (115 ) (5,272 ) Deferred: Federal — — — State — — — Foreign — — — — — — Benefit for income taxes $ (1,730 ) $ (115 ) $ (5,272 ) The provision for income taxes differs from the amount computed by applying the federal income tax rate of 35% to pretax loss from operations as a result of the following: December 31, 2017 2016 2015 Statutory federal income tax rate $ (31,927 ) $ (21,079 ) $ (19,976 ) State income taxes, net of federal tax benefits (5,041 ) (9 ) 1 Foreign rate differential — 10 — Tax credits (2,306 ) (3,905 ) (8,303 ) Impact of federal rate change 24,907 — — Net operating loss carryback — — 4,099 Change in statutory rates (1,440 ) 624 — Stock compensation (2,558 ) (1,109 ) 821 State net operating losses 633 1,779 — Other — 109 1,330 Change in valuation allowance 16,002 23,465 16,756 Income tax provision $ (1,730 ) $ (115 ) $ (5,272 ) Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 31, 2017 2016 Net operating loss carryforwards $ 44,177 $ 29,102 Research and development tax credits 16,189 14,453 Accruals and reserves 371 395 Stock compensation 6,244 6,902 Depreciation and amortization 1,638 1,765 Total deferred tax assets 68,619 52,617 Less: Valuation allowance (68,619 ) (52,617 ) Net deferred tax assets $ — $ — The deferred income tax assets have been fully offset by a valuation allowance, as realization is dependent on future earnings, if any, the timing and amount of which are uncertain. The net valuation allowance increased by $16.0 million and $23.5 million for the years ended December 31, 2017 and 2016 , respectively. The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of its net deferred tax assets. The Company primarily considered such factors as its history of operating losses, the nature of the Company’s deferred tax assets, and the timing, likelihood, and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. The Tax Act repealed corporate alternative minimum tax (“AMT”) for tax years beginning after December 31, 2017, and provides that existing AMT credit carryovers are refundable beginning in 2018 through 2022. The Company has approximately $1.7 million of AMT credit carryovers that are fully refunded by 2022 and therefore the deferred tax asset has been reclassed to an income tax receivable. As for the remaining deferred tax assets, the Company does not believe that it is more likely than not that the deferred tax assets will be realized; accordingly, a full valuation allowance has been established and no deferred tax asset is shown in the accompanying balance sheets. As of December 31, 2017 , and December 31, 2016 , the Company had federal net operating loss carryforwards of approximately $163.3 million and $73.0 million , respectively, available to reduce future taxable income. The Company also had state net operating loss carryforwards of approximately $131.3 million and $61.8 million as of December 31, 2017 and December 31, 2016 , respectively. The federal net operating loss carryforward begins expiring in 2025, and the non-utilized state net operating loss carryforward began expiring in 2016. In the year ended December 31, 2017 , $11.0 million of California net operating loss carryforwards expired. The Company has federal research and development tax credit carryforwards of approximately $3.5 million . If not utilized, the carryforwards will begin expiring in 2024. The Company has state research and development credit carryforwards of approximately $3.2 million which do not expire. The Company also has orphan drug credit carryforwards of $13.5 million . Under federal and similar state tax statutes, changes in the Company’s ownership may limit its ability to use its available net operating loss and tax credit carryforwards. The annual limitation, as a result of a change of control, may result in the expiration of net operating losses and credits before utilization. The Company’s ability to use its remaining net operating loss and tax credit carryforwards may be further limited if the Company experiences a Section 382 ownership change in connection with future changes in its stock ownership. Uncertain Tax Positions The total amounts of unrecognized tax benefits for the years ended December 31, 2017 , 2016 , and 2015 were $4.0 million , $3.2 million , and $1.8 million , respectively. If recognized, none of the unrecognized tax benefits would affect the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): December 31, 2017 2016 2015 Balance at the beginning of the year $ 3,188 $ 1,820 $ 2,608 Additions based on prior period tax positions 43 93 980 Additions based on current period tax positions 803 1,275 — Reductions based on prior period tax positions — — (1,768 ) Balance at the end of the year $ 4,034 $ 3,188 $ 1,820 The Company’s policy is to account for interest and penalties as income tax expense. The Company accrued no interest related to unrecognized tax benefits during the years ended December 31, 2017 , 2016 , and 2015 . The Company files income tax returns in the U.S. federal jurisdiction, California, other state jurisdictions, and India. The Company is subject to U.S. federal income tax examination for the calendar years ending 2002 through 2017 due to net operating losses that have been carried forward for tax purposes. Additionally, the Company is subject to state income tax examinations for the 2006 through 2017 calendar years due to net operating losses that are being carried forward for tax purposes. The Company is subject to audit by the Indian tax authorities from 2014 onward. The Company is not currently under audit in any major tax jurisdiction. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent for tax years beginning after December 31, 2017. Pursuant to the SEC Staff Accounting Bulletin No. 118, “Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (“SAB 118”), a company may select between one of three scenarios to determine a reasonable estimate arising from the Tax Act. Those scenarios are (i) a final estimate which effectively closes the measurement window; (ii) a reasonable estimate leaving the measurement window open for future revisions; and (iii) no estimate as the law is still being analyzed. The Company was able to provide a reasonable estimate for the revaluation of deferred taxes by recording a net tax provision of $24.9 million in the period ending December 31, 2017, which is offset by a full valuation allowance. This reasonable estimate will leave the measurement window open for up to one year. This tax expense is primarily due to the corporate rate reduction. The Company has also recorded a tax benefit of $1.7 million for the AMT credits which are refundable in tax year 2018 through 2022. |
Net Loss per Share
Net Loss per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | NET LOSS PER SHARE A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share is as follows (in thousands, except per share data): December 31, 2017 2016 2015 Historical net loss per share Numerator: Net loss, basic and diluted $ (89,490 ) $ (60,058 ) $ (51,802 ) Denominator: Weighted average common shares outstanding, basic and diluted 22,558 21,711 18,116 Less: weighted average unvested common shares subject to repurchase — — (5 ) Weighted average common shares used in calculating net loss per share, basic and diluted 22,558 21,711 18,111 Net loss per share, basic and diluted $ (3.97 ) $ (2.77 ) $ (2.86 ) The following shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented, because including them would have been anti-dilutive (in thousands): December 31, 2017 2016 2015 Options to purchase common stock 5,940 5,523 5,249 Total 5,940 5,523 5,249 |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table represents certain unaudited quarterly information for the eight quarters ended December 31, 2017 . This data has been derived from unaudited consolidated financial statements that, in the opinion of the Company’s management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such information when read in conjunction with the Company’s annual audited consolidated financial statements and notes thereto appearing elsewhere in this report. These operating results are not necessarily indicative of results for any future period (in thousands, except per share data): Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Total net revenues $ — $ 2 $ 1 $ 568 (1) Gross profit(2) — — — 551 Net loss (16,028 ) (20,745 ) (23,360 ) (29,357 ) Net loss per share, basic and diluted (0.72 ) (0.93 ) (1.04 ) (1.27 ) Year Ended December 31, 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Total net revenues $ 175 $ 222 $ 138 $ 37 Gross profit — — — — Net loss (13,828 ) (16,876 ) (14,394 ) (14,960 ) Net loss per share, basic and diluted (0.65 ) (0.78 ) (0.66 ) (0.68 ) (1) In the fourth quarter of 2017 the Company commenced commercial sales of GOCOVRI. (2) Gross profit is computed by subtracting cost of product sales from product sales, net. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On January 16, 2018, the Company amended its lease agreement with KBSIII Towers at Emeryville, LLC to extend its lease until April 30, 2025, and relocate the Company within its current building from the seventh to the tenth and eleventh floors, containing approximately 37,626 rentable square feet. The relocation of the Company is expected to occur no later than the second quarter of 2018. Upon relocation, the Company shall pay a base rent of $159,911 per month for the first twelve months, with the monthly rent increasing approximately $5,000 per month in each subsequent year until the expiration of the lease. On January 26, 2018 , the Company completed a follow-on public offering of 3,450,000 shares of its common stock, which includes the exercise in full by the underwriters of their option to purchase 450,000 shares of common stock, at an offering price of $41.50 per share. Proceeds from the follow-on public offering were approximately $134.1 million , net of underwriting discounts, commissions, and offering-related transaction costs. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Use of Estimates | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses in the consolidated financial statements and the accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, clinical trial accruals, fair value of assets and liabilities including short-term and long-term classification, embedded derivatives, income taxes, and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates. |
Liquidity and Financial Condition | Liquidity and Financial Condition To date, a significant portion of the Company’s resources have been dedicated to the research and development of its products. The Company made GOCOVRI available for physician and patient use in the fourth quarter of 2017, with a full commercial launch via the deployment of the Company’s sales team in January 2018. Prior to the generation of revenue from GOCOVRI, the Company had not generated any commercial revenue from the sale of its products. Based upon the current status of, and plans for, its product development and commercialization, the Company believes that the existing cash, cash equivalents, and investments of $ 176.4 million as of December 31, 2017 , will be adequate to satisfy the Company’s capital needs through at least the next twelve months from the issuance of this annual report on Form 10-K. However, the process of developing and commercializing products requires significant research and development, preclinical testing and clinical trials, manufacturing arrangements, as well as regulatory approvals. These activities, together with the Company’s selling, general and administrative expenses, are expected to result in significant operating losses until the commercialization of the Company’s products or license agreements generate sufficient revenue to offset expenses. Under its license agreement with Allergan, the Company received the final milestone payment in 2014, and is not entitled to receive any royalties for net sales of Namzaric ® until mid-2020. Although the Company is eligible to receive royalties on net sales of Namenda XR ® in mid-2018, it does not expect to receive such royalties because of the potential entry of generic versions of Namenda XR. |
Inventory | Inventory Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method. Inventory consists of raw materials, work-in-process, and GOCOVRI finished goods. Raw materials and work-in-process that may be utilized for both commercial and clinical programs are identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance and are included in inventory. Amounts in inventory associated with clinical development programs are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have “alternative future use”. Costs include active pharmaceutical ingredient (API), third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. If the Company identifies excess, obsolete or unsalable product, the Company will write down its inventory to its net realizable value in the period it is identified. To date, the Company has determined that a reserve for potentially excess, obsolete or unsalable inventory is not required. The Company begins capitalizing costs as inventory when the product candidate receives regulatory approval. Prior to regulatory approval, inventory costs related to product candidates are recorded as research and development expense. The Company received FDA approval for GOCOVRI on August 24, 2017, and began capitalizing inventory manufactured at the FDA approved location, after FDA approval. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities, when purchased, of less than three months. |
Investments | Investments The Company classifies its investments as “available-for-sale.” In general, these investments are free of trading restrictions. The Company carries these investments at fair value, based on quoted market prices or other readily available market information. Quoted market prices for U.S. government and corporate bonds include both principal and accrued interest components. Unrealized gains and losses are included in accumulated other comprehensive income, which is reflected as a separate component of stockholders’ equity in its Consolidated Balance Sheets. Gains and losses are recognized when realized in its Consolidated Statements of Income. When the Company determines that an other-than-temporary decline in fair value has occurred, the amount of the decline that is related to a credit loss is recognized in income. Gains and losses are determined using the specific identification method. The Company considers all marketable debt securities with a maturity of less than one year to be short-term investments, with all others considered to be long-term investments. All of the Company’s available-for-sale securities are subject to a periodic impairment review. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investments’ fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, extent of the loss related to credit of the issuer, the expected cash flows from the security, its intent to sell or hold the security, and whether or not the Company will be required to sell the security before the recovery of its amortized cost. |
Consolidation | Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. |
Segment | Segments In accordance with ASC 280-10-50, Segment Reporting, 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 operates in one reportable segment: the development and commercialization of therapeutics targeting chronic disorders of the central nervous system. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when all four of the following criteria have been met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the fee is fixed or determinable, and (iv) collectability is reasonably assured. Revenue under license arrangements is recognized based on the performance requirements of the contract. Determinations of whether persuasive evidence of an arrangement exists and whether delivery has occurred or services have been rendered are based on management’s judgments regarding the fixed nature of the fees charged for deliverables and the collectability of those fees. Should changes in conditions cause management to determine that these criteria are not met for any new or modified transactions, revenue recognized could be adversely affected. Product sales, net The Company’s product sales, net, consist of U.S. sales of GOCOVRI and is recognized once all four revenue recognition criteria described above have been met. GOCOVRI was approved by the FDA on August 24, 2017 and the Company commenced shipments of GOCOVRI to a specialty pharmacy (SP) during October 2017. The SP dispenses product to a patient based on the fulfillment of a prescription. The Company’s agreement with its SP provides for transfer of title to the product at the time the product is delivered to the SP. In addition, except for limited circumstances, the SP has no right of product return to the Company. The Company has determined it can reasonably estimate its allowances for rebates and returns at the time title and risk of loss transfers to the SP. Therefore, the Company records revenue when the product is delivered to the SP, which is an approach frequently referred to as the “sell-in” revenue recognition model. The Company recognizes revenue from product sales net of the following allowances at the time of revenue recognition: Distribution fees : Distribution fees include fees paid to the SP for data and prompt payment discounts. Distribution fees are recorded as an offset to revenue based on contractual terms. Rebates : Rebates include mandated discounts under the Medicaid Drug Rebate Program, Medicare Part D Prescription Drug Benefit Program, and TRICARE Retail Pharmacy Refunds Program (TRICARE). Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or statutory requirements with benefit providers. The allowance for rebates is estimated based on statutory discount rates and expected utilization at the time of sale. The Company estimates for expected utilization of rebates based on data received from the SP. The allowance for rebates is adjusted quarterly to reflect actual experience. Product Returns : Consistent with industry practice, the Company offers limited product return rights. The Company generally allows for the return of product that is damaged or defective, and within a few months prior to and up to a few months after the product expiration date. The Company does not allow product returns for product that has been dispensed to a patient. The Company considers several factors in the estimation of potential product returns, including, expiration dates of the product shipped, the limited product return rights, third-party data in monitoring channel inventory levels, shelf life of the product, prescription trends, and other relevant factors. Medicare Part D coverage gap : Medicare Part D coverage gap is a federal program to subsidize the costs of prescription drugs for Medicare beneficiaries in the United States, which mandates manufacturers to fund a portion of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Funding of the coverage gap is generally invoiced and paid in arrears. Medicare Part D coverage gap is accrued at the time of sale based on an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters and is adjusted quarterly based on actual experience. Co-payment assistance : The Company provides co-payment assistance to patients who have commercial insurance and meet certain eligibility requirements. Co-payment assistance is accrued based on actual program participation and estimates of program redemption using data provided by third-party administrators. Each of the above adjustments are recorded at the time of revenue recognition, resulting in a reduction in product sales, net, and an increase in accrued expenses or a reduction in accounts receivable, net. The above adjustments require significant estimates, judgment and information obtained from external sources. If management's estimates differ from actuals, the Company will record adjustments that would affect product sales, net in the period of adjustment. License agreement revenue The Company generates revenue from collaboration and license agreements for the development and commercialization of products. Collaboration and license agreements may include non-refundable upfront license fees, partial or complete reimbursement of research and development costs, contingent consideration payments based on the achievement of defined objectives, and royalties on sales of commercialized products. The Company’s performance obligations under the collaboration and license agreements may include the license or transfer of intellectual property rights, obligations to provide research and development services and related materials, and obligations to participate on certain development and/or commercialization committees with the partners. For revenue agreements with multiple-element arrangements, the Company allocates revenue to each non-contingent element based on the relative-selling-price of each element in an arrangement. When applying the relative-selling-price method, the Company determines the selling price for each deliverable using the following estimation hierarchy: (i) vendor-specific objective evidence of fair value of the deliverable, if it exists, (ii) third-party evidence of selling price, if vendor-specific objective evidence is not available, or (iii) the vendor’s best estimate of selling price, if neither vendor-specific nor third-party evidence is available. Revenue allocated is then recognized when the four basic revenue recognition criteria, mentioned above, are met for each element. The Company recognizes payments that are contingent upon achievement of a substantive milestone in their entirety in the period in which the milestone is achieved. Milestones are defined as events that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones subject to this guidance. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Amounts related to research and development funding and full-time equivalent employees assigned to the license agreement are recognized as the related services or activities are performed, in accordance with the contract terms. |
Cost of Product Sales | Cost of Product Sales Cost of product sales consists primarily of direct and indirect costs related to the manufacturing of GOCOVRI products sold, including third-party manufacturing costs, packaging services, freight, and allocation of overhead costs. Cost of product sales may also include period costs related to certain inventory manufacturing services, inventory adjustment charges, as well as manufacturing variances. In connection with the FDA approval of GOCOVRI on August 24, 2017, the Company began capitalizing inventory manufactured at the FDA approved location starting in August 2017. Prior to receiving regulatory approval for GOCOVRI from the FDA, the Company expensed all costs incurred in the manufacture of GOCOVRI as research and development. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and short and long-term investments. Cash, cash equivalents, and investments are deposited with financial institutions or invested in security issuers that management believes are credit worthy. Deposits may, at times, exceed the amount of insurance provided on such deposits. To date, the Company has not experienced any losses on invested cash and cash equivalents. |
Risk and Uncertainties | Risk and Uncertainties The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, uncertainty of results of clinical trials and reaching milestones, uncertainty of market acceptance of the Company’s products, competition from substitute products and larger companies, protection of proprietary technology, strategic relationships, and dependence on key individuals. Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the products will receive the necessary approvals. If the Company is denied approval, approval is delayed, or the Company is unable to maintain approval, it could have a materially adverse impact on the Company. The Company has expended and will continue to expend substantial funds to conduct research, development, and clinical testing of its product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. The Company may require additional funds to conduct research and development activities and commercialize its products. Additional funds may not be available on acceptable terms, if at all. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs or alter its product commercialization plans, which may materially and adversely affect its business, financial condition, and operations. |
Accounts Receivable, net | Accounts Receivable, net The Company’s accounts receivable balance consists of amounts due from sales of GOCOVRI and amounts due from Allergan, in accordance with the contract terms of the license agreement. Receivables from sales of GOCOVRI are recorded net of allowances which generally include chargebacks, distribution fees, doubtful accounts, and discounts. Allergan receivables are for research and development funding and full-time equivalent employees assigned to the Allergan license agreement, as well as for reimbursement of external costs, recorded as contra-expense, associated with supporting prosecution and litigation of intellectual property rights. The Company’s estimate of the allowance for doubtful accounts is based on an evaluation of the aging of its receivables. Accounts receivable balances are written off against the allowance when it is probable that the receivable will not be collected. To date, the Company has determined that an allowance for doubtful accounts is not required. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Maintenance and repairs are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operations in the period realized. Estimated useful lives by major asset category are as follows: Useful Lives Computer equipment and software 3 years Equipment 5 years Furniture and fixtures 10 years |
Leases | Leases At the inception of a lease, the Company evaluates the lease agreement to determine whether the lease is an operating, capital or build-to-suit lease using the criteria in ASC 840, “Leases.” Certain lease agreements also require the Company to make additional payments for taxes, insurance, and other operating expenses incurred during the lease period, which are expensed as incurred. For operating leases, the Company recognizes rent expense on a straight-line basis over the lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred liability. Where lease agreements contain rent escalation clauses, rent abatements and/or concessions, such as rent holidays and tenant improvement allowances, the Company applies them in the determination of straight-line expense over the lease term. |
Accounting for Long-Lived Assets | Accounting for Long-Lived Assets The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by the comparison of the carrying amount to the future net cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. |
Clinical Trial Accruals | Clinical Trial Accruals The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites, as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and contract research organizations (“CROs”) that conduct and manage clinical trials on the Company’s behalf. The Company estimates clinical trial expenses based on the services performed pursuant to contracts with research institutions and CROs that conduct and manage clinical trials on its behalf. In accruing service fees, the Company obtains the reported level of patient enrollment at each site and estimates the time period over which services are to be performed and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered. |
Research and Development | Research and Development Research and development (“R&D”) expenses include salaries and related compensation, contractor and consultant fees, external clinical trial expenses performed by CROs, licensing fees, acquired intellectual property with no alternative future use, and facility and administrative expense allocations. In addition, the Company funds R&D at research institutions under agreements that are generally cancelable at its option. Research costs typically consist of applied research and preclinical and toxicology work. Pharmaceutical manufacturing development costs consist of pre-approval inventory purchases, product formulation, chemical analysis, and the transfer and scale-up of manufacturing at facilities operated by the Company’s contract manufacturers. Clinical development costs include the costs of Phase 1, Phase 2, and Phase 3 clinical trials. These costs are a significant component of the Company’s research and development expenses. The Company accrues costs for clinical trial activities performed by CROs and other third parties based upon the estimated amount of work completed on each study as provided by the CRO. These estimates are reviewed for reasonableness by the Company’s internal clinical personnel, and the Company aims to match the accrual to actual services performed by the organizations as determined by patient enrollment levels and related activities. The Company monitors patient enrollment levels and related activities using available information; however, if the Company underestimates activity levels associated with various studies at a given point in time, the Company could be required to record significant additional R&D expenses in future periods when the actual activity level becomes known. The Company charges all such costs to R&D expenses. Non-refundable advance payments are capitalized and expensed as the related goods are delivered or services are performed. |
Long-Term Debt | Long-Term Debt Long-term debt consists of the Company’s loan agreement with HealthCare Royalty Partners (“HCRP”). The Company accounted for the loan agreement as a debt financing arrangement. Interest expense is accrued using the effective interest rate method over the estimated period the debt will be repaid. Debt issuance costs have been recorded as a debt discount in the Company’s consolidated balance sheets and are being amortized and recorded as interest expense throughout the life of the loan using the effective interest rate method. The Company must make certain assumptions and estimates, including future royalties and net product sales, in determining the expected repayment term and amortization period of the debt discount, as well as the classification between current and long-term portions. The Company periodically assesses these assumptions and estimates, and adjusts the liabilities accordingly. See Note 9 for further details of the Company’s long-term debt. |
Embedded Derivatives Related to Debt Instruments | Embedded Derivatives Related to Debt Instruments Embedded derivatives that are required to be bifurcated from their host contract are evaluated and valued separately from the debt instrument. Under the Company’s loan agreement with HCRP, upon the occurrence of a default or a change in control, the Company may be required to make mandatory prepayments of the borrowings. The prepayment premium is considered an embedded derivative, as the holder of the loans may exercise the option to require prepayment by the Company. Further, in the event of a regulatory change that results in a material adverse effect on HCRP’s rate of return, the Company shall pay directly to HCRP an amount that compensates HCRP for such reduction. The embedded derivative is presented as a component of other non-current liabilities. The Company will remeasure the embedded derivatives each reporting period and report changes in the estimated fair value as gains or losses in interest and other income, net, in the condensed consolidated statement of operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, short-term investments, accounts receivable, long-term investments and other current assets, other assets, accounts payable, accrued liabilities approximate fair value due to the short-term nature or determinable value of these items. See also Note 4 for further details of the Company’s fair value instruments. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability approach. Under this method, 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 affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company follows the provisions of ASC 740, Income Taxes, under which it assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available. |
Basic and Diluted Net Loss Per Share | Basic and Diluted Net Loss Per Share Basic net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common shares outstanding and dilutive common stock equivalents outstanding during the period. Common stock equivalents are options granted under the Company’s stock awards plans and are calculated under the treasury stock method. Common equivalent shares from unexercised stock options and unvested restricted stock units are excluded from the computation when there is a loss as their effect is anti-dilutive, or if the exercise price of such options is greater than the average market price of the stock for the period. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation of stock options granted to employees and directors and for employee stock purchase plan shares by estimating the fair value of stock-based awards using the Black-Scholes option-pricing model. The Company accounts for stock-based compensation of restricted stock units granted to employees based on the closing price of the Company’s common stock on the date of grant. The fair value of stock-based awards, net of estimated forfeitures, is recognized and amortized over the applicable vesting period. All stock options awarded to non-employees are accounted for at the fair value of the consideration received or the fair value of the equity instrument issued, as calculated using the Black-Scholes model. Stock options granted to non-employees are subject to periodic revaluation at each reporting date as the underlying equity instruments vest. In order to estimate the value of share-based awards, the Company uses the Black-Scholes model, which requires the use of certain subjective assumptions. The most significant subjective assumptions are management’s estimates of the expected volatility and the expected term of the award. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from any of these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers . The amendment in this ASU provides guidance on the revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The core principle of this update provides guidance to identify the performance obligations under the contract(s) with a customer and how to allocate the transaction price to the performance obligations in the contract. It further provides guidance to recognize revenue when (or as) the entity satisfies a performance obligation. This standard will replace most existing revenue recognition guidance. On July 9, 2015, the FASB approved a one-year deferral of the effective date of this standard to 2018 for public companies, with an option that would permit companies to adopt the standard as early as the original effective date of 2017. Early adoption prior to the original effective date is not permitted. Since the issuance of ASU 2014-09, the FASB has issued several amendments which clarify certain points, including ASU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) ; ASU 2016-10, Identifying Performance Obligations and Licensing ; ASU 2016-11, Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting ; ASU 2016-12, Narrow-Scope Improvements and Practical Expedients ; ASU 2016-20 , Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers ; and ASU 2017-14, Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from contracts with Customers (Topic 606) . The Company will adopt the new standard in the first quarter of fiscal year 2018 using the full retrospective method. The Company has evaluated the effect the new guidance will have on its consolidated financial statements and expects the adoption of this guidance to have no material impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases . The authoritative guidance significantly amends the current accounting for leases. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) a financing lease or (ii) an operating lease. Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases. For sale leaseback transactions, a sale will only be recognized if the criteria in the new revenue recognition standard are met. For public business entities, this guidance is effective for fiscal periods beginning after December 15, 2018 and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments. The new guidance changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. This guidance is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation (Topic 718) – Scope of Modification Accounting. The new guidance clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. This guidance is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of the new guidance to have a material impact on its consolidated financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of estimated useful lives by major asset category | Estimated useful lives by major asset category are as follows: Useful Lives Computer equipment and software 3 years Equipment 5 years Furniture and fixtures 10 years Property and equipment, net (in thousands) December 31, 2017 2016 Computer equipment and software $ 3,289 $ 2,128 Equipment 252 252 Furniture and fixtures 466 466 Leasehold improvements 1,645 1,645 5,652 4,491 Less: Accumulated depreciation and amortization (2,520 ) (1,335 ) Property and equipment, net $ 3,132 $ 3,156 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets (in thousands) December 31, 2017 2016 Prepaid expenses $ 2,638 $ 1,316 Income tax receivable 1,007 168 Other current assets 17 1,057 Prepaid expenses and other current assets $ 3,662 $ 2,541 |
Schedule of property and equipment, net | Estimated useful lives by major asset category are as follows: Useful Lives Computer equipment and software 3 years Equipment 5 years Furniture and fixtures 10 years Property and equipment, net (in thousands) December 31, 2017 2016 Computer equipment and software $ 3,289 $ 2,128 Equipment 252 252 Furniture and fixtures 466 466 Leasehold improvements 1,645 1,645 5,652 4,491 Less: Accumulated depreciation and amortization (2,520 ) (1,335 ) Property and equipment, net $ 3,132 $ 3,156 |
Schedule of accrued liabilities | Accrued liabilities (in thousands) December 31, 2017 2016 Accrued employee related costs $ 5,499 $ 3,696 Clinical trial accruals 1,720 1,041 Accrued consulting and other professional fees 4,897 864 Other 269 266 Accrued liabilities $ 12,385 $ 5,867 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis | The following table represents the fair value hierarchy for the Company’s financial assets and liabilities which require fair value measurement on a recurring basis (in thousands): December 31, 2017 Total Level 1 Level 2 Level 3 Assets: Money market $ 68,501 $ 68,501 $ — $ — Corporate debt 23,471 — 23,471 — U.S. Treasury notes 61,646 — 61,646 — Total assets measured at fair value $ 153,618 $ 68,501 $ 85,117 $ — Liabilities: Embedded derivative liability $ 470 $ — $ — $ 470 Total liabilities measured at fair value $ 470 $ — $ — $ 470 December 31, 2016 Total Level 1 Level 2 Level 3 Assets: Money market $ 192 $ 192 $ — $ — Corporate debt 51,233 — 51,233 — U.S. Treasury notes 60,976 — 60,976 — Total assets measured at fair value $ 112,401 $ 192 $ 112,209 $ — |
Roll forward of the financial instruments classified within Level 3 of the fair value hierarchy | The following table sets forth a summary of the changes in the estimated fair value of the Company’s embedded derivative, which is measured at fair value as a Level 3 liability on a recurring basis (in thousands): Balance as of December 31, 2016 $ — Issuance of long-term debt with embedded derivative 764 Change in fair value included in interest and other income, net (294 ) Balance as of December 31, 2017 $ 470 |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Summary of amortized cost, unrealized gain and loss and the fair value of available-for-sale securities | The following table is a summary of amortized cost, unrealized gain and loss, and the fair value of available-for-sale securities as of December 31, 2017 and 2016 (in thousands): December 31, 2017 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ 23,507 $ — $ (36 ) $ 23,471 U.S. Treasury notes 61,777 — (131 ) 61,646 Total $ 85,284 $ — $ (167 ) $ 85,117 Reported as: Short-term investments $ 82,280 $ (154 ) $ 82,126 Long-term investments 3,004 (13 ) 2,991 Total $ 85,284 $ — $ (167 ) $ 85,117 December 31, 2016 Gross Unrealized Gross Unrealized Amortized Cost Gains Losses Fair Value Investments: Corporate debt $ 51,354 $ — $ (121 ) $ 51,233 U.S. Treasury notes 61,048 5 (77 ) 60,976 Total $ 112,402 $ 5 $ (198 ) $ 112,209 Reported as: Short-term investments $ 90,050 $ 1 $ (134 ) $ 89,917 Long-term investments 22,352 4 (64 ) 22,292 Total $ 112,402 $ 5 $ (198 ) $ 112,209 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | The Company began capitalizing inventory in August 2017 once the FDA approved GOCOVRI. Inventory consists of the following (in thousands): December 31, 2017 December 31, 2016 Raw materials $ 859 $ — Work-in-process 817 — Finished goods 28 — Total inventory $ 1,704 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under a non-cancelable facility operating lease | As of December 31, 2017 , future minimum lease payments under the non-cancelable facility operating lease and non-cancelable purchase commitments were as follows (in thousands): December 31, 2017 2018 $ 3,782 2019 2,019 2020 591 2021 — 2022 — Thereafter — Total $ 6,392 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt and unamortized debt discount balances | Long-term debt and unamortized debt discount balances are as follows (in thousands): December 31, 2017 December 31, 2016 Loans payable, gross $ 100,000 $ — Less: Unamortized debt discount and issuance costs (1,747 ) — Plus: Unpaid portion of quarterly interest payment 4,394 — Carrying value of loans payable $ 102,647 $ — Less: Current portion of long-term debt — — Non-current portion of long-term debt $ 102,647 $ — |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Schedule of shares of Company's common stock reserved for future issuance | Shares of Company’s common stock reserved for future issuance are as follows: December 31, 2017 December 31, 2016 Common stock awards issued and outstanding 5,564,635 5,483,557 Authorized for future issuance under 2014 Equity Incentive Plan 1,723,733 1,576,926 Authorized for future issuance under 2016 Inducement Plan 188,715 334,062 Employee stock purchase plan 693,856 532,849 Total 8,170,939 7,927,394 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of activity under the company's stock option plans | The stock option and related activity under all of the Company’s stock compensation plans is summarized as follows: Outstanding Options Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (thousands) Number of Shares Weighted Average Exercise Price Stock Options Balances, December 31, 2016 5,270,196 $ 9.60 Options granted 1,444,675 18.87 Options exercised (1,183,353 ) 7.63 Options forfeited (383,243 ) 16.42 Options expired (10,691 ) 20.29 Balances, December 31, 2017 5,137,584 $ 12.12 6.48 $ 111,981 Vested and expected to vest, December 31, 2017 4,991,486 $ 11.99 6.43 $ 109,438 Exercisable, December 31, 2017 3,363,191 $ 9.01 5.31 $ 83,688 |
Schedule of restricted stock unit and related activity | The restricted stock unit and related activity under all of the Company’s stock compensation plans is summarized as follows: Outstanding Units Weighted-Average Restricted Stock Units Number of Shares Unvested, December 31, 2016 213,361 $ 14.66 Granted 349,896 19.97 Vested (64,471 ) 14.96 Forfeited (71,735 ) 16.13 Unvested, December 31, 2017 427,051 $ 18.72 |
Schedule of allocation of total stock-based compensation expense | The following table reflects stock-based compensation expense recognized for the years ended December 31, 2017 , 2016 , and 2015 (in thousands): Years Ended December 31, 2017 2016 2015 Research and development $ 3,597 $ 2,855 $ 3,156 Selling, general and administrative 9,770 7,716 6,800 Total stock-based compensation expense $ 13,367 $ 10,571 $ 9,956 |
Schedule of assumptions used to estimate fair value of stock options | The Company estimated the fair value of employee stock options and ESPP shares on the date of grant using the Black-Scholes model with the following weighted-average assumptions: Years Ended December 31, 2017 2016 2015 Stock Options Expected price volatility 68% - 70% 69% - 71% 68% - 80% Risk-free interest rate 1.83% - 2.17% 1.23% - 1.81% 1.37% - 1.95% Expected term (in years) 5.50 - 6.25 5.50 - 6.25 5.50 - 6.25 Dividend yield — — — Years Ended December 31, 2017 2016 2015 Employee Stock Purchase Plan Expected price volatility 51% - 71% 68% - 73% 56% - 62% Risk-free interest rate 0.60% - 1.45% 0.49% - 0.60% 0.07% - 0.41% Expected term (in years) 0.50 0.50 0.50 Dividend yield — — — The Company estimated the fair value of non-employee stock options using the Black-Scholes model with the following weighted-average assumptions: Years Ended December 31, 2017 2016 2015 Expected price volatility 68% - 80% 71% - 77% 76% - 82% Risk-free interest rate 1.94% - 2.36% 1.47% - 2.46% 1.84% - 2.26% Expected term (in years) 6.00 - 9.75 7.00 - 9.75 8.00 - 9.00 Dividend yield — — — |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary of loss before provision for income tax | Loss before provision for income tax is summarized as follows (in thousands): Year Ended December 31, 2017 2016 2015 United States $ (91,220 ) $ (60,147 ) $ (57,074 ) International — (26 ) — Total $ (91,220 ) $ (60,173 ) $ (57,074 ) |
Summary of income tax provision | The provision for income taxes is summarized as follows (in thousands): December 31, 2017 2016 2015 Current: Federal $ (1,730 ) $ (116 ) $ (5,273 ) State — 1 1 Foreign — — — (1,730 ) (115 ) (5,272 ) Deferred: Federal — — — State — — — Foreign — — — — — — Benefit for income taxes $ (1,730 ) $ (115 ) $ (5,272 ) |
Schedule showing the difference of provision for income taxes from the amount computed by applying the federal income tax rate of 35% to pretax income (loss) from operations | The provision for income taxes differs from the amount computed by applying the federal income tax rate of 35% to pretax loss from operations as a result of the following: December 31, 2017 2016 2015 Statutory federal income tax rate $ (31,927 ) $ (21,079 ) $ (19,976 ) State income taxes, net of federal tax benefits (5,041 ) (9 ) 1 Foreign rate differential — 10 — Tax credits (2,306 ) (3,905 ) (8,303 ) Impact of federal rate change 24,907 — — Net operating loss carryback — — 4,099 Change in statutory rates (1,440 ) 624 — Stock compensation (2,558 ) (1,109 ) 821 State net operating losses 633 1,779 — Other — 109 1,330 Change in valuation allowance 16,002 23,465 16,756 Income tax provision $ (1,730 ) $ (115 ) $ (5,272 ) |
Schedule of deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands): December 31, 2017 2016 Net operating loss carryforwards $ 44,177 $ 29,102 Research and development tax credits 16,189 14,453 Accruals and reserves 371 395 Stock compensation 6,244 6,902 Depreciation and amortization 1,638 1,765 Total deferred tax assets 68,619 52,617 Less: Valuation allowance (68,619 ) (52,617 ) Net deferred tax assets $ — $ — |
Schedule of reconciliation of the beginning and ending amount of unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): December 31, 2017 2016 2015 Balance at the beginning of the year $ 3,188 $ 1,820 $ 2,608 Additions based on prior period tax positions 43 93 980 Additions based on current period tax positions 803 1,275 — Reductions based on prior period tax positions — — (1,768 ) Balance at the end of the year $ 4,034 $ 3,188 $ 1,820 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of numerator and denominator used in calculation of basic and diluted net loss per share | A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net loss per share is as follows (in thousands, except per share data): December 31, 2017 2016 2015 Historical net loss per share Numerator: Net loss, basic and diluted $ (89,490 ) $ (60,058 ) $ (51,802 ) Denominator: Weighted average common shares outstanding, basic and diluted 22,558 21,711 18,116 Less: weighted average unvested common shares subject to repurchase — — (5 ) Weighted average common shares used in calculating net loss per share, basic and diluted 22,558 21,711 18,111 Net loss per share, basic and diluted $ (3.97 ) $ (2.77 ) $ (2.86 ) |
Schedule of outstanding shares of potentially dilutive securities excluded from the computation of diluted net loss per share of common stock, because including them would have been anti-dilutive | The following shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented, because including them would have been anti-dilutive (in thousands): December 31, 2017 2016 2015 Options to purchase common stock 5,940 5,523 5,249 Total 5,940 5,523 5,249 |
Quarterly Financial Informati36
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly information | These operating results are not necessarily indicative of results for any future period (in thousands, except per share data): Year Ended December 31, 2017 First Quarter Second Quarter Third Quarter Fourth Quarter Total net revenues $ — $ 2 $ 1 $ 568 (1) Gross profit(2) — — — 551 Net loss (16,028 ) (20,745 ) (23,360 ) (29,357 ) Net loss per share, basic and diluted (0.72 ) (0.93 ) (1.04 ) (1.27 ) Year Ended December 31, 2016 First Quarter Second Quarter Third Quarter Fourth Quarter Total net revenues $ 175 $ 222 $ 138 $ 37 Gross profit — — — — Net loss (13,828 ) (16,876 ) (14,394 ) (14,960 ) Net loss per share, basic and diluted (0.65 ) (0.78 ) (0.66 ) (0.68 ) (1) In the fourth quarter of 2017 the Company commenced commercial sales of GOCOVRI. (2) Gross profit is computed by subtracting cost of product sales from product sales, net. |
Description of Business (Detail
Description of Business (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segments | 1 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Liquidity and Financial Condition (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 26, 2018 | Jan. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | |||||
Cash, cash equivalents and investments | $ 176,400 | ||||
Subsidiary, Sale of Stock [Line Items] | |||||
Share price (in dollars per share) | $ 33.89 | ||||
Proceeds from follow-on offering | $ 0 | $ 61,822 | $ 9,657 | ||
Common Stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock shares sold (in shares) | 2,875,000 | 2,875,000 | |||
Share price (in dollars per share) | $ 23 | ||||
Proceeds from follow-on offering | $ 61,800 | ||||
Common Stock | Over-Allotment Option | Stock options | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock shares sold (in shares) | 375,000 | ||||
Subsequent Event | Common Stock | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock shares sold (in shares) | 3,450,000 | ||||
Share price (in dollars per share) | $ 41.50 | ||||
Proceeds from follow-on offering | $ 134,100 | ||||
Subsequent Event | Common Stock | Over-Allotment Option | Stock options | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock shares sold (in shares) | 450,000 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2017segment | |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Risk and Uncertainties (Details) | 12 Months Ended |
Dec. 31, 2017program | |
Accounting Policies [Abstract] | |
Number of research or development programs which the Company may have to delay or reduce the scope | 1 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Computer equipment and software | |
Property and Equipment | |
Estimated useful lives of the assets | 3 years |
Equipment | |
Property and Equipment | |
Estimated useful lives of the assets | 5 years |
Furniture and fixtures | |
Property and Equipment | |
Estimated useful lives of the assets | 10 years |
Balance Sheet Components (Detai
Balance Sheet Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Prepaid expenses and other current assets | |||
Prepaid expenses | $ 2,638 | $ 1,316 | |
Income tax receivable | 1,007 | 168 | |
Other current assets | 17 | 1,057 | |
Prepaid expenses and other current assets | 3,662 | 2,541 | |
Property and equipment, gross | 5,652 | 4,491 | |
Less: Accumulated depreciation and amortization | (2,520) | (1,335) | |
Property and equipment, net | 3,132 | 3,156 | |
Depreciation expense | 1,194 | 808 | $ 435 |
Accrued liabilities | |||
Accrued employee related costs | 5,499 | 3,696 | |
Clinical trial accruals | 1,720 | 1,041 | |
Accrued consulting and other professional fees | 4,897 | 864 | |
Other | 269 | 266 | |
Accrued liabilities | 12,385 | 5,867 | |
Computer equipment and software | |||
Prepaid expenses and other current assets | |||
Property and equipment, gross | 3,289 | 2,128 | |
Equipment | |||
Prepaid expenses and other current assets | |||
Property and equipment, gross | 252 | 252 | |
Furniture and fixtures | |||
Prepaid expenses and other current assets | |||
Property and equipment, gross | 466 | 466 | |
Leasehold improvements | |||
Prepaid expenses and other current assets | |||
Property and equipment, gross | $ 1,645 | $ 1,645 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities (Details) - Recurring basis - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Total assets measured at fair value | $ 153,618 | $ 112,401 |
Liabilities: | ||
Total liabilities measured at fair value | 470 | |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 68,501 | 192 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 85,117 | 112,209 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | 470 | |
Embedded derivative liability | ||
Liabilities: | ||
Total liabilities measured at fair value | 470 | |
Embedded derivative liability | Level 1 | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Embedded derivative liability | Level 2 | ||
Liabilities: | ||
Total liabilities measured at fair value | 0 | |
Embedded derivative liability | Level 3 | ||
Liabilities: | ||
Total liabilities measured at fair value | 470 | |
Money market | ||
Assets: | ||
Total assets measured at fair value | 68,501 | 192 |
Money market | Level 1 | ||
Assets: | ||
Total assets measured at fair value | 68,501 | 192 |
Money market | Level 2 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Money market | Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Corporate debt | ||
Assets: | ||
Total assets measured at fair value | 23,471 | 51,233 |
Corporate debt | Level 1 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Corporate debt | Level 2 | ||
Assets: | ||
Total assets measured at fair value | 23,471 | 51,233 |
Corporate debt | Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
U.S. Treasury notes | ||
Assets: | ||
Total assets measured at fair value | 61,646 | 60,976 |
U.S. Treasury notes | Level 1 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
U.S. Treasury notes | Level 2 | ||
Assets: | ||
Total assets measured at fair value | 61,646 | 60,976 |
U.S. Treasury notes | Level 3 | ||
Assets: | ||
Total assets measured at fair value | $ 0 | $ 0 |
Fair Value Measurements - Rollf
Fair Value Measurements - Rollforward of Level 3 financial instruments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Transfers Between Level 1 and Level 2, Description and Policy [Abstract] | ||
Fair vale Level 1 and 2 transfers | $ 0 | $ 0 |
Fair vale Level 2 and 1 transfers | 0 | $ 0 |
Level 3 | Long-term debt with embedded derivative | ||
Roll forward of the financial instruments classified within Level 3 of the fair value hierarchy | ||
Balance as of December 31, 2016 | 0 | |
Issuance of long-term debt with embedded derivative | 764,000 | |
Change in fair value included in interest and other income, net | (294,000) | |
Balance as of December 31, 2017 | $ 470,000 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Available-for-sale securities | ||
Amortized Cost | $ 85,284 | $ 112,402 |
Gross Unrealized Gains | 0 | 5 |
Gross Unrealized Losses | (167) | (198) |
Fair Value | 85,117 | 112,209 |
Short-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 82,280 | 90,050 |
Gross Unrealized Gains | 1 | |
Gross Unrealized Losses | (154) | (134) |
Fair Value | 82,126 | 89,917 |
Accrued interest | 600 | 300 |
Long-term investments | ||
Available-for-sale securities | ||
Amortized Cost | 3,004 | 22,352 |
Gross Unrealized Gains | 4 | |
Gross Unrealized Losses | (13) | (64) |
Fair Value | 2,991 | 22,292 |
Accrued interest | $ 14 | 100 |
Long-term investments | Minimum | ||
Available-for-sale securities | ||
Maturity range of long term investment | 12 months | |
Long-term investments | Maximum | ||
Available-for-sale securities | ||
Maturity range of long term investment | 13 months | |
Corporate debt | ||
Available-for-sale securities | ||
Amortized Cost | $ 23,507 | 51,354 |
Gross Unrealized Losses | (36) | (121) |
Fair Value | 23,471 | 51,233 |
U.S. Treasury notes | ||
Available-for-sale securities | ||
Amortized Cost | 61,777 | 61,048 |
Gross Unrealized Gains | 0 | 5 |
Gross Unrealized Losses | (131) | (77) |
Fair Value | $ 61,646 | $ 60,976 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 859 | $ 0 |
Work-in-process | 817 | 0 |
Finished goods | 28 | 0 |
Total inventory | $ 1,704 | $ 0 |
License Agreements (Details)
License Agreements (Details) | Nov. 30, 2012USD ($) | Dec. 31, 2014USD ($) | May 31, 2014USD ($) | Dec. 31, 2013USD ($) | Dec. 31, 2017USD ($)deliverableitemcomponent | Dec. 31, 2016USD ($) |
Collaboration and License Agreements | ||||||
Final milestone payment received | $ 30,000,000 | |||||
Period describing the commercial launch of dose | 15 years | |||||
License agreement | ||||||
Collaboration and License Agreements | ||||||
Upfront payment received | $ 65,000,000 | |||||
Maximum total additional cash payments receivable upon achievement of certain development and regulatory milestones | 95,000,000 | |||||
Prosecution and litigation cost | $ 33,000 | $ 2,400,000 | ||||
Number of non-contingent performance deliverables | deliverable | 2 | |||||
Number of components of intellectual property rights accounted for as a single unit of accounting | component | 2 | |||||
Amount of consideration for non-contingent performance deliverables | $ 0 | |||||
Number of units of accounting | item | 2 | |||||
Amount of upfront license fee allocated to transfer of license and technical know-how | $ 65,000,000 | |||||
Total milestone payments received | $ 40,000,000 | |||||
Additional milestone payment received | $ 25,000,000 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Commitments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |||
Lease agreement square footage (in sqft) | ft² | 18,500 | ||
Rent expense | $ 667 | $ 625 | $ 628 |
Future minimum lease payments under non-cancelable facility operating leases | |||
2,018 | 3,782 | ||
2,019 | 2,019 | ||
2,020 | 591 | ||
2,021 | 0 | ||
2,022 | 0 | ||
Thereafter | 0 | ||
Total | $ 6,392 |
Commitments and Contingencies49
Commitments and Contingencies - Litigation (Details) | 12 Months Ended |
Dec. 31, 2017claimdefendant | |
Loss Contingencies [Line Items] | |
Number of claims | claim | 0 |
Namenda XR | |
Loss Contingencies [Line Items] | |
Number of defendants not entered into settlement agreements | defendant | 1 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
May 31, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||||
Payment of debt issuance costs | $ 633,000 | $ 0 | $ 0 | ||
Level 3 | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, fair value | $ 109,500,000 | 109,500,000 | |||
HCRP | Royalty-backed loan agreement | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of debt | $ 35,000,000 | $ 65,000,000 | |||
Percentage revenue interest of future net sales | 12.50% | ||||
Quarterly royalty payment (up to) | $ 15,000,000 | ||||
Royalty percentage of future net sales | 6.25% | ||||
Royalty trail cap, percentage of face amount | 200.00% | ||||
Voluntary prepay election, amount due, percentage of funded amount | 200.00% | ||||
Interest rate, stated percentage | 11.00% | ||||
Contingent consideration, asset | $ 65,000,000 | ||||
Unpaid interest payment added to principal amount, term | 2 years 3 months | ||||
Accrued interest | 4,400,000 | ||||
Lender expense | $ 400,000 | ||||
Payment of debt issuance costs | $ 800,000 | ||||
Interest expense | $ 4,600,000 | ||||
Effective interest rate | 19.10% | ||||
HCRP | Royalty-backed loan agreement | December 2021 | |||||
Debt Instrument [Line Items] | |||||
Royalty percentage of future net sales if principal and interest payments below minimum specified levels (up to) | 17.50% | ||||
HCRP | Royalty-backed loan agreement | December 2022 | |||||
Debt Instrument [Line Items] | |||||
Royalty percentage of future net sales if principal and interest payments below minimum specified levels (up to) | 22.50% |
Long-term Debt - Long-Term Debt
Long-term Debt - Long-Term Debt and Unamortized Debt Discount Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 102,647 | $ 0 |
HCRP | Royalty-backed loan agreement | ||
Debt Instrument [Line Items] | ||
Loans payable, gross | 100,000 | 0 |
Less: Unamortized debt discount and issuance costs | (1,747) | 0 |
Plus: Unpaid portion of quarterly interest payment | 4,394 | 0 |
Carrying value of loans payable | 102,647 | 0 |
Less: Current portion of long-term debt | 0 | 0 |
Long-term debt | $ 102,647 | $ 0 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) - shares | Dec. 31, 2017 | Dec. 31, 2016 | Apr. 15, 2014 |
Temporary Equity Disclosure [Abstract] | |||
Preferred stock authorized shares (in shares) | 5,000,000 | 5,000,000 | 5,000,000 |
Preferred stock, outstanding shares (in shares) | 0 | 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 1 Months Ended | 12 Months Ended | ||||||
Jan. 31, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Dec. 31, 2017USD ($)vote$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)$ / sharesshares | May 31, 2017USD ($) | Jan. 31, 2017shares | Mar. 31, 2016shares | |
Shareholders' Equity | ||||||||
Authorized shares of common stock (in shares) | 100,000,000 | 100,000,000 | ||||||
Dividends declared | $ | $ 0 | |||||||
Number of votes per share | vote | 1 | |||||||
Total shares of common stock sold (in shares) | 23,320,551 | 22,013,644 | ||||||
Share price (in dollars per share) | $ / shares | $ 33.89 | |||||||
Proceeds from follow-on offering | $ | $ 0 | $ 61,822,000 | $ 9,657,000 | |||||
Number of shares available for future issuance under the plan (in shares) | 8,170,939 | 7,927,394 | ||||||
2016 Inducement Plan | ||||||||
Shareholders' Equity | ||||||||
Number of shares available for future issuance under the plan (in shares) | 900,000 | 450,000 | ||||||
Employee Stock Purchase Plan | ||||||||
Shareholders' Equity | ||||||||
Number of shares available for future issuance under the plan (in shares) | 693,856 | 532,849 | ||||||
Cowen and Company, LLC | ||||||||
Shareholders' Equity | ||||||||
At-the-market offering, aggregate offering price (up to) | $ | $ 50,000,000 | |||||||
At-the-market offering, commission as a percentage of gross proceeds (up to) | 3.00% | |||||||
Controlled Equity Offering | ||||||||
Shareholders' Equity | ||||||||
Common stock shares sold (in shares) | 0 | 509,741 | ||||||
Share price (in dollars per share) | $ / shares | $ 20.04 | |||||||
Proceeds from follow-on offering | $ | $ 9,700,000 | |||||||
Value of shares authorized (up to) | $ | $ 25,000,000 | |||||||
Controlled Equity Offering | Cantor | ||||||||
Shareholders' Equity | ||||||||
Commission of sale proceeds | 3.00% | |||||||
Stock options | ||||||||
Shareholders' Equity | ||||||||
Number of shares available for future issuance under the plan (in shares) | 5,564,635 | 5,483,557 | ||||||
Stock options | 2014 Equity Incentive Plan | ||||||||
Shareholders' Equity | ||||||||
Authorized for future issuance (in shares) | 1,723,733 | 1,576,926 | ||||||
Stock options | 2016 Inducement Plan | ||||||||
Shareholders' Equity | ||||||||
Authorized for future issuance (in shares) | 188,715 | 334,062 | ||||||
Common Stock | ||||||||
Shareholders' Equity | ||||||||
Common stock shares sold (in shares) | 2,875,000 | 2,875,000 | ||||||
Share price (in dollars per share) | $ / shares | $ 23 | |||||||
Proceeds from follow-on offering | $ | $ 61,800,000 | |||||||
Common Stock | Stock options | Over-Allotment Option | ||||||||
Shareholders' Equity | ||||||||
Common stock shares sold (in shares) | 375,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Compensation Plans (Details) - shares | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2017 | Mar. 31, 2016 | Mar. 31, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for future issuance under the plan (in shares) | 8,170,939 | 7,927,394 | ||||
Number of additional shares available for future issuance under the plan (in shares) | 450,000 | |||||
Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for future issuance under the plan (in shares) | 5,564,635 | 5,483,557 | ||||
Stock options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years | |||||
2002 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of common stock available for future grant or issuance (in shares) | 0 | |||||
2007 Stock Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of common stock available for future grant or issuance (in shares) | 0 | |||||
2007 Stock Plan | Stock options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years | |||||
2014 Equity Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of common stock available for future grant or issuance (in shares) | 1,723,733 | |||||
Increase in common stock reserved for issuance as a percentage of total number of shares of the Company's capital stock outstanding on the last day of the preceding fiscal year | 4.00% | |||||
2014 Equity Incentive Plan | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercise price as a percentage of estimated fair value of the shares on the date of grant | 100.00% | |||||
Exercise price as a percentage of estimated grant date fair value of shares for a 10% shareholder | 110.00% | |||||
2014 Equity Incentive Plan | Stock options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares of common stock available for future grant or issuance (in shares) | 1,993,394 | |||||
Increase in common stock available for issuance (in shares) | 880,362 | 739,708 | 701,763 | |||
Vesting period | 4 years | |||||
Vesting percentage on first anniversary of the issuance date | 25.00% | |||||
Monthly vesting percentage of options after first anniversary of issuance date | 2.08% | |||||
2014 Equity Incentive Plan | Stock options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years | |||||
2014 Equity Incentive Plan | Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Award vesting rights percentage | 25.00% | |||||
2014 Equity Incentive Plan | ISO | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Threshold ownership percentage of shareholder for determining exercise price of awards granted | 10.00% | |||||
2016 Inducement Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares available for future issuance under the plan (in shares) | 900,000 | 450,000 | ||||
2016 Inducement Plan | Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting period | 4 years | |||||
Award vesting rights percentage | 25.00% | |||||
2016 Inducement Plan | Employee Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years | |||||
Vesting period | 4 years | |||||
Vesting percentage on first anniversary of the issuance date | 25.00% | |||||
Monthly vesting percentage of options after first anniversary of issuance date | 2.08% | |||||
2016 Inducement Plan | Employee Stock Options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of awards | 10 years |
Stock-Based Compensation - St55
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Aggregate Intrinsic Value (thousands) | |||
Fair value of common stock (in dollars per share) | $ 33.89 | ||
Stock options | |||
Number of Shares | |||
Balances, beginning of the period (in shares) | 5,270,196 | ||
Options granted (in shares) | 1,444,675 | ||
Options exercised (in shares) | (1,183,353) | ||
Options forfeited (in shares) | (383,243) | ||
Options expired (in shares) | (10,691) | ||
Balances, end of the period (in shares) | 5,137,584 | 5,270,196 | |
Vested and expected to vest, end of the period (in shares) | 4,991,486 | ||
Vested, end of the period (in shares) | 3,363,191 | ||
Weighted Average Exercise Price | |||
Balances, beginning of the period (in dollars per share) | $ 9.60 | ||
Options granted (in dollars per share) | 18.87 | ||
Options exercised (in dollars per share) | 7.63 | ||
Options forfeited (in dollars per share) | 16.42 | ||
Options expired (in dollars per share) | 20.29 | ||
Balances, end of the period (in dollars per share) | 12.12 | $ 9.60 | |
Vested and expected to vest, end of the period (in shares) | 11.99 | ||
Vested, end of the period (in shares) | $ 9.01 | ||
Weighted- Average Remaining Contractual Term (years) | |||
Balances, end of the period | 6 years 5 months 23 days | ||
Vested and expected to vest, end of the period | 6 years 5 months 5 days | ||
Vested, end of the period | 5 years 3 months 23 days | ||
Aggregate Intrinsic Value (thousands) | |||
Balances, end of the period | $ 111,981 | ||
Vested and expected to vest, end of the period | 109,438 | ||
Vested, end of the period | 83,688 | ||
Aggregate intrinsic value of exercises | $ 18,100 | $ 6,600 | $ 6,600 |
Employee Stock Options | |||
Number of Shares | |||
Options granted (in shares) | 1,439,675 | 1,030,375 | 917,150 |
Aggregate Intrinsic Value (thousands) | |||
Weighted-average grant date fair value (in dollars per share) | $ 11.93 | $ 9.15 | $ 11.47 |
Compensation not yet recognized | $ 21,400 | ||
Period for recognition of unrecognized compensation cost | 2 years 7 months | ||
Total fair value of awards vested | $ 10,600 | $ 8,400 | $ 10,000 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Shares | |||
Unvested, Beginning balance (in shares) | 213,361 | ||
Granted (in shares) | 349,896 | ||
Vested (in shares) | (64,471) | ||
Forfeited (in shares) | (71,735) | ||
Unvested, Ending balance (in shares) | 427,051 | 213,361 | |
Weighted-Average Grant Date Fair Value | |||
Unvested, Beginning balance (in dollars per share) | $ 14.66 | ||
Granted (in dollars per share) | 19.97 | ||
Vested (in dollars per share) | 14.96 | ||
Forfeited (in dollars per share) | 16.13 | ||
Unvested, Ending balance (in dollars per share) | $ 18.72 | $ 14.66 | |
Aggregate intrinsic value, outstanding | $ 14,500,000 | ||
Aggregate intrinsic value, vested | 1,200,000 | $ 0 | $ 0 |
Unrecognized compensation cost | $ 7,000,000 | ||
Period for recognition of unrecognized compensation cost | 3 years 5 months |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) | 1 Months Ended | 12 Months Ended | 34 Months Ended | ||
Mar. 31, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares available for future issuance under the plan (in shares) | 8,170,939 | 7,927,394 | 7,927,394 | ||
Employee Stock Purchase Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Authorized for future issuance (in shares) | 262,762 | ||||
Exercise price as a percentage of estimated fair value of the shares on the date of grant | 85.00% | ||||
Value of shares that an employee is permitted to purchase | $ 25,000 | ||||
Stock issued under employee stock purchase plan (in shares) | 149,363 | ||||
Number of shares available for future issuance under the plan (in shares) | 693,856 | ||||
Increase in common stock available for issuance (in shares) | 220,090 | 184,927 | 175,440 | ||
Employee Stock Purchase Plan | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of annual compensation of the employee to be deducted for purchase of shares | 15.00% | ||||
Increase in common stock reserved for issuance as a percentage of total number of shares of the Company's capital stock outstanding on the last day of the preceding fiscal year | 1.00% | ||||
Threshold number of shares to determine increase in common stock reserved for future issuance (in shares) | 520,000 |
Stock-Based Compensation - St58
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 13,367,000 | $ 10,571,000 | $ 9,956,000 |
Stock-based compensation capitalized in inventory | 39,000 | 0 | 0 |
Employee Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 11,200,000 | 9,300,000 | 8,700,000 |
Employee Stock Purchase Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 300,000 | 300,000 | 200,000 |
Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 1,300,000 | 500,000 | 0 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 3,597,000 | 2,855,000 | 3,156,000 |
Selling, general and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 9,770,000 | $ 7,716,000 | $ 6,800,000 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted Average Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Employee Stock Options | |||
Assumptions to estimate the fair value of stock options | |||
Expected price volatility, minimum | 68.00% | 69.00% | 68.00% |
Expected price volatility, maximum | 70.00% | 71.00% | 80.00% |
Risk-free interest rate, minimum | 1.83% | 1.23% | 1.37% |
Risk-free interest rate, maximum | 2.17% | 1.81% | 1.95% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Employee Stock Options | Minimum | |||
Assumptions to estimate the fair value of stock options | |||
Expected term | 5 years 6 months | 5 years 6 months | 5 years 6 months |
Employee Stock Options | Maximum | |||
Assumptions to estimate the fair value of stock options | |||
Expected term | 6 years 3 months | 6 years 3 months | 6 years 3 months |
Employee Stock Purchase Plan | |||
Assumptions to estimate the fair value of stock options | |||
Expected price volatility, minimum | 51.00% | 68.00% | 56.00% |
Expected price volatility, maximum | 71.00% | 73.00% | 62.00% |
Risk-free interest rate, minimum | 0.60% | 0.49% | 0.07% |
Risk-free interest rate, maximum | 1.45% | 0.60% | 0.41% |
Expected term | 6 months | 6 months | 6 months |
Dividend yield | 0.00% | 0.00% | 0.00% |
Non-employee Stock Options | |||
Assumptions to estimate the fair value of stock options | |||
Dividend yield | 0.00% | 0.00% | 0.00% |
Non-employee Stock Options | Minimum | |||
Assumptions to estimate non-employee stock options | |||
Expected price volatility | 68.00% | 71.00% | 76.00% |
Risk-free interest rate | 1.94% | 1.47% | 1.84% |
Expected term | 6 years | 7 years | 8 years |
Non-employee Stock Options | Maximum | |||
Assumptions to estimate non-employee stock options | |||
Expected price volatility | 80.00% | 77.00% | 82.00% |
Risk-free interest rate | 2.36% | 2.46% | 2.26% |
Expected term | 9 years 9 months | 9 years 9 months | 9 years |
Stock-Based Compensation - Non-
Stock-Based Compensation - Non-Employee Stock-Based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 13,367 | $ 10,571 | $ 9,956 |
Non-employee Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 5,000 | 12,600 | 0 |
Stock-based compensation expense | $ 600 | $ 500 | $ 1,100 |
Non-employee Restricted Stock Units (RSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options granted (in shares) | 12,437 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income (loss) before provision for income tax | |||
United States | $ (91,220) | $ (60,147) | $ (57,074) |
International | 0 | (26) | 0 |
Loss before income taxes | (91,220) | (60,173) | (57,074) |
Current: | |||
Federal | (1,730) | (116) | (5,273) |
State | 0 | 1 | 1 |
Foreign | 0 | 0 | 0 |
Current income tax provision (benefit) | (1,730) | (115) | (5,272) |
Deferred: | |||
Federal | 0 | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | 0 | 0 | 0 |
Deferred income tax provision | 0 | 0 | 0 |
Benefit for income taxes | (1,730) | (115) | (5,272) |
Difference of provision for income taxes from the amount computed by applying the federal income tax rate of 35% to pretax income from operations | |||
Statutory federal income tax rate | (31,927) | (21,079) | (19,976) |
State income taxes, net of federal tax benefits | (5,041) | (9) | 1 |
Foreign rate differential | 0 | 10 | 0 |
Tax credits | (2,306) | (3,905) | (8,303) |
Impact of federal rate change | 24,907 | 0 | 0 |
Net operating loss carryback | 0 | 0 | 4,099 |
Change in statutory rates | (1,440) | 624 | 0 |
Stock compensation | (2,558) | (1,109) | 821 |
State net operating losses | 633 | 1,779 | 0 |
Other | 0 | 109 | 1,330 |
Change in valuation allowance | 16,002 | 23,465 | 16,756 |
Benefit for income taxes | (1,730) | (115) | $ (5,272) |
Significant components of the Company's deferred tax assets | |||
Net operating loss carryforwards | 44,177 | 29,102 | |
Research and development tax credits | 16,189 | 14,453 | |
Accruals and reserves | 371 | 395 | |
Stock compensation | 6,244 | 6,902 | |
Depreciation and amortization | 1,638 | 1,765 | |
Total deferred tax assets | 68,619 | 52,617 | |
Less: Valuation allowance | (68,619) | (52,617) | |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating loss carryforwards | ||
Federal income tax rate | 35.00% | |
Increase in net valuation allowance | $ (16) | $ 23.5 |
Deferred tax assets, tax credit carryforwards, alternative minimum tax | 1.7 | |
Federal | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 163.3 | 73 |
State | ||
Operating loss carryforwards | ||
Net operating loss carryforwards | 131.3 | $ 61.8 |
Operating loss carryforwards, amount expired | $ 11 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) - Research and development tax credit carryforward $ in Millions | Dec. 31, 2017USD ($) |
Tax credit carryforwards | |
Tax credit carryforwards | $ 13.5 |
Federal | |
Tax credit carryforwards | |
Tax credit carryforwards | 3.5 |
State | |
Tax credit carryforwards | |
Tax credit carryforwards | $ 3.2 |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefits that would impact effective tax rate | $ 0 | ||
Reconciliation of the beginning and ending amount of unrecognized tax benefits | |||
Balance at the beginning of the year | 3,188,000 | $ 1,820,000 | $ 2,608,000 |
Additions based on prior period tax positions | 43,000 | 93,000 | 980,000 |
Additions based on current period tax positions | 803,000 | 1,275,000 | 0 |
Reductions based on prior period tax positions | 0 | 0 | (1,768,000) |
Balance at the end of the year | 4,034,000 | 3,188,000 | 1,820,000 |
Interest related to unrecognized tax benefits | 0 | $ 0 | $ 0 |
Tax Cuts and Jobs Act of 2017, incomplete accounting, change in tax rate, deferred tax liability, provisional income tax benefit | 24,900,000 | ||
Tax Cuts and Jobs Act of 2017, incomplete accounting, transition tax for AMT credits, provisional income tax benefit | $ 1,700,000 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Anti-dilutive securities | |||||||||||
Net loss | $ (29,357) | $ (23,360) | $ (20,745) | $ (16,028) | $ (14,960) | $ (14,394) | $ (16,876) | $ (13,828) | $ (89,490) | $ (60,058) | $ (51,802) |
Weighted average common shares outstanding, basic and diluted (in shares) | 22,558 | 21,711 | 18,116 | ||||||||
Less: weighted average unvested common shares subject to repurchase (in shares) | 0 | 0 | (5) | ||||||||
Weighted average common shares used in calculating net loss per share, basic and diluted (in shares) | 22,558 | 21,711 | 18,111 | ||||||||
Net loss per share, basic and diluted (in dollars per share) | $ (1.27) | $ (1.04) | $ (0.93) | $ (0.72) | $ (0.68) | $ (0.66) | $ (0.78) | $ (0.65) | $ (3.97) | $ (2.77) | $ (2.86) |
Total anti-dilutive securities (in shares) | 5,940 | 5,523 | 5,249 | ||||||||
Options to purchase common stock | |||||||||||
Anti-dilutive securities | |||||||||||
Total anti-dilutive securities (in shares) | 5,940 | 5,523 | 5,249 |
Quarterly Financial Informati66
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total net revenues | $ 568 | $ 1 | $ 2 | $ 0 | $ 37 | $ 138 | $ 222 | $ 175 | |||
Gross profit | 551 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||
Net loss | $ (29,357) | $ (23,360) | $ (20,745) | $ (16,028) | $ (14,960) | $ (14,394) | $ (16,876) | $ (13,828) | $ (89,490) | $ (60,058) | $ (51,802) |
Net loss per share, basic and diluted (in dollars per share) | $ (1.27) | $ (1.04) | $ (0.93) | $ (0.72) | $ (0.68) | $ (0.66) | $ (0.78) | $ (0.65) | $ (3.97) | $ (2.77) | $ (2.86) |
Subsequent Events (Details)
Subsequent Events (Details) | Jan. 26, 2018USD ($)$ / sharesshares | Jan. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | Jan. 16, 2018USD ($)ft² |
Subsequent Event [Line Items] | ||||||
Share price (in dollars per share) | $ / shares | $ 33.89 | |||||
Proceeds from public offerings, net of offering costs | $ 0 | $ 61,822,000 | $ 9,657,000 | |||
Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Common stock shares sold (in shares) | shares | 2,875,000 | 2,875,000 | ||||
Share price (in dollars per share) | $ / shares | $ 23 | |||||
Proceeds from public offerings, net of offering costs | $ 61,800,000 | |||||
Stock options | Over-Allotment Option | Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Common stock shares sold (in shares) | shares | 375,000 | |||||
Subsequent Event | Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Common stock shares sold (in shares) | shares | 3,450,000 | |||||
Share price (in dollars per share) | $ / shares | $ 41.50 | |||||
Proceeds from public offerings, net of offering costs | $ 134,100,000 | |||||
Subsequent Event | Stock options | Over-Allotment Option | Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Common stock shares sold (in shares) | shares | 450,000 | |||||
Subsequent Event | Emeryville, LLC | ||||||
Subsequent Event [Line Items] | ||||||
Lessee, operating lease, rentable square feet (in sqft) | ft² | 37,626 | |||||
Lessee, operating lease, monthly payments due in first twelve months of lease | $ 159,911 | |||||
Lessee, operating lease, monthly rent expense increase | $ 5,000 |