Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 10, 2020 | Jun. 28, 2019 | |
Document and Entity Information | |||
Entity Registrant Name | KALA PHARMACEUTICALS, INC. | ||
Entity Central Index Key | 0001479419 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Interactive Data Current | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Common Stock, Shares Outstanding | 36,803,874 | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Public Float | $ 160.1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 85,449 | $ 170,898 |
Accounts receivable, net | 11,563 | |
Inventory | 4,648 | 4,095 |
Prepaid expenses and other current assets | 3,824 | 2,035 |
Total current assets | 105,484 | 177,028 |
Non-current assets: | ||
Property and equipment, net | 2,698 | 2,166 |
Long-term inventory | 3,778 | |
Right-of-use assets | 29,781 | 29,566 |
Restricted cash | 12,582 | 12,206 |
Total assets | 154,323 | 220,966 |
Current liabilities: | ||
Accounts payable | 2,518 | 5,446 |
Accrued expenses and other current liabilities | 20,929 | 11,101 |
Current portion of lease liabilities | 1,327 | 463 |
Total current liabilities | 24,774 | 17,010 |
Long-term liabilities: | ||
Long-term lease liability - less current portion | 28,673 | 28,752 |
Long-term debt | 71,184 | 70,226 |
Total long-term liabilities | 99,857 | 98,978 |
Total liabilities | 124,631 | 115,988 |
Commitments and Contingencies (Note 14) | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 120,000,000 shares authorized as of December 31, 2019 and December 31, 2018; 36,086,254 and 33,863,077 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 36 | 34 |
Additional paid-in capital | 325,112 | 306,053 |
Accumulated deficit | (295,456) | (201,109) |
Total stockholders' equity | 29,692 | 104,978 |
Total liabilities and stockholders' equity | $ 154,323 | $ 220,966 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 36,086,254 | 33,863,077 |
Common stock, shares outstanding | 36,086,254 | 33,863,077 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Product revenues, net | $ 6,074 | |
Costs and expenses: | ||
Cost of product revenues | 2,008 | |
Selling, general and administrative | 65,015 | $ 35,431 |
Research and development | 27,275 | 29,290 |
Total costs and expenses | 94,298 | 64,721 |
Loss from operations | (88,224) | (64,721) |
Other income (expense): | ||
Interest income | 2,357 | 1,687 |
Interest expense | (8,480) | (3,314) |
Loss on extinguishment of debt | (390) | |
Total other expense | (6,123) | (2,017) |
Net loss | $ (94,347) | $ (66,738) |
Net loss per share—basic and diluted | $ (2.76) | $ (2.49) |
Weighted average shares outstanding—basic and diluted | 34,209,756 | 26,753,906 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance as of beginning of period at Dec. 31, 2017 | $ 25 | $ 224,025 | $ (134,371) | $ 89,679 |
Balance as of beginning of period (in shares) at Dec. 31, 2017 | 24,538,309 | |||
Stockholders' Equity | ||||
Common stock offering, net of issuance cost and underwriting fees | $ 9 | 66,123 | 66,132 | |
Common stock offering, net of issuance cost and underwriting fees (in shares) | 8,625,000 | |||
At-the-market offering, net of sales agent commission and fees | 4,634 | 4,634 | ||
At-the-market offering, net of sales agent commission and fees (in shares) | 518,135 | |||
Issuance of equity classified warrants, net of issuance cost | 1,900 | 1,900 | ||
Exercise of stock options | 530 | 530 | ||
Exercise of stock options (in shares) | 181,633 | |||
Stock-based compensation expense | 8,841 | 8,841 | ||
Net loss | (66,738) | (66,738) | ||
Balance as of end of period at Dec. 31, 2018 | $ 34 | 306,053 | (201,109) | 104,978 |
Balance as of end of period (in shares) at Dec. 31, 2018 | 33,863,077 | |||
Stockholders' Equity | ||||
At-the-market offering, net of sales agent commission and fees | $ 2 | 8,423 | 8,425 | |
At-the-market offering, net of sales agent commission and fees (in shares) | 2,074,799 | |||
Exercise of stock options | 42 | 42 | ||
Exercise of stock options (in shares) | 24,714 | |||
Issuance under employee stock purchase plan | 545 | 545 | ||
Issuance under employee stock purchase plan (in shares) | 123,664 | |||
Stock-based compensation expense | 10,049 | 10,049 | ||
Net loss | (94,347) | (94,347) | ||
Balance as of end of period at Dec. 31, 2019 | $ 36 | $ 325,112 | $ (295,456) | $ 29,692 |
Balance as of end of period (in shares) at Dec. 31, 2019 | 36,086,254 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY | ||
Underwriters discount and offering costs | $ 5 | |
Sales agent commission | $ 0.3 | $ 0.1 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (94,347) | $ (66,738) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 843 | 352 |
Non-cash operating lease cost | 1,773 | 603 |
Loss of extinguishment of debt | 390 | |
Amortization of debt discount and other non-cash interest | 958 | 274 |
Stock-based compensation | 9,991 | 8,615 |
Change in operating assets and liabilities: | ||
Accounts receivable | (11,563) | |
Prepaid expenses and other current assets | (1,789) | (1,387) |
Inventory | (4,271) | (3,868) |
Accounts payable | (2,770) | 4,088 |
Accrued expenses and other current liabilities | 9,630 | 3,968 |
Lease liabilities and other long-term liabilities | (1,175) | (418) |
Net cash used in operating activities | (92,720) | (54,121) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,335) | (1,578) |
Net cash used in investing activities | (1,335) | (1,578) |
Cash flows from financing activities: | ||
Proceeds from common stock offerings, net of underwriters' discounts and offering cost | 8,425 | 70,766 |
Proceeds from venture debt, net of debt issuance costs of $0 and $50 | 2,728 | |
Proceeds from issuance of debt and warrants, net of debt issuance costs of $0 and $3,073 | 71,927 | |
Payment of principal and prepayment penalty on venture debt | (21,847) | |
Payment of principal on finance lease | (30) | |
Proceeds from exercise of stock options and issuance of common stock under employee stock purchase plan | 587 | 530 |
Net cash provided by financing activities | 8,982 | 124,104 |
Net decrease in cash and restricted cash: | (85,073) | 68,405 |
Cash and restricted cash at beginning of period | 183,104 | 114,699 |
Cash and restricted cash at end of period | 98,031 | 183,104 |
Reconciliation of cash and restricted cash: | ||
Cash and restricted cash at end of period | 98,031 | 183,104 |
Non-cash investing and financing activities: | ||
Right-of-use asset obtained in exchange for finance lease obligation | 136 | |
Purchases of property and equipment in accrued expenses | 195 | |
Purchases of property and equipment in accounts payable | 155 | |
Supplemental disclosure: | ||
Cash paid for interest | 7,522 | 3,041 |
Right-of-use assets obtained in exchange of operating lease obligations | $ 1,852 | $ 29,427 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt issuance costs | $ 4,806 | |
Venture debt | ||
Debt issuance costs | $ 0 | 50 |
Other debt | ||
Debt issuance costs | $ 0 | $ 3,073 |
Nature of business
Nature of business | 12 Months Ended |
Dec. 31, 2019 | |
Nature of business | |
Nature of business | Note 1: Nature of business Nature of Business — Kala Pharmaceuticals, Inc. (the “Company”) was incorporated on July 7, 2009, and is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies for diseases of the eye. The Company has applied its AMPPLIFY ® mucus-penetrating particle (“MPP”) Drug Delivery Technology to loteprednol etabonate (“LE”), a corticosteroid designed for ocular applications, resulting in the U.S. Food and Drug Administration’s (the “FDA”) approval of INVELTYS ® (loteprednol etabonate ophthalmic suspension) 1% as the first and only topical twice-daily ocular corticosteroid for treatment of post-operative inflammation and pain following ocular surgery, and the development of its lead product candidate, KPI-121 0.25%, which if approved it plans to commercialize under the brand name EYSUVIS TM (loteprednol etabonate ophthalmic suspension) 0.25%, for the temporary relief of the signs and symptoms of dry eye disease. In October 2018, the Company submitted a New Drug Application (“NDA”) to the FDA for EYSUVIS. In August 2019, the Company announced that it received a complete response letter (“CRL”) from the FDA regarding this NDA. The FDA indicated that efficacy data from an additional clinical trial will be needed to support a resubmission of the NDA. Based upon the previous recommendation of the FDA, the Company initiated an additional Phase 3 clinical trial (“STRIDE 3”) (STRIDE- S hort T erm R elief I n D ry E ye), in the third quarter of 2018, which the Company expects will serve as the basis for its response to the CRL. The Company is targeting topline data for STRIDE 3 in the first quarter of 2020 and resubmission of the NDA in the second quarter of 2020. The Company is evaluating opportunities for MPP nanosuspensions of LE with less frequent daily dosing regimens for the temporary relief of the signs and symptoms of dry eye disease and for potential chronic treatment of dry eye disease. The Company is also evaluating compounds in its receptor Tyrosine Kinase Inhibitor program (the “rTKI program”), that inhibit the vascular endothelial growth factor (“VEGF”), pathway, for the potential treatment of a number of retinal diseases and novel next-generation anti-inflammatories designed to exhibit steroid-like anti-inflammatory action with the goal of eliminating the risk of IOP increase and cataract formation. In January 2019, the Company launched its first commercial product, INVELTYS, in the United States. The Company is currently engaged in the commercialization of INVELTYS, research and development activities, raising capital and recruiting skilled personnel. The Company is subject to a number of risks similar to those of other companies conducting high‑risk, research and development of pharmaceutical product candidates and launching a product for the first time. Principal among these risks are dependence on key individuals and intellectual property, competition from other products and companies and the technical risks associated with the successful research, development and marketing of its product candidates. The Company’s success is dependent upon its ability to raise additional capital in order to fund ongoing and future research and development, obtain regulatory approval of its product candidates, successfully commercialize its products, generate revenue, meet its obligations, and, ultimately, attain profitable operations. October 2018 and Subsequent Financings — On August 9, 2018, the Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective on August 27, 2018 (the “Shelf Registration”). Under the Shelf Registration, the Company may offer and sell up to $250.0 million of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, purchase contracts, purchase units or any combination of such securities during the three-year period that commenced upon the Shelf Registration becoming effective. On October 5, 2018, the Company sold 7,500,000 shares of the Company’s common stock (the “Shares”) in an underwritten offering pursuant to the Shelf Registration at a public offering price of $8.25 per share, before underwriting discounts and commissions. In addition, the underwriters were granted an overallotment option to purchase an additional 1,125,000 shares of the common stock at the same public offering price, less underwriting discounts and commissions (the “Overallotment Shares”). On October 11, 2018, the underwriters exercised in full their option to purchase the Overallotment Shares. The total number of Shares and Overallotment Shares sold by the Company in the offering was 8,625,000 shares, resulting in net proceeds to the Company, after underwriting discounts and offering expenses, of approximately $66.1 million. In connection with the filing of the Shelf Registration, the Company entered into a sales agreement with Jefferies, LLC (the “Sales Agreement”) pursuant to which the Company may issue and sell, from time to time, up to an aggregate of $50.0 million of its common stock in an at-the-market equity offering (“ATM Offering”) through Jefferies, LLC, as sales agent. As of December 31, 2019, the Company issued 2,592,934 shares of its common stock under the ATM Offering, resulting in net proceeds to the Company of approximately $13.1 million. In the period beginning January 1, 2020 through the issuance date of these consolidated financial statements, the Company issued and sold an additional 583,411 shares of its common stock under the ATM Offering, resulting in net proceeds to the Company of approximately $2.2 million. As of December 31, 2019, there was approximately $36.4 million shares of common stock remaining under the ATM Offering that the Company may issue and sell in the future and, excluding the funds designated to be offered under the ATM Offering, there was approximately $128.8 million of securities available to be issued under the Shelf Registration . On October 1, 2018, the Company entered into a credit agreement (the “Athyrium Credit Facility”), with Athyrium Opportunities III Acquisition LP (“Athyrium”). The Athyrium Credit Facility provides for a Term Loan A in the aggregate principal amount of $75.0 million (the “Athyrium Term Loan A”), and a Term Loan B in the aggregate principal amount of $35.0 million (the “Athyrium Term Loan B”). On October 1, 2018, the Company borrowed the entire principal amount of the Athyrium Term A Loan. The Company may draw down the Athyrium Term Loan B upon either (i) FDA approval of EYSUVIS for a dry eye disease indication or (ii) reaching certain net product revenues for INVELTYS, in each case on or prior to June 30, 2020; however, the Company does not expect to satisfy either such condition on or prior to June 30, 2020 and, as a result, does not currently expect that it will be eligible to draw down any of the Athyrium Term Loan B funds. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Principles of consolidation— The accompanying consolidated financial statements include the accounts of Kala Pharmaceuticals, Inc. and its wholly owned subsidiary, Kala Pharmaceuticals Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities. All intercompany transactions and balances have been eliminated. Basis of Presentation —The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated only limited revenues to date from product sales and has incurred recurring losses and negative cash flows from operations, including a net loss of $94.3 million and $66.7 million, for the years ended December 31, 2019 and 2018, respectively, and used cash in operations of $92.7 million and $54.1 million, in the years ended December 31, 2019 and 2018, respectively. The Company has financed its operations to date primarily through proceeds from its initial public offering of common stock (“IPO”), private placements of preferred stock, convertible debt financings, borrowings under credit facilities, warrants, public offerings of common stock and sales of its common stock under its ATM Offering facility. The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials and engaging in activities to launch and commercialize INVELTYS. The Company expects to continue to incur significant expenses and operating losses for the next several years. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. The Company also expects that its existing cash on hand as of December 31, 2019, together with anticipated net revenue from sales of INVELTYS, will enable it to fund its planned operations, lease and debt service obligations, and capital expenditure requirements for at least 12 months from the date of these consolidated financial statements. This evaluation is based on the Company’s current operating plan which include projected net revenue from sales of INVELTYS. If the Company does not achieve its projected net revenue, it believes it has the ability to manage spending under its operating plan in order to fund operations for at least 12 months from the date of these consolidated financial statements. This evaluation is based on relevant conditions and events that are currently known or reasonably knowable. As a result, the Company could deplete its available capital resources sooner than it currently expects. The Company has based these estimates on assumptions that may prove to be wrong, and the Company’s operating projections including its projected net revenue, may change as a result of many factors currently unknown. Reclassifications — Certain reclassifications, primarily related to gross deferred tax assets and liabilities, have been made to prior period amounts to conform to the current period financial statement presentation. Use of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense, and related disclosures. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. Estimates and assumptions relied upon in preparing these consolidated financial statements relate to, but are not limited to, revenue recognition, inventory, the present value of lease liabilities and the corresponding right-of-use assets, the fair value of warrants, stock compensation, accrued expenses and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Actual results may differ from these estimates under different assumptions or conditions. Product Revenues, Net — The Company sells INVELTYS, its topical twice-a-day ocular steroid for the treatment of inflammation and pain following ocular surgery, to wholesalers and/or specialty distributors in the United States (collectively, “Customers”). These Customers subsequently resell the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company enters into arrangements with payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of our product. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company performs the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer. Performance Obligations The Company determined that performance obligations are satisfied and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 70 to 90 days after satisfaction of the Company’s performance obligations. Transaction Price and Variable Consideration Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns. The Company will estimate the amount of variable consideration that should be included in the transaction price. These estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. These provisions reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in net sales only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. In general, performance obligations do not include any estimated amounts of variable consideration that are constrained. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the year ended December 31, 2019: Trade Discounts, Allowances and Rebates and Chargebacks (1) Product Returns (2) Incentives (3) Balance at January 1, 2019 $ - $ - - Provision related to current period sales 4,031 321 24,812 Credit/payments made (2,248) (141) (14,768) Balance at December 31, 2019 $ 1,783 $ 180 $ 10,044 (1) Trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. (3) Rebates and incentives includes managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Provisions for rebates and discounts are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. As of December 31, 2019, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial. Accounts Receivable, net — Accounts receivable are reported on the consolidated balance sheets at outstanding amounts due from Customers for product sales. The Company deducts sales discounts for prompt payments and contractual fees for service arrangements, and chargebacks from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of Customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for doubtful accounts as of December 31, 2019. The Company recorded an allowance of approximately $1.8 million for expected sales discounts, related to prompt pay discounts and contractual fee for service arrangements, to wholesalers and distributors as of December 31, 2019. Cost of Product Revenues — The cost of product revenues consists primarily of materials, third-party manufacturing costs, freight and distribution costs, royalty expense, allocation of labor, quality control and assurance, reserves for defective inventory, and other manufacturing overhead costs. The Company expenses cost of product revenues related to product candidates as research and development expenses prior to regulatory approval in the respective territory. The Company received U.S. regulatory approval for INVELTYS on August 22, 2018. Cash and Concentration of Credit Risk —Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Three Customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2019. These Customers comprised 41%, 35% and 23% of the accounts receivable balance, respectively, as of December 31, 2019. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balances is collectible as of December 31, 2019. The same three Customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2019. These Customers comprised 39%, 33% and 26% of revenue, respectively. The Company has no financial instruments with off‑balance sheet risk of loss. Restricted Cash —As of December 31, 2019 and 2018, the Company had restricted cash of $12.6 million and $12.2 million, respectively, which represents cash held to satisfy its financial covenant (See Note 8) and serve as collateral for the Company’s vehicle fleet lease, credit cards and its facility lease in Watertown, Massachusetts. This cash is classified as a non-current asset in the accompanying consolidated balance sheets. Inventory — Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out (“FIFO”) method. Costs include amounts related to third party manufacturing, transportation, internal labor and overhead. Capitalization of costs as inventory begins when the product has received regulatory approval. The Company expenses inventory costs related to product candidates as research and development expenses prior to regulatory approval in the respective territory, even if this inventory may later be sold. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018. Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is selected for use and shipped as part of a marketing program. Long-term inventory includes inventory with an anticipated sale or consumption beyond one year based on the Company’s forecasted expectations. Leases —At the inception of an arrangement the Company determines whether the arrangement is or contains a lease. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one-year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components which the Company has elected to use the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis to the statements of operations. Property and Equipment, net —Property and equipment are recorded at cost. Depreciation is provided using the straight‑line method over the estimated useful lives of the related assets. Depreciation expense is included in operations. Laboratory equipment and office and computer equipment is depreciated over three to five years. Leasehold improvements are depreciated over the shorter of their useful life or the life of the lease. Major additions and upgrades are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations. Patent Costs —Costs to secure and defend patents are expensed as incurred and are classified as selling, general and administrative expenses in the Company’s consolidated statements of operations. Impairment of Long‑Lived Assets —Long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, the assets are recorded at the lesser of the carrying value or fair value. For the years ended December 31, 2019 and 2018, no impairments were recorded. Segment Information —Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The CODM is the Company’s Chief Executive Officer. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on the development and commercialization of therapeutics using its proprietary AMPPLIFY technology. All of the Company’s tangible assets are held in the United States. To date, all of the Company’s revenue has been generated in the United States. Research and Development Costs —Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full‑time research and development employees, an allocation of facilities expenses, overhead expenses, payments to universities under the Company’s license agreements and other outside expenses. Research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance, including nonrefundable prepayments for goods or services, are deferred and capitalized as a prepaid expense. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. Accrued Expenses — The Company accrues for variable consideration related to rebates, sales incentives and allowances, distribution service fees, and returns. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of the accrued expense. The Company also accrues expenses related to development activities performed by third parties based on an evaluation of services received and efforts expended pursuant to the terms of the contractual arrangements. Payments under some of these contracts depend on clinical trial milestones. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of expenses. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be 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 or prepaid expense accordingly. Stock‑Based Compensation —The Company accounts for all stock‑based awards granted as compensation expense at fair value. The Company generally issues stock option awards with the measurement date for awards as the date of grant. Stock‑based compensation costs are recognized as expense over the employees’ requisite service period, which is the vesting period, on a straight‑line basis. Stock‑based compensation is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided, or capitalized with inventory until related expense is recognized. The Company recognizes compensation expense for the portion of awards that have vested. After the adoption of Accounting Standards Update (“ASU”) 2016-09, described in further detail below, forfeitures are recorded as they occur. The fair value of each stock option grant is estimated on the date of grant using the Black‑Scholes option‑pricing model. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The Company lacks sufficient company‑specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and will continue to do so until it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain‑vanilla” options. The risk‑free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. Common Stock Valuation Prior to the IPO —Through the consummation of the IPO in July 2017, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately‑Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s‑length sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could have resulted in different fair values of common stock at each valuation date. Income Taxes —Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the consolidated financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As a result, reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present. Net Loss per Share —Basic net loss per share is computed using the weighted‑average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. The weighted average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, and warrants. Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti‑dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2019 and 2018. Comprehensive Loss —Comprehensive loss is equal to net loss for the periods presented. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) effective January 1, 2018. ASU 2014-09 states that an entity should recognize revenue based on 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 FASB subsequently issued amendments to ASU 2014-09 that had the same effective date of January 1, 2018. Revenue from sales of INVELTYS, as well as any other future revenue arrangements, are and will be recognized under the provisions of ASU 2014-09. While the Company adopted ASU 2014-09 effective January 1, 2018, the Company did not generate any revenue from product sales prior to 2019. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 substantially aligns accounting for share-based payments to employees and non-employees. This ASU became effective for annual periods beginning after December 15, 2018, including interim periods within that period, and early adoption is permitted. The new standard was effective on January 1, 2019 and the adoption of ASU 2018-07 did not have an impact on the Company’s consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen t (“ASU 2018-13”). ASU 2018-13 is intended to improve the effectiveness of disclosures in the notes to financial statements related to fair value measurements in Topic 820. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Inventory | Note 3: Inventory Current and long-term inventory consist of the following (in thousands): December 31, December 31, 2019 2018 Raw materials $ 1,387 $ 350 Work in progress 4,166 3,357 Finished goods 2,873 388 Total inventory $ 8,426 $ 4,095 As of December 31, 2019 , the Company had $4.6 million of current inventory and $3.8 million of long-term inventory. As of December 31, 2018 , the Company had $4.1 million of current inventory and no long-term inventory. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses and Other Current Assets | |
Prepaid Expenses and Other Current Assets | Note 4: Prepaid Expenses and Other Current Assets Prepaid Expenses and Other Current Assets, consists of the following (in thousands): December 31, December 31, 2019 2018 Insurance $ 906 $ 532 Deposits 699 — Non-trade receivables 1,535 Receivable for construction related to facility — 1,026 Other 684 477 Prepaid expenses and other current assets $ 3,824 $ 2,035 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 5: Property and Equipment, Net Property and equipment, net, consists of the following (in thousands): December 31, December 31, 2019 2018 Equipment $ 2,627 $ 2,400 Leasehold improvements 356 114 Computer hardware and software 892 599 Furniture and office equipment 1,144 67 Construction in progress 195 804 Property and equipment — at cost 5,214 3,984 Less: Accumulated depreciation (2,516) (1,818) Property and equipment—net $ 2,698 $ 2,166 Depreciation expense for the years ended December 31, 2019 and 2018 was $0.8 million and $0.4 million respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses | |
Accrued Expenses | Note 6: Accrued Expenses Accrued expenses consist of the following (in thousands): December 31, December 31, 2019 2018 Compensation and benefits $ 6,502 $ 5,352 Accrued revenue reserves (1) 9,482 — Development costs 1,600 1,223 Professional services 760 1,019 Commercial cost 930 1,722 Contract manufacturing 630 434 Payable related to construction of facility — 1,026 Other 1,025 325 Accrued expenses $ 20,929 $ 11,101 (1) As of December 31, 2019, $0.7 million of additional revenue reserves were in accounts payable. |
Lease
Lease | 12 Months Ended |
Dec. 31, 2019 | |
Lease | |
Lease | Note 7: Lease Operating leases The Company entered into a three‑year lease agreement for its former headquarters (the “Waltham Lease”) on September 30, 2013, with a commencement date of February 1, 2014. On June 30, 2016, the lease was amended to extend the term from January 31, 2017 to January 31, 2019. In connection with the lease agreement, the Company issued a letter of credit to the landlord for $0.1 million. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which was reported as restricted cash as of December 31, 2018. Upon the expiration of the lease term on January 31, 2019, the deposit was returned. On February 28, 2018, the Company entered into a lease agreement with 480 Arsenal Group LLC (the “Arsenal Group”) for the lease of a portion of the building located at 490 Arsenal Way Watertown, Massachusetts (the “Watertown Lease”). The initial term of the Watertown Lease is eight years with an option to extend for an additional five years, which are recognized as part of our right of use asset and lease liability . The Company occupied the premises in Watertown in early 2019 as its corporate headquarters and for research and development. The lease commencement date was November 15, 2018 and the Company concluded that it controlled the space, as of the lease commencement date. The Company identified and assessed the following significant assumptions in recognizing the right-of-use asset and corresponding liability for the Watertown Lease. · Expected lease term - The expected lease term includes both contractual lease periods and, when applicable, cancelable option periods where failure to exercise such options would result in an economic penalty. · Incremental borrowing rate - the Company’s lease does not provide an implicit rate, the Company estimated the incremental borrowing rate based on a yield curve analysis, utilizing the interest rate derived from the fair value analysis of the Company’s Athyrium Credit Facility and adjusting it for factors that reflect the profile of secured borrowin The Company recognized the right-of-use asset and corresponding lease liability, by calculating the present value of lease payments, discounted at 9.9%, the Company’s estimated incremental borrowing rate, over the 13 year expected term . As of December 31, 2019, the remaining lease term on the Watertown Lease was 11.83 years. Variable lease expense for the Watertown Lease, includes real estate taxes, common area maintenance, and management fees. In connection with the Watertown Lease, the Company issued a letter of credit to the Arsenal Group for $2.0 million. The Company secured the letter of credit for the full amount of the letter with cash on deposit, which is reported as restricted cash on the Consolidated Balance Sheets. Vehicle Fleet lease During the year ended December 31, 2019, the Company entered into a master fleet lease agreement (the “Vehicle Fleet Lease”), pursuant to which it currently leases 65 vehicles. In connection with the Vehicle Fleet Lease, the Company issued a letter of credit for $0.5 million, which is reported as restricted cash on the Consolidated Balance Sheet. The Vehicle Fleet Lease has an expected term of three years, which commenced upon the delivery of the vehicles in March 2019. As of December 31, 2019, the remaining lease term was 2.2 years. The components of lease expense and related cash flows were as follows (in thousands): Years Ended December 31, 2019 2018 Lease cost Operating lease cost $ $ Short-term lease cost — Variable lease cost Total lease cost $ $ Operating cash outflows from operating leases $ $ Maturities of lease liability due under these lease agreements as of December 31, 2019 are as follows (in thousands): Years Ending December 31, Operating Lease (1) Finance Lease (2) Total 2020 $ 4,141 $ 41 $ 4,182 2021 4,233 41 4,274 2022 4,021 41 4,062 2023 3,960 — 3,960 2024 4,079 — 4,079 Thereafter 31,336 — 31,336 Present value adjustment (21,877) (16) (21,893) Present value of lease payments $ 29,893 $ 107 $ 30,000 (1) Future minimum lease payments under the Company’s Watertown Lease and its Vehicle Fleet Lease. Future minimum lease payments under the Company’s finance lease obligation. (2) Future minimum lease payments under the Company's finance lease obligation. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Debt | Note 8: Debt 2014 Debt Facility In November 2014, the Company entered into a venture debt facility (“2014 Debt Facility”) for a total loan commitment of $10.0 million. On October 13, 2016, the Company entered into a First Amendment to the 2014 Debt Facility the (''First Amendment''), which reaffirmed the initial commitment to a total of $10.0 million of funding (“Term Loan A”) and increased the Company’s total borrowing capacity by an additional $10.0 million (“Term Loan B” and together with Term Loan A, ''Term Loans''). In connection with the 2014 Debt Facility, the Company issued warrants that can be exercised into common stock that expire between April 2021 and October 2026 (see Note 9). Under the terms of the 2014 Debt Facility, the borrowings accrued interest at an annual rate equal to 3.00% above the Prime Rate then in effect. The applicable interest rate for the outstanding principal balance was 8.25% as of the repayment date of October 1, 2018. The Company recognized interest expense of $1.2 million related to the 2014 Debt Facility during the year ended December 31, 2018, which consisted of amortization of the debt discount of $0.1 million, and contractual coupon interest of $1.1 million. On October 1, 2018, the Company repaid the outstanding principal balance under the 2014 Debt Facility of $20.0 million. In connection with the repayment of the 2014 Debt Facility, the Company paid a prepayment fee of $0.2 million. Athyrium Credit Facility On October 1, 2018, the Company entered into a $110.0 million Athyrium Credit Facility with Athyrium. The maturity date of the Athyrium Credit Facility is October 1, 2024, the six-year anniversary of the close. The Athyrium Term Loan A bears interest at a rate of 9.875% per annum, with quarterly, interest-only payments until the fourth anniversary of the Athyrium Term Loan A. The unpaid principal amount of the Athyrium Term Loan A is due and payable in quarterly installments starting on the fourth anniversary of the loan. The Company may make voluntary prepayments, in whole or in part, and subject to certain exceptions, is required to make mandatory prepayments upon the occurrence of certain events of default as defined in the agreement, including but not limited to, the occurrence of a change of control. In addition, upon payment or repayment of any outstanding balance under the Athyrium Credit Facility, the Company will have to pay a 1% exit fee of All mandatory and voluntary prepayments of the Athyrium Credit Facility are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs prior to the second anniversary of the applicable date of issuance, an amount equal to the amount by which (a) the present value of 105% of the principal prepaid plus all interest that would have accrued on such principal through such second anniversary exceeds (b) the amount of principal prepaid, (ii) if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary of such issuance, an amount equal to 3% of the principal prepaid, and (iii) if prepayment occurs on or after the third anniversary of the applicable date of issuance but prior to the fourth anniversary of such issuance, an amount equal to 2% of the principal prepaid. No prepayment premium is due on any principal prepaid after the fourth anniversary of the applicable date of issuance. The Athyrium Credit Facility includes two features upon the event of default requiring (1) additional interest rate upon an event of default accrued at an additional 3%, or a total interest rate of 12.875%, and (2) the lender has a right to declare all outstanding principal and interest immediately payable. These two features were analyzed and determined to be embedded derivatives to be valued as separate financial instruments. These embedded derivatives were bundled and valued as one compound derivative in accordance with the applicable accounting guidance for derivatives and hedging. The Company determined that, due to the unlikely event of default, the embedded derivatives have a de minimis value as of December 31, 2019. The derivative liability will be remeasured at fair value at each reporting date, with changes in fair value being recorded as other income (expense) in the consolidated statements of operations. The Athyrium Credit Facility is secured by a pledge of substantially all of the Company’s assets and contains affirmative and negative covenants customary for financings of this type, including limitations on the Company’s and its subsidiaries’ ability to, among other things, incur and prepay additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, change in the nature of business, enter into sale and leaseback transactions, make distributions, and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the Athyrium Credit Facility also contains a financial covenant requiring the Company to maintain at least $10.0 million of cash and cash equivalents. As of December 31, 2019, the Company was in compliance with the covenants. In connection with the Athyrium Credit Facility, the Company issued a warrant (“Warrant”), to purchase up to 270,835 shares of the Company’s common stock, at an exercise price per share of $12.18456. The Warrant is immediately exercisable as to 184,660 shares and will become exercisable as to the remaining 86,175 shares only upon the Company’s draw of the Athyrium Term Loan B. The Warrant is exercisable through October 1, 2025. The Warrant is considere In addition, the Company paid certain fees to Athyrium and another third party service provider in the aggregate amount of $3.0 million. These fees paid Athyrium were recorded as a debt discount while the fees paid to the other third party service provider were recorded as debt issuance cost, respectively, in the aggregate amount of $3.0 million. These costs, along with the fair value of The components of the carrying value of the debt consist of the following (in thousands) : December 31, December 31, 2019 2018 Principal loan balance $ 75,000 $ 75,000 Unamortized debt discount and issuance cost (3,999) (4,806) Cumulative accretion of exit fee 183 32 Long-term debt, net $ 71,184 $ 70,226 The future annual principal payments due under the Athyrium Credit Facility as of December 31, 2019 were as follows (in thousands): Years Ending December 31, 2020 $ — 2021 — 2022 16,665 2023 33,330 2024 25,005 Total $ 75,000 |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Warrants | |
Warrants | Note 9: Warrants The Company has issued warrants in connection with debt transactions that were completed prior to 2017 (see Note 8). In connection with and in consideration for the commitment of the Athyrium Credit Facility, on October 1, 2018, the Company issued to Athyrium the Warrant as described in Note 8. The following table summarizes the common stock warrants outstanding as of December 31, 2019 and December 31, 2018, each exercisable into the number of shares of common stock set forth below as of the specified dates: Shares Exercisable at Exercise Expiration Exercisable December 31, December 31, Issued Price Date From 2019 2018 2013 $ 7.50 April 2021 July 2017 82,816 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 2018 $ 12.18 October 2025 October 2018 184,660 184,660 2018 $ 12.18 October 2025 (1) — — 297,988 297,988 (1) As of December 31, 2019, warrants outstanding to acquire 86,175 of common stock are not exercisable and are only exercisable upon draw down of Athyrium Term Loan B. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | Note 10: Fair Value of Financial Instruments The Company classifies fair value based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including estimates and assumptions developed by the Company, reflective of those that a market participant would use, as inputs to certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The carrying value of cash, restricted cash, accounts payable and accrued expenses approximate their fair value due to the short ‑ term nature of these assets and liabilities. Management believes that the Company’s long ‑ term debt (See Note 8) bears interest at the prevailing market rate for instruments with similar characteristics and, accordingly, the carrying value of long ‑ term debt, also approximates its fair value. The fair value of the outstanding debt was estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years to maturity, adjusted for credit risk, which represents a Level 3 measurement. There were no transfers between fair value measurement levels during the year ended December 31, 2019 or December 31, 2018. |
Common and Preferred Stock
Common and Preferred Stock | 12 Months Ended |
Dec. 31, 2019 | |
Common and Preferred Stock | |
Common and Preferred Stock | Note 11: Common and Preferred Stock Preferred Stock The Company was authorized to issue up to 5,000,000 shares of preferred stock as of December 31, 2019 and 2018. There was no preferred stock outstanding as of December 31, 2019 and 2018. Common Stock The Company was authorized to issue up to 120,000,000 shares of common stock with a $0.001 par value per share as of December 31, 2019 and 2018. The Company had 36,086,254 and 33,863,077 shares of common stock issued and outstanding as of December 31, 2019 and 2018, respectively. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Each election of directors by our stockholders will be determined by a plurality of the votes cast by the stockholders entitled to vote on the election. Holders of common stock are entitled to receive proportionately any dividends as may be declared by our Board, subject to any preferential dividend rights of outstanding preferred stock that we may issue in the future. In the event of our liquidation or dissolution, the holders of our common stock are entitled to receive proportionately all assets available for distribution to stockholders after the payment of all debts and other liabilities and subject to the prior rights of any of our outstanding preferred stock. Holders of our common stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock are subject to and may be adversely affected by the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future. Voting, dividend and liquidation rights of the holders of the common stock are subject to and qualified by the rights, powers and preferences of the holders of preferred stock that we may issue in the future. Voting Each holder of outstanding shares of common stock shall be entitled to one vote in respect of each share. The holders of outstanding shares of common stock, voting together as a single class, shall be entitled to elect one director. The number of authorized shares of common stock may be increased or decreased by the affirmative vote of a majority of the outstanding shares of common stock and preferred stock voting together as a single class. Dividends Subject to the payment in full of all preferential dividends to which the holders of preferred stock may be entitled, the holders of common stock shall be entitled to receive dividends out of funds legally available therefor at such times and in such amounts as the Board may determine in its sole discretion, with holders of preferred stock and common stock sharing pari passu in such dividends. Liquidation Rights Upon any liquidation, after the payment or provision for payment of all debts and liabilities of the Company and all preferential amounts to which the holders of preferred stock may be entitled with respect to the distribution of assets in liquidation, the holders of common stock shall be entitled to share ratably in the remaining assets of the Company available for distribution. Reserved Shares As of December 31, 2019 and 2018, the Company has reserved shares of common stock for issuance upon exercise of rights under warrants, under the Amended and Restated 2017 Employee Stock Purchase Plan (as amended, the “ESPP”) and upon the exercise of stock options as follows (see Note 12): December 31, December 31, 2019 2018 Warrant rights to acquire Common Stock 384,163 384,163 ESPP 438,307 223,341 Outstanding inducement stock option awards 705,500 498,000 2009 Plan 2,530,586 2,563,072 2017 Plan 4,429,849 3,130,910 Total 8,488,405 6,799,486 |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Stock-based Compensation | |
Stock-based Compensation | Note 12: Stock-based Compensation Stock Incentive Plans In December 2009, the Board adopted the 2009 Employee, Director and Consultant Equity Incentive Plan (the “2009 Plan”) for the issuance of common stock and stock options to employees, officers, directors, consultants, and advisors. In July 2017, the Company’s 2017 employees, officers, directors, consultants, and advisors. As of December 31, 2019, there were 146,942 shares of common stock available for grant under the 2017 Plan Also approved under the 2017 Plan is an annual increase for each of the years through December 31, 2027, equal to the least of (i) 3,573,766 shares of common stock, (ii) 4% of the shares of common stock outstanding on December 31 of the prior year and (iii) an amount determined by the Board. Under the plans, the Board determines the number of shares of common stock to be granted pursuant to the awards, as well as the exercise price and terms of such awards. The exercise price of incentive stock options could not be less than the fair value of the common stock on the date of grant. Stock options awarded under the plans expire 10 years after the grant date, unless the Board sets a shorter term. Options granted under the plans generally vest over a four‑year period. A portion of the unvested stock options will vest upon the sale of all or substantially all of the stock or assets of the Company. Inducement Stock Option Awards During the year ended December 31, 2019, the Company granted non-statutory stock options to purchase an aggregate of 207,500 shares of the Company’s common stock to new employees. These stock options will vest over a four-year period, with 25% of the shares underlying each option award vesting on the one-year anniversary of the applicable employees’ hire date and the remaining 75% of the shares underlying each option award vesting monthly thereafter for three-years. Vesting of each option is subject to such employee’s continued service with the Company through the applicable vesting dates. These stock options were granted outside of the 2017 Plan as an inducement material to each employee’s acceptance of employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). A summary of option activity for employee awards under the 2009 Plan, the 2017 Plan and inducement grants for the year ended December 31, 2019 is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) (in thousands) Outstanding at January 1, 2019 $ 8.96 $ 3,771 Granted 4.90 Exercised 1.70 Forfeited 11.33 Outstanding at December 31, 2019 $ 7.46 $ 1,313 Vested or expected to vest at December 31, 2019 7,453,076 $ 7.46 $ 1,313 Options exercisable at December 31, 2019 4,076,113 $ 7.02 $ 1,170 The Company records stock‑based compensation related to stock options granted at fair value. The Company utilizes the Black‑Scholes option‑pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock‑based payment awards represent management’s best estimates. The assumptions used in determining fair value of the stock options granted in the years ended December 31, 2019 and 2018 are as follows: Year Ended December 31, 2019 2018 Expected volatility – 84% – 115% Risk-free interest rate – 2.58% – 2.96% Expected dividend yield 0% 0% Expected term (in years) 5.27 – 6.63 – 6.13 The Company derived the risk-free interest rate assumption from the U.S. Treasury rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the awards being valued. The Company based the assumed dividend yield on its expectation of not paying dividends in the foreseeable future. The Company calculated the expected term of options using the simplified method, as the Company lacks relevant historical data due to the Company’s limited operating experience. The estimated volatility is based upon the historical volatility of comparable companies with publicly available share prices. The impact of forfeitures on compensation expense is recorded as they occur. The weighted average grant-date fair value of options granted during the years ended December 31, 2019 and 2018, was $3.45 and $9.05, respectively. The fair value is being recognized over the vesting period of the options on a straight-line basis as the services are being provided. As of December 31, 2019 and 2018, there was $19.2 million and $21.1 million of unrecognized compensation cost related to the stock options granted, which is expected to be recognized over a weighted-average period of 2.31 years and 2.84 years, respectively. Stock-based compensation recognized was classified in the consolidated statements of operations as follows (in thousands): Year Ended December 31, 2019 2018 Cost of product revenues $ 268 $ — Research and development 2,844 2,660 Selling, general and administrative 6,879 5,955 Total $ 9,991 $ 8,615 For the year ended December 31, 2019, stock-based compensation expense for the Company’s manufacturing employees related to INVELTYS manufactured since the FDA approval of $0.1 million, has been capitalized into inventory as a component of overhead. The Company received cash proceeds from the exercise of stock options of $42,000 and $0.5 million during the years ended December 31, 2019 and 2018, respectively. The total intrinsic value of options exercised for the year ended December 31, 2019 and 2018, was $0.1 million and $1.3 million, respectively. Employee Stock Purchase Plan In 2017, the Company approved the 2017 Employee Stock Purchase Plan, which was amended and restated in December 2018 (as amended, the “ESPP”), under which participating employees can authorize the Company to withhold a portion of their base pay during consecutive six-month payment periods for the purchase of shares of the Company’s common stock. At the conclusion of the period, participating employees can purchase shares of the Company’s common stock at 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. During the year ended December 31, 2019, employees of the Company purchased an aggregate of 123,664 shares under the ESPP. The second offering period for 2019 ended on December 31, 2019. In January 2020, employees of the Company purchased an aggregate of 85,553 shares under the ESPP. The Company recorded $0.3 million of stock-based compensation expense related to the ESPP for the year ended December 31, 2019. There were no purchases under the ESPP for the year ended December 31, 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | Note 13: Income Taxes The Company has had no income tax expense due to operating losses incurred for the years ended December 31, 2019 and 2018. The Company has also not recorded any income tax benefits for the net operating losses incurred in each period due to its uncertainty of realizing a benefit from those items. All of the Company’s losses before income taxes were generated in the United States. A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: Year Ended December 31, 2019 2018 Federal statutory income tax rate 21.0 % 21.0 % Effect of: Change in valuation allowance (25.8) (28.5) State income taxes, net of federal benefit 4.3 5.9 Research and development tax credits 1.0 2.7 Other (0.5) (1.1) Effective income tax rate — % — % Net deferred tax assets as of December 31, 2019 and 2018 consisted of the following (in thousands): December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 49,018 $ 46,933 Research and development tax credit carryforwards 6,250 5,070 Stock-based compensation 5,414 3,010 Lease liabilities 9,369 8,280 Other 2,467 1,318 Capitalized research and development and start-up expenditures 6,733 193 Total deferred tax assets $ 79,251 $ 64,804 Deferred tax liabilities: Right-of-use assets (9,178) (8,221) Total deferred tax liabilities $ (9,178) $ (8,221) Valuation allowance $ (70,073) $ (56,583) Net deferred tax assets $ — $ — The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2019 and 2018. The valuation allowance increased by $13.5 million in 2019 due to an increase in the net operating loss carryforwards and research and development tax credits, partially offset by limitations caused by ownership changes under the provisions of 382. Management reevaluates the positive and negative evidence at each reporting period. At December 31, 2019 and 2018, the Company had federal net operating loss carryforwards of $168.8 million and $165.0 million, respectively, which may be available to offset future federal tax liabilities and expire at various dates beginning in 2030. At December 31, 2019 and 2018, the Company had state net operating loss carryforwards of $171.8 million and $156.4 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates beginning in 2030. As of December 31, 2019 and 2018, the Company also had federal and state research and development credit carryforwards of approximately $6.3 million and $5.1 million, respectively, which are available to reduce future income taxes, if any, from 2030 through 2039 (federal) and 2025 through 2034 (state). Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of Section 382 of the Internal Revenue Code of 1986, certain substantial changes in the Company’s ownership, including a sale of the Company, or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards, which could be used annually to offset future taxable income. The Company previously determined that an ownership change occurred as of April 2016, and such change did not materially impact the Company’s ability to utilize its net operating loss carryforwards and research and development tax credits as of that date to offset future tax liabilities. The Company recently completed an analysis and determined that an additional ownership change occurred and that such change has materially limited the net operating loss carryforwards and research and development tax credits available to offset future tax liabilities. The Company files its corporate income tax returns in the United States and various states. All tax years since the date of incorporation remain open to examination by the major taxing jurisdictions (state and federal) to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (‘‘IRS’’) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other jurisdictions for any tax year. As of December 31, 2019 and 2018 the Company had no uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2019 and 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 14: Commitments and Contingencies License Agreement — In 2009, the Company entered into an exclusive license agreement with The Johns Hopkins University (“JHU”), as amended in November 2012, May 2014, August 2014, October 2014 and June 2018, which licensed to the Company a portfolio of specified patent rights and remains in full force and effect. Pursuant to the terms of the agreement, as amended, the Company agreed to pay an initial license fee, minimum annual payments beginning in 2017, certain development and commercial milestone payments, royalties on product sales and reimburse all or a portion of the costs associated with the preparation, filing, prosecution and maintenance of the agreed-upon patents and patent applications to JHU. After 2016 and until the first commercial sale of product, which occurred in January 2019, the minimum annual payment was $37,500. Upon the launch of INVELTYS, the annual minimum payment increased to $0.1 million. The Company is obligated to pay JHU a tiered royalty rate in the low single-digits on net annual sales of the licensed products. The Company also has an obligation to pay JHU certain one‑time development and commercial milestone payments. During the year ended December 31, 2019, the Company paid JHU $0.4 million related to the first commercial sale milestone and subsequent royalties. The Company also recorded expenses totaling $0.3 million for each of the years ended December 31, 2019 and 2018, respectively, primarily related to the prosecution and maintenance costs on the JHU patent rights licensed to the Company. The Company’s minimum obligations due under its license agreements as of December 31, 2019, are as follows (in thousands): Years Ending December 31, 2020 $ 113 2021 113 2022 113 2023 113 2024 113 Thereafter 1,012 Total minimum license payments $ 1,577 Other Commitments — The Company entered into a commercial supply agreement with Catalent Pharma Solutions, LLC to manufacture commercial supplies of INVELTYS and EYSUVIS, with annual minimum purchase requirements. The Company is subject to these minimum purchase requirements upon receiving an approval for commercial sale for the approved product. The Company has the following minimum purchase obligations for INVELTYS (in thousands): Years Ending December 31, 2020 $ 2021 2022 2023 2024 Thereafter Total minimum purchase commitments $ Litigation —The Company is not currently subject to any material legal proceedings. Guarantees and Indemnifications —The Company’s Certificate of Incorporation authorizes the Company to indemnify and advance expenses to its officers and directors and agents to the fullest extent permitted by law. The Company leases office space under a non-cancelable operating lease, pursuant to which the Company is required to indemnify the landlord against claims, actions, or damages incurred in connection with, among other items, the Company’s occupancy and use of the premises. The Company’s equity agreements and certain other arrangements include standard indemnifications against claims, actions, or other matters that may arise in connection with these arrangements. As of December 31, 2019 and 2018, the Company had not experienced any losses related to these indemnification obligations, and no claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and has no amount accrued related to these contingencies. The Company does not expect these indemnifications to have a material adverse effect on these consolidated financial statements. |
Defined Contribution Plan
Defined Contribution Plan | 12 Months Ended |
Dec. 31, 2019 | |
Defined Contribution Plan | |
Defined Contribution Plan | Note 15: Defined Contribution Plan The Company has a 401(k) defined contribution plan (the ‘‘401(k) Plan’’) for substantially all of its employees. Eligible employees may make pretax contributions to the 401(k) Plan up to statutory limits. The Company made discretionary matching contributions of $0.5 million and $0.2 million to the 401(k) Plan during for the year ended December 31, 2019 and 2018, respectively. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | Note 16: Selected Quarterly Financial Data (Unaudited) Selected quarterly financial data is as follows (in thousands, except per share data): Three months ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 (in thousands, except per share data) Product revenues, net $ 1,386 $ 2,057 $ 1,451 $ 1,180 Costs and expenses: 25,436 24,467 23,018 21,377 Total other income (expense) (1,338) (1,415) (1,609) (1,761) Net loss attributable to common stockholders $ (25,388) $ (23,825) $ (23,176) $ (21,958) Net loss per share attributable to common stockholders—basic and diluted $ (0.75) $ (0.70) $ (0.68) $ (0.63) Three months ended March 31, June 30, September 30, December 31, 2018 2018 2018 2018 (in thousands, except per share data) Product revenues, net $ - $ - $ - $ - Costs and expenses: 11,139 14,519 15,496 23,567 Total other income (expense) (158) (101) (107) (1,651) Net loss attributable to common stockholders $ (11,297) $ (14,620) $ (15,603) $ (25,218) Net loss per share attributable to common stockholders—basic and diluted $ (0.46) $ (0.60) $ (0.63) $ (0.76) |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | Note 17: Subsequent Events The Company has evaluated all events and transactions that occurred after the balance sheet date through the date of this filing. During this period, the Company did not have any material subsequent events that impacted its consolidated financial statements or disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Principles of consolidation | Principles of consolidation— The accompanying consolidated financial statements include the accounts of Kala Pharmaceuticals, Inc. and its wholly owned subsidiary, Kala Pharmaceuticals Security Corporation, which is a Massachusetts subsidiary created to buy, sell and hold securities. All intercompany transactions and balances have been eliminated. |
Basis of Presentation | Basis of Presentation —The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated only limited revenues to date from product sales and has incurred recurring losses and negative cash flows from operations, including a net loss of $94.3 million and $66.7 million, for the years ended December 31, 2019 and 2018, respectively, and used cash in operations of $92.7 million and $54.1 million, in the years ended December 31, 2019 and 2018, respectively. The Company has financed its operations to date primarily through proceeds from its initial public offering of common stock (“IPO”), private placements of preferred stock, convertible debt financings, borrowings under credit facilities, warrants, public offerings of common stock and sales of its common stock under its ATM Offering facility. The Company has devoted substantially all of its financial resources and efforts to research and development, including preclinical studies and clinical trials and engaging in activities to launch and commercialize INVELTYS. The Company expects to continue to incur significant expenses and operating losses for the next several years. Net losses may fluctuate significantly from quarter-to-quarter and year-to-year. The Company also expects that its existing cash on hand as of December 31, 2019, together with anticipated net revenue from sales of INVELTYS, will enable it to fund its planned operations, lease and debt service obligations, and capital expenditure requirements for at least 12 months from the date of these consolidated financial statements. This evaluation is based on the Company’s current operating plan which include projected net revenue from sales of INVELTYS. If the Company does not achieve its projected net revenue, it believes it has the ability to manage spending under its operating plan in order to fund operations for at least 12 months from the date of these consolidated financial statements. This evaluation is based on relevant conditions and events that are currently known or reasonably knowable. As a result, the Company could deplete its available capital resources sooner than it currently expects. The Company has based these estimates on assumptions that may prove to be wrong, and the Company’s operating projections including its projected net revenue, may change as a result of many factors currently unknown. |
Reclassifications | Reclassifications — Certain reclassifications, primarily related to gross deferred tax assets and liabilities, have been made to prior period amounts to conform to the current period financial statement presentation. |
Use of Estimates | Use of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense, and related disclosures. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company evaluates its estimates and assumptions on an ongoing basis. Estimates and assumptions relied upon in preparing these consolidated financial statements relate to, but are not limited to, revenue recognition, inventory, the present value of lease liabilities and the corresponding right-of-use assets, the fair value of warrants, stock compensation, accrued expenses and the recoverability of the Company’s net deferred tax assets and related valuation allowance. Actual results may differ from these estimates under different assumptions or conditions. |
Product Revenues, Net | Product Revenues, Net — The Company sells INVELTYS, its topical twice-a-day ocular steroid for the treatment of inflammation and pain following ocular surgery, to wholesalers and/or specialty distributors in the United States (collectively, “Customers”). These Customers subsequently resell the Company’s products to specialty and other retail pharmacies. In addition to agreements with Customers, the Company enters into arrangements with payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts for the purchase of our product. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods or services. The Company performs the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer. Performance Obligations The Company determined that performance obligations are satisfied and revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time. This generally occurs upon delivery of the products to customers, at which point the Company recognizes revenue and records accounts receivable. Payment is typically received 70 to 90 days after satisfaction of the Company’s performance obligations. Transaction Price and Variable Consideration Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). The transaction price for product sales includes variable consideration related to chargebacks, rebates, sales incentives and allowances, distribution service fees, and returns. The Company will estimate the amount of variable consideration that should be included in the transaction price. These estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. These provisions reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. The amount of variable consideration that is included in the transaction price may be constrained and is included in net sales only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. In general, performance obligations do not include any estimated amounts of variable consideration that are constrained. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The following table summarizes activity in each of the Company’s product revenue provision and allowance categories for the year ended December 31, 2019: Trade Discounts, Allowances and Rebates and Chargebacks (1) Product Returns (2) Incentives (3) Balance at January 1, 2019 $ - $ - - Provision related to current period sales 4,031 321 24,812 Credit/payments made (2,248) (141) (14,768) Balance at December 31, 2019 $ 1,783 $ 180 $ 10,044 (1) Trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. (3) Rebates and incentives includes managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Provisions for rebates and discounts are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. As of December 31, 2019, the Company did not have any transaction price allocated to remaining performance obligations and any costs to obtain contracts with customers, including pre-contract costs and set up costs, were immaterial. |
Accounts Receivable, net | Accounts Receivable, net — Accounts receivable are reported on the consolidated balance sheets at outstanding amounts due from Customers for product sales. The Company deducts sales discounts for prompt payments and contractual fees for service arrangements, and chargebacks from accounts receivable. The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of Customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible. The Company recorded no allowance for doubtful accounts as of December 31, 2019. The Company recorded an allowance of approximately $1.8 million for expected sales discounts, related to prompt pay discounts and contractual fee for service arrangements, to wholesalers and distributors as of December 31, 2019. |
Cost of Product Revenues | Cost of Product Revenues — The cost of product revenues consists primarily of materials, third-party manufacturing costs, freight and distribution costs, royalty expense, allocation of labor, quality control and assurance, reserves for defective inventory, and other manufacturing overhead costs. The Company expenses cost of product revenues related to product candidates as research and development expenses prior to regulatory approval in the respective territory. The Company received U.S. regulatory approval for INVELTYS on August 22, 2018. |
Cash and Concentration of Credit Risk | Cash and Concentration of Credit Risk —Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Three Customers comprised 10% or more of the Company’s accounts receivable balance as of December 31, 2019. These Customers comprised 41%, 35% and 23% of the accounts receivable balance, respectively, as of December 31, 2019. To date, the Company has not experienced any losses with respect to the collection of its accounts receivable and believes that its entire accounts receivable balances is collectible as of December 31, 2019. The same three Customers comprised 10% or more of the Company’s revenue during the year ended December 31, 2019. These Customers comprised 39%, 33% and 26% of revenue, respectively. The Company has no financial instruments with off‑balance sheet risk of loss. |
Restricted Cash | Restricted Cash —As of December 31, 2019 and 2018, the Company had restricted cash of $12.6 million and $12.2 million, respectively, which represents cash held to satisfy its financial covenant (See Note 8) and serve as collateral for the Company’s vehicle fleet lease, credit cards and its facility lease in Watertown, Massachusetts. This cash is classified as a non-current asset in the accompanying consolidated balance sheets. |
Inventory | Inventory — Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out (“FIFO”) method. Costs include amounts related to third party manufacturing, transportation, internal labor and overhead. Capitalization of costs as inventory begins when the product has received regulatory approval. The Company expenses inventory costs related to product candidates as research and development expenses prior to regulatory approval in the respective territory, even if this inventory may later be sold. For INVELTYS, capitalization of costs as inventory began upon U.S. regulatory approval on August 22, 2018. Inventory produced that will be used in a promotional sample program is expensed to selling, general and administrative expense when it is selected for use and shipped as part of a marketing program. Long-term inventory includes inventory with an anticipated sale or consumption beyond one year based on the Company’s forecasted expectations. |
Leases | Leases —At the inception of an arrangement the Company determines whether the arrangement is or contains a lease. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one-year or less. Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company’s facilities operating leases have lease and non-lease components which the Company has elected to use the practical expedient and account for each lease component and related non-lease component as one single component. The lease component results in a right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis to the statements of operations. |
Property and Equipment, net | Property and Equipment, net —Property and equipment are recorded at cost. Depreciation is provided using the straight‑line method over the estimated useful lives of the related assets. Depreciation expense is included in operations. Laboratory equipment and office and computer equipment is depreciated over three to five years. Leasehold improvements are depreciated over the shorter of their useful life or the life of the lease. Major additions and upgrades are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations. |
Patent Costs | Patent Costs —Costs to secure and defend patents are expensed as incurred and are classified as selling, general and administrative expenses in the Company’s consolidated statements of operations. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets —Long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If the undiscounted cash flows are insufficient to recover the carrying value, the assets are recorded at the lesser of the carrying value or fair value. For the years ended December 31, 2019 and 2018, no impairments were recorded. |
Segment Information | Segment Information —Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The CODM is the Company’s Chief Executive Officer. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company’s singular focus is on the development and commercialization of therapeutics using its proprietary AMPPLIFY technology. All of the Company’s tangible assets are held in the United States. To date, all of the Company’s revenue has been generated in the United States. |
Research and Development Costs | Research and Development Costs —Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full‑time research and development employees, an allocation of facilities expenses, overhead expenses, payments to universities under the Company’s license agreements and other outside expenses. Research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance, including nonrefundable prepayments for goods or services, are deferred and capitalized as a prepaid expense. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. |
Accrued Expenses | Accrued Expenses — The Company accrues for variable consideration related to rebates, sales incentives and allowances, distribution service fees, and returns. Such estimates are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of the accrued expense. The Company also accrues expenses related to development activities performed by third parties based on an evaluation of services received and efforts expended pursuant to the terms of the contractual arrangements. Payments under some of these contracts depend on clinical trial milestones. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of expenses. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be 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 or prepaid expense accordingly. |
Stock-Based Compensation | Stock‑Based Compensation —The Company accounts for all stock‑based awards granted as compensation expense at fair value. The Company generally issues stock option awards with the measurement date for awards as the date of grant. Stock‑based compensation costs are recognized as expense over the employees’ requisite service period, which is the vesting period, on a straight‑line basis. Stock‑based compensation is classified in the accompanying consolidated statements of operations based on the function to which the related services are provided, or capitalized with inventory until related expense is recognized. The Company recognizes compensation expense for the portion of awards that have vested. After the adoption of Accounting Standards Update (“ASU”) 2016-09, described in further detail below, forfeitures are recorded as they occur. The fair value of each stock option grant is estimated on the date of grant using the Black‑Scholes option‑pricing model. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The Company lacks sufficient company‑specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and will continue to do so until it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain‑vanilla” options. The risk‑free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future. |
Common Stock Valuation Prior to the IPO | Common Stock Valuation Prior to the IPO —Through the consummation of the IPO in July 2017, due to the absence of an active market for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants Technical Practice Aid, Valuation of Privately‑Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. In determining the exercise prices for options granted, the Company has considered the estimated fair value of the common stock as of the measurement date. The estimated fair value of the common stock has been determined at each grant date based upon a variety of factors, including the illiquid nature of the common stock, arm’s‑length sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event. Among other factors are the Company’s financial position and historical financial performance, the status of technological developments within the Company’s research, the composition and ability of the current research and management team, an evaluation or benchmark of the Company’s competition, and the current business climate in the marketplace. Significant changes to the key assumptions underlying the factors used could have resulted in different fair values of common stock at each valuation date. |
Income Taxes | Income Taxes —Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the Company’s consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the consolidated financial statement carrying amounts and the tax basis of existing assets and liabilities and for loss and credit carryforwards using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company provides reserves for potential payments of tax to various tax authorities related to uncertain tax positions and other issues. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As a result, reserves are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present. |
Net Loss per Share | Net Loss per Share —Basic net loss per share is computed using the weighted‑average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants. The weighted average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, and warrants. Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti‑dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2019 and 2018. |
Comprehensive Loss | Comprehensive Loss —Comprehensive loss is equal to net loss for the periods presented. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) effective January 1, 2018. ASU 2014-09 states that an entity should recognize revenue based on 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 FASB subsequently issued amendments to ASU 2014-09 that had the same effective date of January 1, 2018. Revenue from sales of INVELTYS, as well as any other future revenue arrangements, are and will be recognized under the provisions of ASU 2014-09. While the Company adopted ASU 2014-09 effective January 1, 2018, the Company did not generate any revenue from product sales prior to 2019. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 substantially aligns accounting for share-based payments to employees and non-employees. This ASU became effective for annual periods beginning after December 15, 2018, including interim periods within that period, and early adoption is permitted. The new standard was effective on January 1, 2019 and the adoption of ASU 2018-07 did not have an impact on the Company’s consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments. ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measuremen t (“ASU 2018-13”). ASU 2018-13 is intended to improve the effectiveness of disclosures in the notes to financial statements related to fair value measurements in Topic 820. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15 , Intangibles - Goodwill and Other - Internal-Use Software -Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns the accounting for implementation costs incurred in a hosting arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software. This ASU will become effective for annual periods beginning after December 15, 2019, including interim periods within that period, and early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of co-pay assistance program | Trade Discounts, Allowances and Rebates and Chargebacks (1) Product Returns (2) Incentives (3) Balance at January 1, 2019 $ - $ - - Provision related to current period sales 4,031 321 24,812 Credit/payments made (2,248) (141) (14,768) Balance at December 31, 2019 $ 1,783 $ 180 $ 10,044 (1) Trade allowances and chargebacks include fees for distribution service fees, prompt pay discounts, and chargebacks. Trade allowances and chargebacks are deducted from gross revenue at the time revenues are recognized and are recorded as a reduction to accounts receivable in the Company’s Consolidated Balance Sheets. (2) Provisions for product returns are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. Rebates and incentives includes managed care rebates, government rebates, co-pay program incentives, and sales incentives and allowances. Provisions for rebates and discounts are deducted from gross revenues at the time revenues are recognized and are included in accrued expenses and other current liabilities in the Company’s Consolidated Balance Sheets. |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory | |
Schedule of Inventory | Current and long-term inventory consist of the following (in thousands): December 31, December 31, 2019 2018 Raw materials $ 1,387 $ 350 Work in progress 4,166 3,357 Finished goods 2,873 388 Total inventory $ 8,426 $ 4,095 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | Prepaid Expenses and Other Current Assets, consists of the following (in thousands): December 31, December 31, 2019 2018 Insurance $ 906 $ 532 Deposits 699 — Non-trade receivables 1,535 Receivable for construction related to facility — 1,026 Other 684 477 Prepaid expenses and other current assets $ 3,824 $ 2,035 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | Property and equipment, net, consists of the following (in thousands): December 31, December 31, 2019 2018 Equipment $ 2,627 $ 2,400 Leasehold improvements 356 114 Computer hardware and software 892 599 Furniture and office equipment 1,144 67 Construction in progress 195 804 Property and equipment — at cost 5,214 3,984 Less: Accumulated depreciation (2,516) (1,818) Property and equipment—net $ 2,698 $ 2,166 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses | |
Schedule of accrued expenses | December 31, December 31, 2019 2018 Compensation and benefits $ 6,502 $ 5,352 Accrued revenue reserves (1) 9,482 — Development costs 1,600 1,223 Professional services 760 1,019 Commercial cost 930 1,722 Contract manufacturing 630 434 Payable related to construction of facility — 1,026 Other 1,025 325 Accrued expenses $ 20,929 $ 11,101 As of December 31, 2019, $0.7 million of additional revenue reserves were in accounts payable. |
Lease (Tables)
Lease (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Lease | |
Schedule of components of lease expense and related cash flows | The components of lease expense and related cash flows were as follows (in thousands): Years Ended December 31, 2019 2018 Lease cost Operating lease cost $ $ Short-term lease cost — Variable lease cost Total lease cost $ $ Operating cash outflows from operating leases $ $ |
Schedule of maturities of finance lease liability | Maturities of lease liability due under these lease agreements as of December 31, 2019 are as follows (in thousands): Years Ending December 31, Operating Lease (1) Finance Lease (2) Total 2020 $ 4,141 $ 41 $ 4,182 2021 4,233 41 4,274 2022 4,021 41 4,062 2023 3,960 — 3,960 2024 4,079 — 4,079 Thereafter 31,336 — 31,336 Present value adjustment (21,877) (16) (21,893) Present value of lease payments $ 29,893 $ 107 $ 30,000 (1) Future minimum lease payments under the Company’s Watertown Lease and its Vehicle Fleet Lease. Future minimum lease payments under the Company’s finance lease obligation. (2) Future minimum lease payments under the Company's finance lease obligation. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt | |
Schedule of carrying value of debt | The components of the carrying value of the debt consist of the following (in thousands) : December 31, December 31, 2019 2018 Principal loan balance $ 75,000 $ 75,000 Unamortized debt discount and issuance cost (3,999) (4,806) Cumulative accretion of exit fee 183 32 Long-term debt, net $ 71,184 $ 70,226 |
Schedule of maturities of long-term debt | The future annual principal payments due under the Athyrium Credit Facility as of December 31, 2019 were as follows (in thousands): Years Ending December 31, 2020 $ — 2021 — 2022 16,665 2023 33,330 2024 25,005 Total $ 75,000 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Warrants | |
Schedule of outstanding warrants | Shares Exercisable at Exercise Expiration Exercisable December 31, December 31, Issued Price Date From 2019 2018 2013 $ 7.50 April 2021 July 2017 82,816 82,816 2014 $ 7.50 November 2024 July 2017 16,000 16,000 2016 $ 8.27 October 2026 September 2017 14,512 14,512 2018 $ 12.18 October 2025 October 2018 184,660 184,660 2018 $ 12.18 October 2025 (1) — — 297,988 297,988 As of December 31, 2019, warrants outstanding to acquire 86,175 of common stock are not exercisable and are only exercisable upon draw down of Athyrium Term Loan B. |
Common and Preferred Stock (Tab
Common and Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Common and Preferred Stock | |
Schedule of reserved common stock shares upon exercise of rights under equity compensation plans | December 31, December 31, 2019 2018 Warrant rights to acquire Common Stock 384,163 384,163 ESPP 438,307 223,341 Outstanding inducement stock option awards 705,500 498,000 2009 Plan 2,530,586 2,563,072 2017 Plan 4,429,849 3,130,910 Total 8,488,405 6,799,486 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock-based Compensation | |
Summary of option activity for employee and non employee awards | Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Term Value (Years) (in thousands) Outstanding at January 1, 2019 $ 8.96 $ 3,771 Granted 4.90 Exercised 1.70 Forfeited 11.33 Outstanding at December 31, 2019 $ 7.46 $ 1,313 Vested or expected to vest at December 31, 2019 7,453,076 $ 7.46 $ 1,313 Options exercisable at December 31, 2019 4,076,113 $ 7.02 $ 1,170 |
Schedule of assumptions used in determining fair value of the stock options granted | Year Ended December 31, 2019 2018 Expected volatility – 84% – 115% Risk-free interest rate – 2.58% – 2.96% Expected dividend yield 0% 0% Expected term (in years) 5.27 – 6.63 – 6.13 |
Schedule of reserved common stock shares upon exercise of rights under equity compensation plans | December 31, December 31, 2019 2018 Warrant rights to acquire Common Stock 384,163 384,163 ESPP 438,307 223,341 Outstanding inducement stock option awards 705,500 498,000 2009 Plan 2,530,586 2,563,072 2017 Plan 4,429,849 3,130,910 Total 8,488,405 6,799,486 |
Schedule of stock based compensation expense | Stock-based compensation recognized was classified in the consolidated statements of operations as follows (in thousands): Year Ended December 31, 2019 2018 Cost of product revenues $ 268 $ — Research and development 2,844 2,660 Selling, general and administrative 6,879 5,955 Total $ 9,991 $ 8,615 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of income tax reconciliation based on federal statutory rate | Year Ended December 31, 2019 2018 Federal statutory income tax rate 21.0 % 21.0 % Effect of: Change in valuation allowance (25.8) (28.5) State income taxes, net of federal benefit 4.3 5.9 Research and development tax credits 1.0 2.7 Other (0.5) (1.1) Effective income tax rate — % — % |
Schedule of net deferred tax assets | December 31, 2019 2018 Deferred tax assets: Net operating loss carryforwards $ 49,018 $ 46,933 Research and development tax credit carryforwards 6,250 5,070 Stock-based compensation 5,414 3,010 Lease liabilities 9,369 8,280 Other 2,467 1,318 Capitalized research and development and start-up expenditures 6,733 193 Total deferred tax assets $ 79,251 $ 64,804 Deferred tax liabilities: Right-of-use assets (9,178) (8,221) Total deferred tax liabilities $ (9,178) $ (8,221) Valuation allowance $ (70,073) $ (56,583) Net deferred tax assets $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies. | |
Schedule of minimum obligations due | Years Ending December 31, 2020 $ 113 2021 113 2022 113 2023 113 2024 113 Thereafter 1,012 Total minimum license payments $ 1,577 |
Schedule of minimum purchase obligations | The Company has the following minimum purchase obligations for INVELTYS (in thousands): Years Ending December 31, 2020 $ 2021 2022 2023 2024 Thereafter Total minimum purchase commitments $ |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Selected Quarterly Financial Data (Unaudited) | |
Quarterly Financial Information | Selected quarterly financial data is as follows (in thousands, except per share data): Three months ended March 31, June 30, September 30, December 31, 2019 2019 2019 2019 (in thousands, except per share data) Product revenues, net $ 1,386 $ 2,057 $ 1,451 $ 1,180 Costs and expenses: 25,436 24,467 23,018 21,377 Total other income (expense) (1,338) (1,415) (1,609) (1,761) Net loss attributable to common stockholders $ (25,388) $ (23,825) $ (23,176) $ (21,958) Net loss per share attributable to common stockholders—basic and diluted $ (0.75) $ (0.70) $ (0.68) $ (0.63) Three months ended March 31, June 30, September 30, December 31, 2018 2018 2018 2018 (in thousands, except per share data) Product revenues, net $ - $ - $ - $ - Costs and expenses: 11,139 14,519 15,496 23,567 Total other income (expense) (158) (101) (107) (1,651) Net loss attributable to common stockholders $ (11,297) $ (14,620) $ (15,603) $ (25,218) Net loss per share attributable to common stockholders—basic and diluted $ (0.46) $ (0.60) $ (0.63) $ (0.76) |
Nature of business (Details)
Nature of business (Details) - USD ($) $ / shares in Units, $ in Thousands | Feb. 12, 2020 | Oct. 11, 2018 | Oct. 05, 2018 | Aug. 09, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 01, 2018 |
Equity Offerings | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||
Net proceeds | $ 8,425 | $ 70,766 | |||||
Underwriters discount and offering costs | 5,000 | ||||||
Accumulated deficit | (295,456) | (201,109) | |||||
Aggregate principal amount | $ 75,000 | ||||||
Underwriter's option | |||||||
Equity Offerings | |||||||
Common stock offering, net of issuance cost and underwriting fees (in shares) | 1,125,000 | ||||||
Shelf | |||||||
Equity Offerings | |||||||
Common stock offering, net of issuance cost and underwriting fees (in shares) | 8,625,000 | 7,500,000 | |||||
Net proceeds | $ 66,100 | ||||||
Share authorized value (shelf) | $ 250,000 | $ 128,800 | |||||
Registration period | 3 years | ||||||
Sales agreement | $ 50,000 | ||||||
Price per share | $ 8.25 | ||||||
ATM | |||||||
Equity Offerings | |||||||
Common stock offering, net of issuance cost and underwriting fees (in shares) | 583,411 | 2,592,934 | |||||
Net proceeds | $ 2,200 | $ 13,100 | |||||
Share authorized value (ATM) | $ 36,400 | ||||||
Athyrium | Term Loan A | |||||||
Equity Offerings | |||||||
Aggregate principal amount | $ 75,000 | ||||||
Athyrium | Term Loan B | |||||||
Equity Offerings | |||||||
Aggregate principal amount | $ 35,000 | ||||||
Common Stock | |||||||
Equity Offerings | |||||||
Common stock offering, net of issuance cost and underwriting fees (in shares) | 8,625,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation and Stock Split (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||||||||||
Net loss attributable to common stockholders | $ (21,958) | $ (23,176) | $ (23,825) | $ (25,388) | $ (25,218) | $ (15,603) | $ (14,620) | $ (11,297) | $ (94,347) | $ (66,738) |
Cash used in operations | $ (92,720) | $ (54,121) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Performance Obligations (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Minimum period in which payment is typically received | 70 days |
Maximum period in which payment is typically received | 90 days |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Co-pay Assistance Program (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Trade Discounts, Allowances and Chargebacks | |
Provision related to current period sales | $ 4,031 |
Credit/payments made | (2,248) |
Ending balance | 1,783 |
Product Returns | |
Provision related to current period sales | 321 |
Credit/payments made | (141) |
Ending balance | 180 |
Rebates And Incentives | |
Provision related to current period sales | 24,812 |
Credit/payments made | (14,768) |
Ending balance | $ 10,044 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Accounts Receivable, net (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 0 | $ 1.8 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Cash, Concentration of Credit Risk and Restricted Cash (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)Counterparty | Dec. 31, 2018USD ($) | |
Cash and Concentration of Credit Risk | ||
Number of counterparties | Counterparty | 3 | |
Restricted Cash | ||
Restricted cash | $ | $ 12,582 | $ 12,206 |
First Customer | ||
Cash and Concentration of Credit Risk | ||
Percent of total accounts receivable | 41.00% | |
Percent of total revenue | 39.00% | |
Second Customer | ||
Cash and Concentration of Credit Risk | ||
Percent of total accounts receivable | 35.00% | |
Percent of total revenue | 33.00% | |
Third Customer | ||
Cash and Concentration of Credit Risk | ||
Percent of total accounts receivable | 23.00% | |
Percent of total revenue | 26.00% |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - PPE, Asset Impairment and Tax Incentives (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Impairment of Long-Lived Assets | ||
Long-lived asset impairment | $ 0 | $ 0 |
Laboratory Equipment | Minimum | ||
Property and Equipment, net | ||
Useful life (in years) | 3 years | |
Laboratory Equipment | Maximum | ||
Property and Equipment, net | ||
Useful life (in years) | 5 years | |
Office equipment | Minimum | ||
Property and Equipment, net | ||
Useful life (in years) | 3 years | |
Office equipment | Maximum | ||
Property and Equipment, net | ||
Useful life (in years) | 5 years | |
Computer hardware and software | Minimum | ||
Property and Equipment, net | ||
Useful life (in years) | 3 years | |
Computer hardware and software | Maximum | ||
Property and Equipment, net | ||
Useful life (in years) | 5 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Net Loss Per Share (Details) - $ / shares | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||||||||||
Weighted average shares outstanding—basic and diluted | 34,209,756 | 26,753,906 | ||||||||
Net loss per share—basic and diluted | $ 0.63 | $ 0.68 | $ 0.70 | $ 0.75 | $ 0.76 | $ 0.63 | $ 0.60 | $ 0.46 | $ 2.76 | $ 2.49 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Impact to Previously Reported Results (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Impacts to Previously Reported Results | ||
Right-of-use assets | $ 29,781 | $ 29,566 |
Accrued expenses | 20,929 | 11,101 |
Lease liabilities | 1,327 | 463 |
Accrued expenses and other current liabilities | $ 9,630 | $ 3,968 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory | ||
Raw Materials | $ 1,387 | $ 350 |
Work in Progress | 4,166 | 3,357 |
Finished Goods | 2,873 | 388 |
Total inventory | 8,426 | 4,095 |
Inventory | 4,648 | $ 4,095 |
Long-term inventory | $ 3,778 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses and Other Current Assets | ||
Insurance | $ 906 | $ 532 |
Deposits | 699 | |
Nontrade Receivables, Current | 1,535 | |
Receivable for construction related to facility | 1,026 | |
Other | 684 | 477 |
Prepaid expenses and other current assets | $ 3,824 | $ 2,035 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment, net | ||
Property and equipment—at cost | $ 5,214 | $ 3,984 |
Less: Accumulated depreciation | (2,516) | (1,818) |
Property and equipment—net | 2,698 | 2,166 |
Depreciation | 843 | 352 |
Equipment | ||
Property and Equipment, net | ||
Property and equipment—at cost | 2,627 | 2,400 |
Leasehold improvements | ||
Property and Equipment, net | ||
Property and equipment—at cost | 356 | 114 |
Computer hardware and software | ||
Property and Equipment, net | ||
Property and equipment—at cost | 892 | 599 |
Construction in Progress | ||
Property and Equipment, net | ||
Property and equipment—at cost | 195 | 804 |
Furniture and office equipment | ||
Property and Equipment, net | ||
Property and equipment—at cost | $ 1,144 | $ 67 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Compensation and benefits | $ 6,502 | $ 5,352 |
Accrued revenue reserves | 9,482 | |
Development costs | 1,600 | 1,223 |
Professional services | 760 | 1,019 |
Commercial cost | 930 | 1,722 |
Contract manufacturing | 630 | 434 |
Accrued Construction Costs | 1,026 | |
Other | 1,025 | 325 |
Accrued expenses | 20,929 | $ 11,101 |
Accounts payable | ||
Accrued revenue reserves | $ 700 |
Lease (Details)
Lease (Details) $ in Thousands | Feb. 28, 2018 | Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Mar. 31, 2019 | Nov. 15, 2018 | Sep. 30, 2013USD ($) |
Leases | ||||||
Lease term | 3 years | |||||
Restricted cash | $ 12,582 | $ 12,206 | ||||
Variable lease cost | $ 1,766 | 83 | ||||
Remaining lease term | 2 years 2 months 12 days | |||||
Number of vehicles leased under a master fleet lease agreement | item | 65 | |||||
Amount borrowed | $ 500 | |||||
Lease cost | ||||||
Operating lease cost | 4,614 | 1,099 | ||||
Short-term lease cost | 183 | |||||
Variable Lease, Cost | 1,766 | 83 | ||||
Total lease cost | 6,380 | 1,365 | ||||
Operating cash outflows from operating leases | 5,445 | 988 | ||||
Operating Lease, Right-of-Use Asset | $ 29,781 | 29,566 | ||||
Watertown Lease | ||||||
Leases | ||||||
Lease term | 8 years | 13 years | ||||
Restricted cash | $ 2,000 | |||||
Existence of option to extend | true | |||||
Renewal term | 5 years | |||||
Lease cost | ||||||
Weighted average remaining lease term | 11 years 9 months 29 days | |||||
Present value of lease payments, discounted | 9.90% | |||||
Waltham Lease | ||||||
Leases | ||||||
Lease term | 3 years | |||||
Waltham Lease | Letter of credit | ||||||
Leases | ||||||
Amount borrowed | $ 100 |
Lease - Future Minimum Commitme
Lease - Future Minimum Commitments Due (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Operating and Finance Leases Payments | |
2020 | $ 4,182 |
2021 | 4,274 |
2022 | 4,062 |
2023 | 3,960 |
2024 | 4,079 |
Thereafter | 31,336 |
Present value adjustment | (21,893) |
Present value of lease payments | 30,000 |
Operating Lease Obligations | |
Future minimum commitments due | |
2020 | 4,141 |
2021 | 4,233 |
2022 | 4,021 |
2023 | 3,960 |
2024 | 4,079 |
Thereafter | 31,336 |
Present value adjustment | (21,877) |
Present value of lease payments, operating | 29,893 |
Short-Term Lease Obligation | |
Finance Lease Payments | |
2020 | 41 |
2021 | 41 |
2022 | 41 |
Present value adjustment | (16) |
Present value of lease payments, financing | $ 107 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Oct. 01, 2018 | Oct. 13, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Nov. 30, 2014 |
Debt instruments | ||||||
Amount borrowed | $ 500 | |||||
Term loan | $ 71,927 | |||||
Interest expense | $ 8,480 | 3,314 | ||||
Aggregate principal amount | 75,000 | |||||
2014 Debt Facility | ||||||
Debt instruments | ||||||
Total loan commitment | $ 10,000 | |||||
Additional borrowing capacity | $ 10,000 | |||||
Interest rate (as a percent) | 8.25% | |||||
Interest expense | 1,200 | |||||
Amortization of debt discount | $ 100 | |||||
Contractual coupon interest | $ 1,100 | |||||
Debt repayments | $ 20,000 | |||||
Prepayment fees paid | $ 200 | |||||
2014 Debt Facility | Prime Rate | ||||||
Debt instruments | ||||||
Variable rate of interest | 3.00% | |||||
Term Loan A | ||||||
Debt instruments | ||||||
Total loan commitment | $ 10,000 |
Debt - Athyrium Credit Facility
Debt - Athyrium Credit Facility (Details) $ / shares in Units, $ in Thousands | Oct. 01, 2018USD ($)item$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)shares |
Debt instruments | |||
Aggregate principal amount | $ 75,000 | ||
Cumulative accretion of exit fee | $ 32 | ||
Number of features of embedded derivative | item | 2 | ||
Number of derivatives | item | 1 | ||
Warrant exercisable | shares | 297,988 | 297,988 | |
Debt issuance costs | $ 4,806 | ||
Interest expense | $ 8,480 | $ 3,314 | |
Warrants 2018 | |||
Debt instruments | |||
Exercise Price | $ / shares | $ 12.18 | ||
Warrant exercisable | shares | 184,660 | 184,660 | |
Athyrium Credit Facility | |||
Debt instruments | |||
Interest expense | $ 8,300 | ||
Amortization of debt discount | 800 | ||
Contractual coupon interest | $ 7,500 | ||
Athyrium | |||
Debt instruments | |||
Remaining warrant exercisable upon condition | shares | 86,175 | ||
Athyrium | Warrants 2018 | |||
Debt instruments | |||
Exercise Price | $ / shares | $ 12.18 | ||
Athyrium | Athyrium Credit Facility | |||
Debt instruments | |||
Aggregate principal amount | $ 110,000 | $ 75,000 | |
Debt term (in years) | 6 years | ||
Cumulative accretion of exit fee | 183 | ||
Fees to service provider | $ 3,000 | ||
Debt issuance costs | $ 3,999 | ||
Effective interest rate | 11.63% | ||
Athyrium | Athyrium Credit Facility | Warrants 2018 | |||
Debt instruments | |||
Warrant to purchase shares of common stock | shares | 270,835 | ||
Exercise Price | $ / shares | $ 12.18456 | ||
Warrant exercisable | shares | 184,660 | ||
Remaining warrant exercisable upon condition | shares | 86,175 | ||
Initial fair value of the Warrant | $ 1,900 | ||
Athyrium | Term Loan A | |||
Debt instruments | |||
Aggregate principal amount | $ 75,000 | ||
Line of Credit Facility, Interest Rate During Period | 9.875% | ||
Exit fee of the total principal payments (as a percent) | 1.00% | ||
Cumulative accretion of exit fee | $ 700 | ||
Present value of prepayments if prepayment occurs prior to the second anniversary (as a percent) | 105.00% | ||
Prepayments if prepayment occurs on or after the second anniversary of the applicable date of issuance but prior to the third anniversary (as a percent) | 3.00% | ||
Prepayments if prepayment occurs on or after the third anniversary (as a percent) | 2.00% | ||
Prepayments if prepayment occurs after the fourth anniversary (as a percent) | 0.00% | ||
Additional interest rate upon an event of default accrued (as a percent) | 3.00% | ||
Total interest rate (as a percent) | 12.875% | ||
Financial covenant amount | $ 10,000 | ||
Athyrium | Term Loan B | |||
Debt instruments | |||
Aggregate principal amount | $ 35,000 |
Debt - Carrying Value (Details)
Debt - Carrying Value (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Oct. 01, 2018 |
Debt instruments | |||
Principal Loan Balance | $ 75,000 | ||
Unamortized debt discount and issuance cost | (4,806) | ||
Accretion of exit fee | 32 | ||
Long-term debt, net | $ 71,184 | $ 70,226 | |
Athyrium | Athyrium Credit Facility | |||
Debt instruments | |||
Principal Loan Balance | 75,000 | $ 110,000 | |
Unamortized debt discount and issuance cost | (3,999) | ||
Accretion of exit fee | 183 | ||
Long-term debt, net | $ 71,184 |
Debt - Future annual principal
Debt - Future annual principal payments (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Maturities of long-term debt | |
2022 | $ 16,665 |
2023 | 33,330 |
2024 | 25,005 |
Total | $ 75,000 |
Warrants (Details)
Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Preferred stock warrants | ||
Shares Exercisable | 297,988 | 297,988 |
Warrants 2013 | ||
Preferred stock warrants | ||
Exercise Price | $ 7.50 | |
Shares Exercisable | 82,816 | 82,816 |
Warrants 2014 | ||
Preferred stock warrants | ||
Exercise Price | $ 7.50 | |
Shares Exercisable | 16,000 | 16,000 |
Warrants 2016 | ||
Preferred stock warrants | ||
Exercise Price | $ 8.27 | |
Shares Exercisable | 14,512 | 14,512 |
Warrants 2018 | ||
Preferred stock warrants | ||
Exercise Price | $ 12.18 | |
Shares Exercisable | 184,660 | 184,660 |
Athyrium | ||
Preferred stock warrants | ||
Shares Exercisable upon condition | 86,175 | |
Athyrium | Warrants 2018 | ||
Preferred stock warrants | ||
Exercise Price | $ 12.18 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments - Fair value measurement levels (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Fair Value of Financial Instruments | ||
Transfer from level 1 to level 2, Assets | $ 0 | $ 0 |
Transfer from level 2 to level 1, Assets | 0 | 0 |
Transfer from level 1 to level 2, Liabilities | 0 | 0 |
Transfer from level 2 to level 1, Liabilities | 0 | 0 |
Transfer into level 3, Assets | 0 | 0 |
Transfer out of level 3, Assets | 0 | 0 |
Transfer into level 3, Liability | 0 | 0 |
Transfer out of level 3, Liability | $ 0 | $ 0 |
Common and Preferred Stock (Det
Common and Preferred Stock (Details) | 12 Months Ended | |
Dec. 31, 2019directorVote$ / sharesshares | Dec. 31, 2018$ / sharesshares | |
Common stock and preferred stock | ||
Common stock, authorized | 120,000,000 | 120,000,000 |
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 |
Common stock, shares issued | 36,086,254 | 33,863,077 |
Common stock, shares outstanding | 36,086,254 | 33,863,077 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Number of votes per common share for each outstanding share | Vote | 1 | |
Number of directors granted | director | 1 | |
Common stock shares reserved for future issuance | 8,488,405 | 6,799,486 |
Warrant rights to acquire Common Stock | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 384,163 | 384,163 |
Employee and Non-Employee Stock Options | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 438,307 | 223,341 |
2009 stock option plan | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 2,530,586 | 2,563,072 |
2017 stock option plan | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 4,429,849 | 3,130,910 |
Stock Options | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 705,500 | 498,000 |
Common stock. | ||
Common stock and preferred stock | ||
Number of votes entitled to each share held | Vote | 1 | |
2017 Equity Incentive Plan | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 146,942 | |
2017 Equity Incentive Plan | Maximum | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 2,530,586 | |
2017 Equity Incentive Plan | Minimum | ||
Common stock and preferred stock | ||
Common stock shares reserved for future issuance | 3,573,766 | |
Percentage of aggregate number of common shares reserved for future issuance (as a percent) | 4.00% |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation | ||
Common stock available for future grant | 8,488,405 | 6,799,486 |
2017 Equity Incentive Plan | ||
Stock-based compensation | ||
Common stock available for future grant | 146,942 | |
2017 Equity Incentive Plan | Maximum | ||
Stock-based compensation | ||
Common stock available for future grant | 2,530,586 | |
2017 Equity Incentive Plan | Minimum | ||
Stock-based compensation | ||
Common stock available for future grant | 3,573,766 | |
Percentage of aggregate number of common shares reserved for future issuance (as a percent) | 4.00% | |
Employee and Non-Employee Stock Options | ||
Stock-based compensation | ||
Common stock available for future grant | 438,307 | 223,341 |
Employee and Non-Employee Stock Options | 2009 plan | ||
Stock-based compensation | ||
Options Expiry Term | 10 years | |
Vesting Period | 4 years |
Stock-based Compensation - Indu
Stock-based Compensation - Inducement Stock Option Awards (Details) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation | ||
Anniversary of the share-based compensation arrangement | 1 year | |
Employee | Non-statutory Stock Options | ||
Stock-based compensation | ||
Options Expiry Term | 4 years | |
Vesting Period | 3 years | |
Number of common stock issuable upon exercise of rights under equity compensation plans | 207,500 | |
Percentage of vesting of share-based compensation awards on the one year anniversary of the grant date | 25.00% | |
Percentage of vesting of share-based compensation awards after the year anniversary of the grant date | 75.00% |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Options (Details) - 2009 plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Outstanding at the beginning of the period (in shares) | 5,111,690 | |
Granted (in shares) | 2,637,175 | |
Exercised (in shares) | (24,714) | |
Forfeited | (271,075) | |
Outstanding at the end of the period (in shares) | 7,453,076 | 5,111,690 |
Vested and expected to vest (in shares) | 7,453,076 | |
Options exercisable (in shares) | 4,076,113 | |
Weighted Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 8.96 | |
Granted (in dollars per share) | 4.90 | |
Exercised (in dollars per share) | 1.70 | |
Forfeited (in dollars per share) | 11.33 | |
Outstanding at the end of the period (in dollars per share) | 7.46 | $ 8.96 |
Vested and expected to vest (in dollars per share ) | 7.46 | |
Options exercisable (in dollars per shares) | $ 7.02 | |
Weighted Average Remaining Contractual Term | ||
Weighted average period | 7 years 8 months 12 days | 8 years |
Vested and expected to vest | 7 years 8 months 12 days | |
Options exercisable | 6 years 9 months 18 days | |
Aggregate Intrinsic Value | ||
Outstanding at the beginning of the period (in dollars) | $ 3,771 | |
Outstanding at the end of the period (in dollars) | 1,313 | $ 3,771 |
Vested and expected to vest (in dollars) | 1,313 | |
Options exercisable (in dollars) | $ 1,170 |
Stock-based Compensation - Fair
Stock-based Compensation - Fair Value Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Assumptions used in determining fair value of the stock options granted | ||
Expected volatility (minimum) | 81.00% | 80.00% |
Expected volatility (maximum) | 84.00% | 115.00% |
Risk-free interest rate (minimum) | 1.44% | 2.63% |
Risk-free interest rate (maximum) | 2.58% | 2.96% |
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Assumptions used in determining fair value of the stock options granted | ||
Expected term (in years) | 5 years 3 months 7 days | 5 years 3 months 7 days |
Maximum | ||
Assumptions used in determining fair value of the stock options granted | ||
Expected term (in years) | 6 years 7 months 17 days | 6 years 1 month 17 days |
Stock-based Compensation (Detai
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stock-based compensation | |||
Weighted average grant date fair value of options granted | $ 3.45 | $ 9.05 | |
2009 plan | |||
Stock-based compensation | |||
Unrecognized compensation expense | $ 19.2 | $ 21.1 | |
Weighted average expense recognition period | 2 years 3 months 22 days | 2 years 10 months 2 days |
Stock-based Compensation - St_2
Stock-based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation | ||
Stock based compensation expense | $ 9,991 | $ 8,615 |
Cost of product revenues | ||
Stock-based compensation | ||
Stock based compensation expense | 268 | |
Research and development | ||
Stock-based compensation | ||
Stock based compensation expense | 2,844 | 2,660 |
Selling, general and administrative | ||
Stock-based compensation | ||
Stock based compensation expense | $ 6,879 | $ 5,955 |
Stock-based Compensation - Comp
Stock-based Compensation - Compensation expense - INVELTYS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation | ||
Stock based compensation expense | $ 9,991 | $ 8,615 |
Total intrinsic value of options exercised | 100 | $ 1,300 |
Inventories | INVELTYS | ||
Stock-based compensation | ||
Stock based compensation expense | $ 100 |
Stock-based Compensation - Empl
Stock-based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation | |||
Stock-based compensation expense | $ 10,049 | $ 8,841 | |
2017 Employee Stock Purchase Plan | |||
Stock-based compensation | |||
Employee basic pay holding period | 6 months | ||
Percentage of market value at which employee may purchase stock | 85.00% | 85.00% | |
Stock-based compensation expense | $ 300 | ||
Issuance under employee stock purchase plan (in shares) | 85,553 | 123,664 | 0 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the U.S. federal statutory income tax rate (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | ||
Federal statutory income tax rate | 21.00% | 21.00% |
Change in valuation allowance | (25.80%) | (28.50%) |
State income taxes, net of federal benefit | 4.30% | 5.90% |
Research and development tax credits | 1.00% | 2.70% |
Other | (0.50%) | (1.10%) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income tax expense | $ 0 | $ 0 |
Change in valuation allowance | 13,500 | |
Uncertain tax positions | 0 | 0 |
Interest or penalties recorded | 0 | 0 |
Federal | ||
Net operating loss carryforwards | 168,800 | 165,000 |
State | ||
Net operating loss carryforwards | $ 171,800 | $ 156,400 |
Income Taxes - Net deferred tax
Income Taxes - Net deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Income Taxes | ||
Net operating loss carryforwards | $ 49,018 | $ 46,933 |
Research and development tax credit carryforwards | 6,250 | 5,070 |
Stock-based compensation | 5,414 | 3,010 |
Deferred Tax Assets Tax Deferred Lease Liabilities | 9,369 | 8,280 |
Other | 2,467 | 1,318 |
Start-up costs and other | 6,733 | 193 |
Total deferred tax assets | 79,251 | 64,804 |
Right-of-use assets | (9,178) | (8,221) |
Total deferred tax liabilities | (9,178) | (8,221) |
Valuation allowance | $ (70,073) | $ (56,583) |
Commitments and Contingencies -
Commitments and Contingencies - License Agreement (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Contingencies | ||
Minimum annual payment | $ 37,500 | |
License fee, if the company achieves the first commercial sale | 100,000 | |
Research and development expenses | 27,275,000 | $ 29,290,000 |
The Johns Hopkins University (“JHU”) | ||
Contingencies | ||
First commercial sale milestone | 400,000 | |
Research and development expenses | $ 300,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Future minimum obligations (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Minimum obligations due under its license agreements | |
2020 | $ 113 |
2021 | 113 |
2022 | 113 |
2023 | 113 |
2024 | 113 |
Thereafter | 1,012 |
Total minimum license payments | $ 1,577 |
Commitments and Contingencies_3
Commitments and Contingencies - Purchase obligations (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Commitments and Contingencies. | |
2020 | $ 801 |
2021 | 1,173 |
2022 | 1,173 |
2023 | 1,173 |
2024 | 880 |
Thereafter | 1,155 |
Total minimum purchase commitments | $ 6,355 |
Commitments and Contingencies_4
Commitments and Contingencies - Guarantees and Indemnifications (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Indemnification obligations | ||
Indemnification obligations | $ 0 | $ 0 |
Accrued contingencies |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Contribution Plan | ||
Matching contribution by employer | $ 0.5 | $ 0.2 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Selected Quarterly Financial Data (Unaudited) | ||||||||||
Product revenues, net | $ 1,180 | $ 1,451 | $ 2,057 | $ 1,386 | $ 6,074 | |||||
Total operating expenses | 21,377 | 23,018 | 24,467 | 25,436 | $ 23,567 | $ 15,496 | $ 14,519 | $ 11,139 | 94,298 | $ 64,721 |
Total other income (expense) | (1,761) | (1,609) | (1,415) | (1,338) | (1,651) | (107) | (101) | (158) | (6,123) | (2,017) |
Net loss | $ (21,958) | $ (23,176) | $ (23,825) | $ (25,388) | $ (25,218) | $ (15,603) | $ (14,620) | $ (11,297) | $ (94,347) | $ (66,738) |
Net loss per share attributable to common stockholders—basic and diluted | $ (0.63) | $ (0.68) | $ (0.70) | $ (0.75) | $ (0.76) | $ (0.63) | $ (0.60) | $ (0.46) | $ (2.76) | $ (2.49) |