Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 09, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Senseonics Holdings, Inc. | |
Entity Central Index Key | 1,616,543 | |
Entity Current Reporting Status | Yes | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2018 | |
Entity Common Stock, Shares Outstanding | 137,412,927 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 60,902 | $ 16,150 |
Marketable securities | 4,149 | 20,300 |
Accounts receivable, primarily from a related party | 3,149 | 3,382 |
Inventory, net | 5,248 | 2,991 |
Prepaid expenses and other current assets | 3,359 | 2,092 |
Total current assets | 76,807 | 44,915 |
Deposits and other assets | 200 | 176 |
Property and equipment, net | 814 | 853 |
Total assets | 77,821 | 45,944 |
Current liabilities: | ||
Accounts payable | 4,922 | 7,712 |
Accrued expenses and other current liabilities | 6,560 | 5,428 |
Note payable, current portion | 10,000 | 10,000 |
Total current liabilities | 21,482 | 23,140 |
Notes payable, net of discount | 12,022 | 14,414 |
Convertible senior notes, net of discount | 34,015 | |
Derivative liability | 22,147 | |
Accrued interest | 1,257 | 1,054 |
Other liabilities | 70 | 69 |
Total liabilities | 90,993 | 38,677 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity (deficit): | ||
Common stock, $0.001 par value per share; 250,000,000 shares authorized, 137,240,202 and 136,882,735 shares issued and outstanding as of March 31, 2018 and December 31, 2017 | 137 | 137 |
Additional paid-in capital | 272,787 | 270,953 |
Accumulated deficit | (286,096) | (263,823) |
Total stockholders' (deficit) equity | (13,172) | 7,267 |
Total liabilities and stockholders' equity (deficit) | $ 77,821 | $ 45,944 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Class of stock information | ||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 137,240,202 | 136,882,735 |
Common stock, shares outstanding | 137,240,202 | 136,882,735 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
Revenue, primarily from a related party | $ 2,946 | $ 553 |
Cost of sales | 3,308 | 1,045 |
Gross profit | (362) | (492) |
Expenses: | ||
Sales and marketing expenses | 3,441 | 1,140 |
Research and development expenses | 8,113 | 6,998 |
General and administrative expenses | 4,011 | 3,767 |
Operating loss | (15,927) | (12,397) |
Other income (expense), net: | ||
Interest income | 184 | 21 |
Interest expense | (1,771) | (684) |
Other expense | (4,759) | (13) |
Total other expense, net | (6,346) | (676) |
Net loss | (22,273) | (13,073) |
Total comprehensive loss | $ (22,273) | $ (13,073) |
Basic and diluted net loss per common share | $ (0.16) | $ (0.14) |
Basic and diluted weighted-average shares outstanding (in shares) | 137,069,008 | 93,905,880 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net loss | $ (22,273) | $ (13,073) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 52 | 43 |
Non-cash interest expense (debt discount and deferred costs) | 624 | 116 |
Change in fair value of warrants | 104 | |
Change in fair value of derivative liability | 4,847 | |
Stock-based compensation expense | 1,454 | 822 |
Provision for lower of cost or net realizable value | 97 | |
Net realized gain on marketable securities | (49) | |
Changes in assets and liabilities: | ||
Accounts receivable | 233 | (156) |
Prepaid expenses and other current assets | (1,267) | (372) |
Inventory | (2,354) | (30) |
Deposits and other assets | (24) | |
Accounts payable | (2,790) | 91 |
Accrued expenses and other current liabilities | 746 | 656 |
Accrued interest | 203 | 177 |
Deferred rent | 2 | 6 |
Net cash used in operating activities | (20,499) | (11,616) |
Cash flows from investing activities | ||
Capital expenditures | (13) | (28) |
Sales and maturities of marketable securities | 16,200 | 5,291 |
Net cash provided by investing activities | 16,187 | 5,263 |
Cash flows from financing activities | ||
Proceeds from exercise of stock options | 380 | 181 |
Proceeds from notes payable, net of costs | 5,000 | |
Proceeds from convertible senior notes, net of costs | 51,204 | |
Financing costs and discount of notes payable | (104) | |
Principal payments of notes payable | (2,500) | |
Principal payments under capital lease obligations | (20) | |
Net cash provided by financing activities | 49,064 | 5,077 |
Net increase (decrease) in cash and cash equivalents | 44,752 | (1,276) |
Cash and cash equivalents, at beginning of period | 16,150 | 13,047 |
Cash and cash equivalents, at end of period | 60,902 | 11,771 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 481 | $ 368 |
Supplemental disclosure of non-cash investing and financing activities | ||
Convertible debt offering costs incurred, not paid | $ 405 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization | |
Organization | 1. Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the design, development and commercialization of glucose monitoring products to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. ASN Technologies, Inc. (“ASN”) was incorporated in Nevada on June 26, 2014. On December 4, 2015, ASN reincorporated in Delaware and changed its name to Senseonics Holdings, Inc. On December 7, 2015, Senseonics Holdings, Inc. acquired 100% of the outstanding capital stock of Senseonics, Incorporated (the "Acquisition"). Senseonics, Incorporated was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings, Inc. and its wholly-owned subsidiary Senseonics, Incorporated are hereinafter referred to as the “Company” unless the context requires otherwise. |
Liquidity
Liquidity | 3 Months Ended |
Mar. 31, 2018 | |
Liquidity | |
Liquidity | 2. The Company’s operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, lack of operating history and uncertainty of future profitability. Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs. The Company has not generated significant revenues from the sale of products and its ability to generate revenue and achieve profitability largely depends on the Company’s ability, alone or with others, to complete the development of its products or product candidates, and to obtain necessary regulatory approvals for the manufacture, marketing and sales of those products. These activities will require significant uses of working capital through the remainder of 2018 and beyond. On March 23, 2016, the Company effected the initial closing of its public offering of 15,800,000 shares of its common stock at a price to the public of $2.85 per share (the “March 2016 Offering”). Additionally, the Company closed on the partial exercise of the underwriters’ option to purchase additional shares on April 5, 2016. The Company received aggregate net proceeds from the March 2016 Offering of $44.8 million. On June 30, 2016, the Company entered into Amended and Restated Loan and Security Agreement with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB”) to potentially borrow up to an aggregate principal amount of $30.0 million. On June 1, 2017, the Company effected the closing of its offering of 29,078,014 shares of its common stock at a price of $1.41 per share (the “May 2017 Offering”). The Company received aggregate net proceeds from the May 2017 Offering of $40.4 million. On August 23, 2017, the Company effected the closing of its offering of 13,383,125 shares of its common stock at a price of $2.15 per share (the “August 2017 Offering”). The Company received aggregate net proceeds from the August 2017 Offering of $26.5 million. In January 2018, the Company issued $50.0 million in aggregate principal amount of convertible senior subordinated notes, and in February 2018, the Company issued an additional $3.0 million in aggregate principal amount of convertible senior subordinated notes (collectively, the “2023 Notes”) upon the partial exercise of the underwriters’ over-allotment option. Management has concluded that, based on the Company’s current operating plans, its existing cash, cash equivalents, and marketable securities available for sale will be sufficient to meet the Company’s anticipated operating needs into the first quarter of 2019. Accordingly, since management has concluded that the Company does not have sufficient funds to support operations through the first quarter of 2019, the Company believes that doubt about the Company’s ability to continue as a going concern exists. Historically, the Company has financed its operating activities through the sale of equity and equity linked securities and the issuance of debt. Although the Company began generating revenue from product sales of Eversense, its continuous glucose monitoring system, in June 2016, the Company does not expect product revenues to be sufficient to satisfy its operating needs for several years, if ever. Accordingly, the Report of Independent Registered Public Accounting Firm contained in the Company’s most recent 10-K filing includes an emphasis of a matter paragraph noting that the consolidated financial statements were prepared assuming that the Company will continue as a going concern. The Company plans to continue financing its operations with external capital for the foreseeable future. However, the Company may not be able to raise additional funds on acceptable terms, or at all. If the Company is unable to secure sufficient capital to fund its research and development and other operating activities, the Company may be required to delay or suspend operations, enter into collaboration agreements with partners that could require the Company to share commercial rights to its products to a greater extent or at earlier stages in the product development process than is currently intended, merge or consolidate with other entities, or liquidate. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the Company’s opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly its financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2017, has been derived from audited financial statements as of that date. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, inventory valuation, inputs used to value stock-based compensation, recoverability of long-lived assets, fair value of financial instruments, income taxes, depreciable lives of property and equipment, reserves for expected warranty costs, and estimated accruals for clinical and preclinical study costs, which are accrued based on estimates of work performed under contracts. Actual results could differ from those estimates; however management does not believe that such differences would be material. Segment Information Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, glucose monitoring products. Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three months ended March 31, 2018 and 2017, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. Concentration of Revenues and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to pay their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the three months ended March 2018 and 2017, the Company derived substantially all of its revenue from two customers. Total revenues from those customers was as follows (in thousands): March 31, 2018 2017 Roche Diabetes Care (related party) $ 2,568 $ 465 Rubin Medical $ 368 $ 88 Marketable Securities Marketable securities consist of government and agency securities and corporate debt securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment through March 31, 2018. Derivative Financial Instruments In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging. The financial instrument will be remeasured at each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense). Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs associated with a product are recorded at the time of shipment. The Company estimates future replacement costs by analyzing historical replacement experience for the timing and amount of returned product, and the Company evaluates the reserve quarterly and makes adjustments when appropriate. Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, using the full retrospective transition method. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under 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 receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies to third-party distributors (the “Customers”) at a fixed price that resell the products to health care providers and patients in the European Union. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenues from product sales are recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the distributor agreement. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. The Company offers no discounts, rebates, rights of return, or other allowances to the Customers which would result in the establishment of reserves against product revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a Customer contract. Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, reserves for expected warranty costs, reserves for inventory valuation, scrap, and shipping and handling expenses associated with product delivery. Shipping and Handling Expenses Shipping and handling expenses associated with product delivery are included within cost of sales in the Company’s consolidated statements of operations. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include costs related to employee compensation, preclinical studies and clinical trials, supplies, outsource testing, consulting and depreciation and other facilities‑related expenses. Stock‑Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight‑line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company accounts for forfeitures in the period in which they occur. The Company uses the Black‑Scholes option pricing model to determine the fair value of stock‑option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC Topic 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC Topic 740, Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of March 31, 2018, no excess tax benefits for the tax deductions related to stock-based awards were recognized in the statements of operations and comprehensive loss. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, 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. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of March 31, 2018 and December 31, 2017. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the NOLs and research and development credit carryforwards that may be used in future years are still subject to adjustment. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company does not remeasure its term notes and 2023 Notes at fair value. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted net loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. At March 31, 2018 and 2017, the total number of anti-dilutive shares, consisting of common stock options, stock purchase warrants, and the 2023 Notes using the if-converted method, which have been excluded from the computation of diluted loss per share, were as follows: March 31, 2018 2017 Stock-based awards 20,337,858 13,605,558 2023 Notes 15,573,527 — Warrants 4,221,312 4,570,902 Total anti-dilutive shares outstanding 40,132,697 18,176,460 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method. Reclassifications Certain reclassifications of prior year amounts have been made to conform to current year presentation. Recent Accounting Pronouncements Recently Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new ASC Topic 606, Revenue from Contracts with Customers. In 2015 and 2016, the FASB issued additional ASUs related to ASC Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the full retrospective transition method. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated financial statements and there were no other significant changes impacting the timing or measurement of revenues or the Company’s business process and controls. In August 2016, the FASB issued ASU 2016-15, guidance on the classification of certain cash receipts and cash payments in the statements of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. The Company adopted this new standard on January 1, 2018 on a retrospective basis. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated statements of cash flows. Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. The Company is currently evaluating the impact of adopting the guidance will have on its consolidated financial statements. The Company has evaluated all other issued unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its consolidated statements of earnings, balance sheets, or cash flows. |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2018 | |
Marketable Securities | |
Marketable Securities | 4. Marketable Securities Marketable securities available for sale, consisting of government and agency securities and corporate debt securities, were as follows (in thousands): March 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ — $ — $ — $ — Corporate debt securities 4,149 — — 4,149 Total $ 4,149 $ — $ — $ 4,149 December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ 5,990 $ — $ — $ 5,990 Corporate debt securities 14,310 — — 14,310 Total $ 20,300 $ — $ — $ 20,300 |
Inventory, net
Inventory, net | 3 Months Ended |
Mar. 31, 2018 | |
Inventory, net | |
Inventory, net | 5. Inventory, net Inventory, net consisted of the following (in thousands): March 31, December 31, 2018 2017 Finished goods $ 357 $ 375 Work-in-process 4,207 2,150 Raw materials 684 466 Total $ 5,248 $ 2,991 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | 6. Prepaid Expenses and Other Current Assets March 31, December 31, 2018 2017 Contract manufacturing $ 2,160 $ 1,601 Clinical and preclinical 131 35 Marketing 475 93 Software 112 214 Insurance 228 77 Other 253 72 Total prepaid expenses and other current assets $ 3,359 $ 2,092 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 7. Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31, 2018 2017 Contract manufacturing $ 2,630 $ 1,209 Compensation and benefits 909 2,209 Product warranty 674 813 Legal 965 627 Interest on notes payable and 2023 Notes 625 180 Audit and tax related 199 315 Clinical and preclinical 185 55 Other 373 20 Total accrued expenses and other current liabilities $ 6,560 $ 5,428 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. The Company leases approximately 33,000 square feet of research and office space under a non‑cancelable operating lease expiring in 2023. The Company has an option to renew the lease for one additional five‑year term. Expense recognition is based upon a straight‑line basis and was $155,884 for each of the three months ended March 31, 2018 and 2017. On March 31, 2016, the Company amended a corporate development agreement with a supplier to include a minimum purchase commitment per year. Total research and development expense related to the minimum payment was $292,801 and $57,875 for the three months ended March 31, 2018 and 2017, respectively. There were approximately $0.9 million of future minimum payments under this commitment at March 31, 2018. |
401(k) Plan
401(k) Plan | 3 Months Ended |
Mar. 31, 2018 | |
401(k) Plan | |
401(k) Plan | 9 . 401 (k) Plan The Company has a defined contribution 401(k) plan available to all full-time employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal income tax regulations. Participants are fully vested in their contributions. There have been no employer contributions to this plan. Administrative expenses for the plan, which are paid by the Company, were not material in the three months ended March 31, 2018 or 2017. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2018 | |
Notes Payable | |
Notes Payable | 10. Term Notes Payable On June 30, 2016, the Company entered into an Amended and Restated Loan and Security Agreement with Oxford and SVB (the “Lenders”). Pursuant to the Amended and Restated Loan and Security Agreement, the Company has borrowed an aggregate principal amount of $25.0 million in the following three tranches: $15.0 million (“Tranche 1 Term Loan”); $5.0 million (“Tranche 2 Term Loan”); and $5.0 million (“Tranche 3 Term Loan”) (each, a “Term Loan,” and collectively, the “Term Loans”). The funding conditions for the Tranche 1 Term Loan were satisfied as of June 30, 2016. Therefore, the Company issued secured notes to the Lenders for aggregate gross proceeds of $15.0 million (the “Notes”) on June 30, 2016. The Company used approximately $11.0 million from the proceeds from the Notes to repay the outstanding balance under the Company’s previously existing Loan and Security Agreement with Oxford, dated as of July 31, 2014, including the applicable final payment fee due thereunder of $1 million. The Company borrowed the Tranche 2 Term Loan in November 2016 upon the Lenders’ confirmation that the Company received positive data in its U.S. pivotal trial of Eversense, and the Company submitted a pre-market approval (“PMA”) application for Eversense in the United States with the FDA. The Company borrowed the Tranche 3 Term Loan in March 2017 upon completion of the first commercial sale of its second-generation transmitter in the European Union. The maturity date for all Term Loans is June 1, 2020 (the “Maturity Date”). The Term Loans bear interest at a floating annual rate of 6.31% plus the greater of (i) 90-day U.S. Dollar LIBOR reported in the Wall Street Journal or (ii) 0.64%, provided that the minimum floor interest rate is 6.95%, and require monthly payments. The monthly payments initially consisted of interest-only through December 31, 2017. In January 2018, the Company began to make monthly principal payments that will continue until the Maturity Date. The Company may elect to prepay all Term Loans prior to the Maturity Date subject to a prepayment fee equal to 3.00% if the prepayment occurs within one year of the funding date of any Term Loan, 2.00% if the prepayment occurs during the second year following the funding date of any Term Loan, and 1.00% if the prepayment occurs more than two years after the funding date of any Term Loan and prior to the Maturity Date. The Amended and Restated Loan and Security Agreement contains customary events of default, including bankruptcy, the failure to make payments when due, the occurrence of a material impairment on the Lenders’ security interest over the collateral, a material adverse change, the occurrence of a default under certain other agreements entered into by the Company, the rendering of certain types of judgments against the Company, the revocation of certain government approvals of the Company, violation of covenants, and incorrectness of representations and warranties in any material respect. Upon the occurrence of an event of default, subject to specified cure periods, all amounts owed by the Company would begin to bear interest at a rate that is 5.00% above the rate effective immediately before the event of default, and may be declared immediately due and payable by Lenders. Pursuant to the Amended and Restated Loan and Security Agreement, the Company also issued 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively (see Note 11, “Stockholders’ Equity (Deficit)”). The Notes are collateralized by all of the Company’s consolidated assets. The Notes also contain certain restrictive covenants that limit the Company’s ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions, as well as financial reporting requirements. The Company incurred issuance costs related to the Notes of approximately $568,648 that are being amortized as additional interest expense over the term of the Notes using the effective interest method. The fair value of the stock purchase warrants, which was estimated to be $526,208, was recorded as a discount to the Notes, which is also being amortized as additional interest expense over the term of the Notes using the effective interest method. At maturity (or earlier prepayment), the Company is also required to make a final payment equal to 9.00% of the aggregate principal balances of the funded Term Loans. This fee is being accrued as additional interest expense over the term of the Notes using the effective interest method. At March 31, 2018 and December 31, 2017, the final payment fee accrual was $1.3 million and $1.1 million, respectively. Convertible Senior Notes In January 2018, the Company issued $50.0 million in aggregate principal amount of the 2023 Notes. In February 2018, the Company issued an additional $3.0 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the overallotment option by the underwriter. The net proceeds from the issuance of the 2023 Notes, after deducting transaction costs, were $50.8 million. The 2023 Notes are general, unsecured, senior subordinated obligations of the Company. The Company pays interest semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as a long-term liability on the Company’s consolidated balance sheet at March 31, 2018. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of our common stock. If specific corporate events occur prior to the maturity date, the Company would increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. In accordance with GAAP relating to embedded conversion features, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded conversion option as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount, embedded conversion option and transaction costs, will be amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.19%. The derivative liability will be remeasured at each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense). The following are the scheduled maturities of the Term Loans and 2023 Notes as of March 31, 2018 (in thousands): 2018 (remaining nine months) $ 7,500 2019 10,000 2020 5,000 2021 — 2022 — After 2022 52,950 Total $ 75,450 The Company estimates the fair value of the term notes based on borrowing rates currently available for loans with similar terms (Level 2). The Company believes that the fair value of its term notes approximate their carrying value. The Company estimates the fair value of the 2023 Notes using commonly accepted valuation methodologies and market-risk measurements that are indirectly observable, such as credit risk (Level 2). At March 31, 2018, the fair value of the 2023 Notes, excluding the derivative liability, was $34.7 million. |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) | 3 Months Ended |
Mar. 31, 2018 | |
Stockholders' Equity (Deficit) | |
Stockholders' Equity (Deficit) | 11. Preferred Stock As of March 31, 2018 and December 31, 2017, the Company’s authorized capital stock included 5,000,000 shares of undesignated preferred stock, par value $0.001 per share. No shares of preferred stock were outstanding as of March 31, 2018 or December 31, 2017. Common Stock As of March 31, 2018 and December 31, 2017, the Company’s authorized capital stock included 250,000,000 shares of common stock, par value $0.001 per share. The Company had 137,240,202 and 136,882,735 shares of common stock issued and outstanding at March 31, 2018 and December 31, 2017, respectively. Stock Purchase Warrants In connection with the issuance of the Notes, the Company also issued to the Lenders 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively. The fair value of the warrants, which the Company estimated to be $526,208, was recorded as a discount to the Notes. These warrants expire on June 30, 2026, November 22, 2026, and March 29, 2027, respectively, and are classified in equity. In connection with the Company’s original Loan and Security Agreement with Oxford in 2014, the Company issued to Oxford 10-year stock purchase warrants to purchase an aggregate of 167,570 shares of common stock at an exercise price of $1.79 per share. The fair value of the warrants, which the Company estimated to be $205,150, was recorded as a discount to the promissory notes issued to Oxford in connection with the original Loan and Security Agreement. These warrants expire on November 2, 2020, July 14, 2021 and August 19, 2021, and are classified in equity. The unamortized deferred financing fees and debt discount related to the notes rollover amount will be amortized along with the deferred financing costs and the discount created by the new issuance of the warrants over the term of the loan using the effective interest method. For the three months ended March 31, 2018 and 2017, the Company recorded amortization of discount of debt of $56,327 and $53,648, respectively, within interest expense in the accompanying statements of operations and comprehensive loss. Stock‑Based Compensation In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”) under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 2015 Plan provisions. In connection with the March 2016 Offering, the Company’s board of directors adopted and the Company’s stockholders approved an Amended and Restated 2015 Equity Incentive Plan (the “amended and restated 2015 Plan”). The amended and restated 2015 Plan became effective as of the date of the pricing of the March 2016 Offering. The Company’s board of directors may terminate the amended and restated 2015 Plan at any time. Options granted under the amended and restated 2015 Plan expire ten years after the date of grant. Pursuant to the amended and restated 2015 Plan, the number of shares initially reserved for issuance pursuant to equity awards was 17,251,115 shares, representing 8,000,000 shares plus up to an additional 9,251,115 shares in the event that options that were outstanding under the Company’s equity incentive plans as of February 16, 2016 expire or otherwise terminate without having been exercised (in such case, the shares not acquired will revert to and become available for issuance under the amended and restated 2015 Plan). The number of shares of the Company’s common stock reserved for issuance under the amended and restated 2015 Plan will automatically increase on January 1 of each year, beginning on January 1, 2017 and ending on January 1, 2026, by 3.5% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. As of March 31, 2018, 3,242,496 shares remained available for grant under the amended and restated 2015 Plan. On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non‑qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. Approximately 8,179,244 shares of the Company’s common stock underlying options have vested or are expected to vest under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the Company no longer grants any awards under the 1997 Plan. The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 12. The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: · Level 1—Quoted prices for identical assets or liabilities in active markets. · Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The Company classifies money market funds within Level 1 in the fair value hierarchy because the Company uses quoted prices in active markets. The Company classifies government agency securities and corporate debt securities within Level 2 in the fair value hierarchy because the Company uses pricing sources utilizing market observable inputs to determine fair value. The Company values the embedded conversion option through a Monte Carlo analysis utilizing future stock prices modeled using geometric Brownian motion; option pricing models utilizing using inputs such as the Company’s stock price, volatility of the Company’s common stock and guideline public companies, dividend yield, and risk-free rate; and management assumptions concerning the likelihood of the occurrence of certain corporate events. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has segregated its financial assets and liabilities that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date. The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as follows (in thousands): March 31, 2018 Total Level 1 Level 2 Level 3 Assets Money market funds $ 55,352 $ 55,352 $ — $ — Government and agency securities — — — — Corporate debt securities 4,149 — 4,149 — Liabilities Embedded conversion option 22,147 — — December 31, 2017 Total Level 1 Level 2 Level 3 Money market funds $ 4,706 $ 4,706 $ — $ — Government and agency securities 7,987 — 7,987 — Corporate debt securities 17,708 — — The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Conversion Option December 31, 2017 $ — Issuance of the 2023 Notes 17,300 Change in fair value included in other income (expense) 4,847 March 31, 2018 $ 22,147 The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain financial instruments within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2018 and 2017. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company has no financial assets and liabilities that are measured at fair value on a non-recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has no non-financial assets and liabilities that are measured at fair value on a recurring basis. Non‑Financial Assets and Liabilities Measured at Fair Value on a Non‑Recurring Basis The Company measures its long‑lived assets, including property and equipment, at fair value on a non‑recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No such fair value impairment was recognized in the three months ended March 31, 2018 and 2017. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Taxes | |
Income Taxes | 13. The Company has not recorded any tax provision or benefit for the three months ended March 31, 2018 or March 31, 2017. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, NOL carryforwards and research and development credits is not more-likely-than-not to be realized at March 31, 2018 and December 31, 2017. On December 22, 2017, the Tax Cuts and Jobs Acts was enacted into law. The new legislation contains several key tax provisions that will impact the Company, including the reduction of the corporate income tax rate to 21% effective January 1, 2018. The new legislation also includes a variety of other changes, such as a one-time repatriation tax on accumulated foreign earnings, a limitation on the tax deductibility of interest expense, acceleration of business asset expensing, and reduction in the amount of executive pay that could qualify as a tax deduction, among others. The lower corporate income tax rate required the Company to remeasure its U.S. deferred tax assets and liabilities as well as reassess the realizability of its deferred tax assets and liabilities. ASC Topic 740 requires the Company to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff has issued Staff Accounting Bulletin No. 118 which allows the Company to record provisional amounts during a measurement period which is similar to the measurement period used when accounting for business combinations. While no adjustments has been made in the current period, the Company will continue to assess the impact of the recently enacted tax law on its business and financial statements and will reflect the provisional impact of the tax law change in the period when such analysis is complete. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the Company’s opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly its financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2017, has been derived from audited financial statements as of that date. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, inventory valuation, inputs used to value stock-based compensation, recoverability of long-lived assets, fair value of financial instruments, income taxes, depreciable lives of property and equipment, reserves for expected warranty costs, and estimated accruals for clinical and preclinical study costs, which are accrued based on estimates of work performed under contracts. Actual results could differ from those estimates; however management does not believe that such differences would be material. |
Segment Information | Segment Information Operating segments are defined as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment, glucose monitoring products. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three months ended March 31, 2018 and 2017, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. |
Cash and Cash Equivalents and Concentration of Credit Risk | Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. |
Concentration of Revenues and Customers | Concentration of Revenues and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to pay their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the three months ended March 2018 and 2017, the Company derived substantially all of its revenue from two customers. Total revenues from those customers was as follows (in thousands): March 31, 2018 2017 Roche Diabetes Care (related party) $ 2,568 $ 465 Rubin Medical $ 368 $ 88 |
Marketable Securities | Marketable Securities Marketable securities consist of government and agency securities and corporate debt securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. |
Accounts Receivable | Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment through March 31, 2018. |
Derivative Financial Instruments | Derivative Financial Instruments In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging. The financial instrument will be remeasured at each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense) |
Warranty Reserve | Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs associated with a product are recorded at the time of shipment. The Company estimates future replacement costs by analyzing historical replacement experience for the timing and amount of returned product, and the Company evaluates the reserve quarterly and makes adjustments when appropriate. |
Revenue Recognition | Revenue Recognition Effective January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers, using the full retrospective transition method. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under 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 receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies to third-party distributors (the “Customers”) at a fixed price that resell the products to health care providers and patients in the European Union. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenues from product sales are recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the distributor agreement. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. The Company offers no discounts, rebates, rights of return, or other allowances to the Customers which would result in the establishment of reserves against product revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a Customer contract. |
Cost of Sales | Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, reserves for expected warranty costs, reserves for inventory valuation, scrap, and shipping and handling expenses associated with product delivery. |
Shipping and Handling Expenses | Shipping and Handling Expenses Shipping and handling expenses associated with product delivery are included within cost of sales in the Company’s consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses include costs related to employee compensation, preclinical studies and clinical trials, supplies, outsource testing, consulting and depreciation and other facilities‑related expenses. |
Stock-Based Compensation | Stock‑Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight‑line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company accounts for forfeitures in the period in which they occur. The Company uses the Black‑Scholes option pricing model to determine the fair value of stock‑option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC Topic 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC Topic 740, Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of March 31, 2018, no excess tax benefits for the tax deductions related to stock-based awards were recognized in the statements of operations and comprehensive loss. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, 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. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of March 31, 2018 and December 31, 2017. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the NOLs and research and development credit carryforwards that may be used in future years are still subject to adjustment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company does not remeasure its term notes and 2023 Notes at fair value. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted net loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. At March 31, 2018 and 2017, the total number of anti-dilutive shares, consisting of common stock options, stock purchase warrants, and the 2023 Notes using the if-converted method, which have been excluded from the computation of diluted loss per share, were as follows: March 31, 2018 2017 Stock-based awards 20,337,858 13,605,558 2023 Notes 15,573,527 — Warrants 4,221,312 4,570,902 Total anti-dilutive shares outstanding 40,132,697 18,176,460 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method. |
Reclassification | Reclassifications Certain reclassifications of prior year amounts have been made to conform to current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which amends the guidance for accounting for revenue from contracts with customers. This ASU supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and creates a new ASC Topic 606, Revenue from Contracts with Customers. In 2015 and 2016, the FASB issued additional ASUs related to ASC Topic 606 that delayed the effective date of the guidance and clarified various aspects of the new revenue guidance, including principal versus agent considerations, identifying performance obligations, and licensing, and they include other improvements and practical expedients. The Company adopted this new standard on January 1, 2018 using the full retrospective transition method. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated financial statements and there were no other significant changes impacting the timing or measurement of revenues or the Company’s business process and controls. In August 2016, the FASB issued ASU 2016-15, guidance on the classification of certain cash receipts and cash payments in the statements of cash flows, including those related to debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance, and distributions received from equity method investees. The Company adopted this new standard on January 1, 2018 on a retrospective basis. The adoption of the new standard did not impact the amounts reported in the Company’s consolidated statements of cash flows. Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, guidance for accounting for leases. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after December 15, 2018 and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. The Company is currently evaluating the impact of adopting the guidance will have on its consolidated financial statements. The Company has evaluated all other issued unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its consolidated statements of earnings, balance sheets, or cash flows. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of Revenue by Major Customers | Total revenues from those customers was as follows (in thousands): March 31, 2018 2017 Roche Diabetes Care (related party) $ 2,568 $ 465 Rubin Medical $ 368 $ 88 |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted loss per share | March 31, 2018 2017 Stock-based awards 20,337,858 13,605,558 2023 Notes 15,573,527 — Warrants 4,221,312 4,570,902 Total anti-dilutive shares outstanding 40,132,697 18,176,460 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Marketable Securities | |
Schedule of marketable debt securities available for sale | Marketable securities available for sale, consisting of government and agency securities and corporate debt securities, were as follows (in thousands): March 31, 2018 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ — $ — $ — $ — Corporate debt securities 4,149 — — 4,149 Total $ 4,149 $ — $ — $ 4,149 December 31, 2017 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Government and agency securities $ 5,990 $ — $ — $ 5,990 Corporate debt securities 14,310 — — 14,310 Total $ 20,300 $ — $ — $ 20,300 |
Inventory, net (Tables)
Inventory, net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory, net | |
Schedule of Inventory, net | Inventory, net consisted of the following (in thousands): March 31, December 31, 2018 2017 Finished goods $ 357 $ 375 Work-in-process 4,207 2,150 Raw materials 684 466 Total $ 5,248 $ 2,991 |
Prepaid Expenses and Other Cu23
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets consisted of the following (in thousands): March 31, December 31, 2018 2017 Contract manufacturing $ 2,160 $ 1,601 Clinical and preclinical 131 35 Marketing 475 93 Software 112 214 Insurance 228 77 Other 253 72 Total prepaid expenses and other current assets $ 3,359 $ 2,092 |
Accrued Expenses and Other Cu24
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): March 31, December 31, 2018 2017 Contract manufacturing $ 2,630 $ 1,209 Compensation and benefits 909 2,209 Product warranty 674 813 Legal 965 627 Interest on notes payable and 2023 Notes 625 180 Audit and tax related 199 315 Clinical and preclinical 185 55 Other 373 20 Total accrued expenses and other current liabilities $ 6,560 $ 5,428 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Notes Payable | |
Schedule of future maturities of the Oxford notes | The following are the scheduled maturities of the Term Loans and 2023 Notes as of March 31, 2018 (in thousands): 2018 (remaining nine months) $ 7,500 2019 10,000 2020 5,000 2021 — 2022 — After 2022 52,950 Total $ 75,450 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis | The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis as follows (in thousands): March 31, 2018 Total Level 1 Level 2 Level 3 Assets Money market funds $ 55,352 $ 55,352 $ — $ — Government and agency securities — — — — Corporate debt securities 4,149 — 4,149 — Liabilities Embedded conversion option 22,147 — — December 31, 2017 Total Level 1 Level 2 Level 3 Money market funds $ 4,706 $ 4,706 $ — $ — Government and agency securities 7,987 — 7,987 — Corporate debt securities 17,708 — — |
Schedule of changes in the fair value of Level 3 derivative liability measured at fair value on a recurring basis | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Conversion Option December 31, 2017 $ — Issuance of the 2023 Notes 17,300 Change in fair value included in other income (expense) 4,847 March 31, 2018 $ 22,147 |
Organization - Acquisition (Det
Organization - Acquisition (Details) | Dec. 07, 2015 |
ASN Technologies, Inc. | Senseonics Reverse Merger Agreement | Capital Stock, Senseonics, Inc. | |
Significant Transaction | |
Interest in capital stock acquired (as a percent) | 100.00% |
Liquidity - Offering (Details)
Liquidity - Offering (Details) - USD ($) | Aug. 23, 2017 | Jun. 01, 2017 | Mar. 23, 2016 | Jun. 30, 2016 |
March 2016 Offering | ||||
Recent Significant Transaction | ||||
Shares issued (in shares) | 15,800,000 | |||
Price per share (in dollars per share) | $ 2.85 | |||
May 2017 Offering | ||||
Recent Significant Transaction | ||||
Shares issued (in shares) | 29,078,014 | |||
Price per share (in dollars per share) | $ 1.41 | |||
Proceeds from issuance of common stock, net of issuance costs | $ 40,400,000 | |||
August 2017 Offering | ||||
Recent Significant Transaction | ||||
Shares issued (in shares) | 13,383,125 | |||
Price per share (in dollars per share) | $ 2.15 | |||
Proceeds from issuance of common stock, net of issuance costs | $ 26,500,000 | |||
March 2016 IPO and Underwriters' Option | ||||
Recent Significant Transaction | ||||
Proceeds from issuance of common stock, net of issuance costs | $ 44,800,000 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | ||||
Recent Significant Transaction | ||||
Maximum amount available under facility | $ 30,000,000 |
Liquidity - 2023 Notes (Details
Liquidity - 2023 Notes (Details) - 2023 Notes - USD ($) $ in Millions | Feb. 28, 2018 | Jan. 31, 2018 |
Convertible Notes | ||
Principal amount | $ 3 | $ 50 |
Third Amendment to Amended and Restated Loan Agreement | ||
Convertible Notes | ||
Principal amount | $ 3 | $ 50 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - Segment Information (Details) | 3 Months Ended |
Mar. 31, 2018segment | |
Segment Information | |
Number of operating segments | 1 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Concentration of revenues and customers (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018USD ($)customer | Mar. 31, 2017USD ($) | Dec. 31, 2017customer | |
Estimated total revenues from major customers | |||
FDIC maximum | $ 250,000 | ||
Number of customers | customer | 2 | 2 | |
Revenue | $ 2,946,000 | $ 553,000 | |
Revenue | Customer Concentration Risk | Roche Diabetes Care (related party) | |||
Estimated total revenues from major customers | |||
Revenue | 2,568,000 | 465,000 | |
Revenue | Customer Concentration Risk | Rubin Medical | |||
Estimated total revenues from major customers | |||
Revenue | $ 368,000 | $ 88,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Laboratory equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 3 years |
Laboratory equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 7 years |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Summary of Significant Accounting Policies | |
Credit period on product sales | 60 days |
Discounts, rebates, rights of return or other allowances | $ 0 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Stock-Based Compensation and Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Stock-Based Compensation | ||
Excess tax benefits recognized in statements of operations | $ 0 | |
Income Taxes | ||
Accrued for income tax penalties and interest | $ 0 | $ 0 |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Net Loss per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 40,132,697 | 18,176,460 |
Stock-based awards | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 20,337,858 | 13,605,558 |
2023 Notes | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 15,573,527 | |
Warrants | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 4,221,312 | 4,570,902 |
Marketable Securities - AFS Deb
Marketable Securities - AFS Debt Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | $ 4,149 | $ 20,300 |
Estimated Market Value | 4,149 | 20,300 |
Government and agency securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 5,990 | |
Estimated Market Value | 5,990 | |
Corporate debt securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 4,149 | 14,310 |
Estimated Market Value | $ 4,149 | $ 14,310 |
Inventory, Net - Summary (Detai
Inventory, Net - Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory, net | ||
Finished goods | $ 357 | $ 375 |
Work-in-process | 4,207 | 2,150 |
Raw materials | 684 | 466 |
Total | $ 5,248 | $ 2,991 |
Prepaid Expenses and Other Cu38
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Prepaid Expenses and Other Current Assets | ||
Contract manufacturing | $ 2,160 | $ 1,601 |
Clinical and preclinical | 131 | 35 |
Marketing | 475 | 93 |
Software | 112 | 214 |
Insurance | 228 | 77 |
Other | 253 | 72 |
Total prepaid expenses | $ 3,359 | $ 2,092 |
Accrued Expenses and Other Cu39
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accrued Expenses and Other Current Liabilities | ||
Contract manufacturing | $ 2,630 | $ 1,209 |
Compensation and benefits | 909 | 2,209 |
Product warranty | 674 | 813 |
Legal | 965 | 627 |
Interest on notes payable and 2023 Notes | 625 | 180 |
Audit and tax related | 199 | 315 |
Clinical and preclinical | 185 | 55 |
Other | 373 | 20 |
Total accrued expenses and other current liabilities | $ 6,560 | $ 5,428 |
Commitments and Contingencies -
Commitments and Contingencies - Operating Lease (Details) - Research and office space | 3 Months Ended | |
Mar. 31, 2018USD ($)ft²item | Mar. 31, 2017USD ($) | |
Operating Leases | ||
Leased space, in square feet | ft² | 33,000 | |
Number of renewal terms | item | 1 | |
Renewal term of lease | 5 years | |
Operating lease expense | $ | $ 155,884 | $ 155,884 |
Commitments and Contingencies41
Commitments and Contingencies - Minimum Payments (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Commitments and contingencies | ||
Research and development expense | $ 8,113,000 | $ 6,998,000 |
Corporate development agreement | ||
Commitments and contingencies | ||
Research and development expense | 292,801 | $ 57,875 |
Future maturities | ||
Future minimum payments | $ 900,000 |
401(k) Plan (Details)
401(k) Plan (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
401(k) Plan | |
Employer contributions to the 401(k) plan | $ 0 |
Notes Payable and Stock Purchas
Notes Payable and Stock Purchase Warrants - Amended Agreement (Details) | Jun. 30, 2016USD ($) | Jun. 30, 2016USD ($)tranche | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Oxford Notes | ||||
Notes payable | ||||
Amount used to retire existing loans | $ 11,000,000 | |||
Final payment fee, notes | 1,000,000 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | ||||
Notes payable | ||||
Principal amount | 25,000,000 | $ 25,000,000 | ||
Maximum amount available under facility | $ 30,000,000 | $ 30,000,000 | ||
Number of tranches under facility | tranche | 3 | |||
Final payment fee, notes | $ 1,300,000 | $ 1,100,000 | ||
Prepayment fee percentage within one year of funding | 3.00% | |||
Prepayment period, first year | 1 year | |||
Prepayment fee percentage second year after funding date | 2.00% | |||
Prepayment period, after two years | 2 years | |||
Prepayment fee percentage after second anniversary of funding | 1.00% | |||
Debt default, interest rate (as a percent) | 5.00% | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | LIBOR | ||||
Notes payable | ||||
Floating annual rate, spread (as a percent) | 6.31% | |||
90-day U.S. Dollar LIBOR | 90-day U.S. Dollar LIBOR | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Floor interest rate | ||||
Notes payable | ||||
Floor interest rate (as a percent) | 0.64% | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Floor interest rate | Minimum | ||||
Notes payable | ||||
Floor interest rate (as a percent) | 6.95% | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Interest only period | ||||
Notes payable | ||||
Frequency of payment | monthly | |||
Type of payment required | interest-only | |||
Tranche 1 Term Loan | ||||
Notes payable | ||||
Principal amount | $ 15,000,000 | $ 15,000,000 | ||
Tranche 1 Term Loan | Amended and Restated Loan and Security Agreement | ||||
Notes payable | ||||
Proceeds from notes payable | 15,000,000 | |||
Tranche 2 Term Loan | Amended and Restated Loan and Security Agreement | ||||
Notes payable | ||||
Principal amount | 5,000,000 | 5,000,000 | ||
Tranche 3 Term Loan | Amended and Restated Loan and Security Agreement | ||||
Notes payable | ||||
Principal amount | $ 5,000,000 | $ 5,000,000 |
Notes Payable and Stock Purch44
Notes Payable and Stock Purchase Warrants - Term Notes Payable (Details) - USD ($) | Jun. 30, 2016 | Feb. 28, 2018 | Jan. 31, 2018 | Mar. 31, 2018 |
Long term debt | ||||
Derivative liability | $ 22,147,000 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | ||||
Long term debt | ||||
Issuance costs | $ 568,648 | |||
Final prepayment fee (as a percent) | 9.00% | |||
Principal amount | $ 25,000,000 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Stock Purchase Warrants | ||||
Long term debt | ||||
Warrant liability | $ 526,208 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $3.86 Exercise Price | ||||
Long term debt | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 116,581 | |||
Exercise price of warrant (in dollars per share) | $ 3.86 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $2.38 Exercise Price | ||||
Long term debt | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 63,025 | |||
Exercise price of warrant (in dollars per share) | $ 2.38 | |||
Term Notes Payable | Amended and Restated Loan and Security Agreement | Warrant liability | Common Stock | Stock Purchase Warrants, $1.86 Exercise Price | ||||
Long term debt | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 80,645 | |||
Exercise price of warrant (in dollars per share) | $ 1.86 | |||
Tranche 3 Term Loan | Amended and Restated Loan and Security Agreement | ||||
Long term debt | ||||
Principal amount | $ 5,000,000 | |||
2023 Notes | ||||
Long term debt | ||||
Issuance costs | $ 2,200,000 | |||
Principal amount | $ 3,000,000 | $ 50,000,000 | ||
Proceeds from notes payable | $ 50,800,000 | |||
Conversion rate (per $1,000 of principal) | 294.1176 | |||
Amount of principal which is converted to 294.1176 shares | $ 1,000 | |||
Conversion price (in dollars per share) | $ 3.40 | |||
Conversion period | 6 months | |||
Repurchase price as a percent of principal amount | 100.00% | |||
Derivative liability | $ 17,300,000 | |||
Amortization percent | 9.19% |
Notes Payable and Stock Purch45
Notes Payable and Stock Purchase Warrants - Scheduled Maturities (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Scheduled maturities of Oxford notes | |
2018 (remaining nine months) | $ 7,500 |
2,019 | 10,000 |
2,020 | 5,000 |
After 2,022 | 52,950 |
Total | 75,450 |
2023 Notes | |
Scheduled maturities of Oxford notes | |
Total | $ 34,700 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Class of Stock Disclosures (Details) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Class of stock information | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares outstanding | 0 | 0 |
Authorized common stock | 250,000,000 | 250,000,000 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock issued | 137,240,202 | 136,882,735 |
Common stock, shares outstanding | 137,240,202 | 136,882,735 |
Stockholders' Equity (Deficit47
Stockholders' Equity (Deficit) - Stock Purchase Warrants (Details) - USD ($) | Jun. 30, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2014 |
Stock Purchase Warrants | Interest Expense | ||||
Stock Purchase Warrants | ||||
Accretion of debt discount | $ 56,327 | $ 53,648 | ||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants | Warrant liability | ||||
Stock Purchase Warrants | ||||
Warrant liability | $ 526,208 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $3.86 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 116,581 | |||
Exercise price of warrant (in dollars per share) | $ 3.86 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $2.38 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 63,025 | |||
Exercise price of warrant (in dollars per share) | $ 2.38 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $1.86 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 80,645 | |||
Exercise price of warrant (in dollars per share) | $ 1.86 | |||
Oxford Notes | Stock Purchase Warrants | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 167,570 | |||
Exercise price of warrant (in dollars per share) | $ 1.79 | |||
Oxford Notes | Stock Purchase Warrants | Warrant liability | ||||
Stock Purchase Warrants | ||||
Warrant liability | $ 205,150 |
Stockholders' Equity (Deficit48
Stockholders' Equity (Deficit) - Stock-Based Compensation (Details) - shares | Feb. 16, 2016 | Dec. 31, 2015 | Mar. 31, 2018 |
2015 Equity Incentive Plan | |||
Stock-based compensation | |||
Expiration period | 10 years | ||
Total shares that may be issued | 17,251,115 | ||
Shares available for grant | 8,000,000 | 3,242,496 | |
Automatic annual increase in shares authorized, percent of common stock outstanding | 3.50% | ||
2015 Equity Incentive Plan | Maximum | |||
Stock-based compensation | |||
Additional shares authorized | 9,251,115 | ||
1997 Stock Option Plan | |||
Stock-based compensation | |||
Options vested and expected to vest | 8,179,244 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | |||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | $ 0 | $ 0 | |
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | 0 | |
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | 0 | |
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | 0 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3 | 0 | 0 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | 0 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | $ 0 | |
Embedded conversion option | |||
Fair Value Measurements | |||
Liabilities, fair value | 22,147 | ||
Level 3 | Embedded conversion option | |||
Fair Value Measurements | |||
Liabilities, fair value | 22,147 | ||
Recurring | Money market funds | |||
Fair Value Measurements | |||
Assets, fair value | 55,352 | $ 4,706 | |
Recurring | Government and agency securities | |||
Fair Value Measurements | |||
Assets, fair value | 7,987 | ||
Recurring | Corporate debt securities | |||
Fair Value Measurements | |||
Assets, fair value | 4,149 | 17,708 | |
Recurring | Level 1 | Money market funds | |||
Fair Value Measurements | |||
Assets, fair value | 55,352 | 4,706 | |
Recurring | Level 2 | Government and agency securities | |||
Fair Value Measurements | |||
Assets, fair value | 7,987 | ||
Recurring | Level 2 | Corporate debt securities | |||
Fair Value Measurements | |||
Assets, fair value | 4,149 | $ 17,708 | |
Recurring | Level 3 | Embedded conversion option | |||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | |||
Issuance of the 2023 Notes | 17,300 | ||
Change in fair value included in other income (expense) | 4,847 | ||
Balance at the end of the period | $ 22,147 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Recurring | |||
Fair Value Measurements | |||
Fair value of non-financial assets | $ 0 | $ 0 | |
Fair value of non-financial liabilities | 0 | 0 | |
Nonrecurring | |||
Fair Value Measurements | |||
Fair value of non-financial assets | 0 | 0 | |
Fair value of non-financial liabilities | 0 | $ 0 | |
Fair value impairment recognized on long-lived assets | $ 0 | $ 0 |
Income Taxes - Tax Provision (D
Income Taxes - Tax Provision (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Taxes | ||
Income tax provision | $ 0 | $ 0 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% |