Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2015 | Mar. 10, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Strongbridge Biopharma plc | |
Entity Central Index Key | 1,634,432 | |
Document Type | 20-F | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Trading Symbol | sbbp | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 21,205,382 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 51,623 | $ 15,632 |
Prepaid expenses and other current assets | 1,253 | 598 |
Total current assets | 52,876 | 16,230 |
Property and equipment, net | 35 | 21 |
In-process research and development | 36,551 | 5,228 |
Goodwill | 7,256 | 2,200 |
Other assets | 612 | 10 |
Total assets | 97,330 | 23,689 |
Current liabilities: | ||
Accounts payable | 2,792 | 887 |
Accrued liabilities | 2,685 | 1,422 |
Total current liabilities | 5,477 | 2,309 |
Stock-based liability awards | 1,183 | |
Deferred tax liabilities | 926 | 1,376 |
Total liabilities | $ 6,403 | $ 4,868 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Deferred shares, $1.098 par value, 40,000 shares authorized, issued and outstanding | $ 44 | |
Ordinary shares, $0.01 par value, 175,000,000 and 600,000,000 shares authorized at December 31, 2014 and 2015; 9,700,789 and 21,205,382 shares issued and outstanding at December 31, 2014 and 2015 | 212 | $ 97 |
Additional paid-in capital | 170,910 | 55,947 |
Accumulated deficit | (80,803) | (37,223) |
Non-controlling interest | 564 | |
Total stockholders’ equity | 90,927 | 18,821 |
Total liabilities and stockholders’ equity | $ 97,330 | $ 23,689 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Consolidated Balance Sheets | ||
Deferred shares, par value (in dollars per share) | $ 1.098 | |
Deferred shares, shares authorized | 40,000 | |
Deferred shares, shares issued | 40,000 | |
Deferred shares, shares outstanding | 40,000 | |
Ordinary shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Ordinary shares, shares authorized | 600,000,000 | 175,000,000 |
Ordinary shares, shares issued | 21,205,382 | 9,700,789 |
Ordinary shares, shares outstanding | 21,205,382 | 9,700,789 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating expenses: | |||
Research and development | $ 20,135 | $ 5,844 | $ 2,534 |
General and administrative | 22,719 | 4,588 | 2,658 |
Total operating expenses | 42,854 | 10,432 | 5,192 |
Operating loss | (42,854) | (10,432) | (5,192) |
Other income (expense), net: | |||
Foreign exchange loss | (124) | (204) | (570) |
Other income (expense), net | (1,105) | 486 | 282 |
Total other income (expense), net | (1,229) | 282 | (288) |
Loss before income taxes | (44,083) | (10,150) | (5,480) |
Income tax benefit | 450 | 480 | 93 |
Net loss | (43,633) | (9,670) | (5,387) |
Net loss attributable to non-controlling interest | 53 | 92 | |
Net loss attributable to Strongbridge Biopharma | (43,580) | (9,670) | (5,295) |
Comprehensive loss | (43,580) | (9,670) | (5,295) |
Net loss attributable to ordinary shareholders: | |||
Basic and diluted | $ (43,580) | $ (9,670) | $ (5,295) |
Net loss per share attributable to ordinary shareholders: | |||
Basic and diluted | $ (2.62) | $ (1.20) | $ (0.88) |
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders | |||
Basic and diluted | 16,606,669 | 8,043,175 | 6,017,895 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Ordinary Shares | Deferred Shares | Additional Paid-In Capital | Accumulated Deficit | Non Controlling Interest | Total |
Balance at beginning of period at Dec. 31, 2012 | $ 51 | $ 28,465 | $ (22,258) | $ 1,725 | $ 7,983 | |
Balance (in shares) at Dec. 31, 2012 | 5,076,789 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (5,295) | (92) | (5,387) | |||
Shares exchanged for BioPancreate non-controlling interest | $ 3 | 1,563 | (1,609) | (43) | ||
Shares exchanged for BioPancreate non-controlling interest (in Shares) | 336,136 | |||||
Stock-based compensation | 346 | 346 | ||||
Issuance of shares | $ 25 | 14,899 | 14,924 | |||
Issuance of shares (in shares) | 2,526,683 | |||||
Balance at end of period at Dec. 31, 2013 | $ 79 | 45,273 | (27,553) | 24 | 17,823 | |
Balance (in shares) at Dec. 31, 2013 | 7,939,608 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (9,670) | (9,670) | ||||
Shares exchanged for BioPancreate non-controlling interest | 19 | (24) | (5) | |||
Shares exchanged for BioPancreate non-controlling interest (in Shares) | 5,272 | |||||
Stock-based compensation | 480 | 480 | ||||
Issuance of shares | $ 18 | 10,175 | $ 10,193 | |||
Issuance of shares (in shares) | 1,755,909 | 1,755,909 | ||||
Balance at end of period at Dec. 31, 2014 | $ 97 | 55,947 | (37,223) | $ 18,821 | ||
Balance (in shares) at Dec. 31, 2014 | 9,700,789 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (43,580) | (53) | (43,633) | |||
Stock-based compensation | 3,581 | 3,581 | ||||
Reclass of stock-based liability award to equity | 1,542 | 1,542 | ||||
Issuance of shares | $ 91 | 91,418 | 91,509 | |||
Issuance of shares (in shares) | 9,108,169 | |||||
U.S. Non accredited shares repurchased | (412) | (412) | ||||
U.S. Non accredited shares repurchased (in shares) | (24,955) | |||||
Issuance of shares in initial public offering, net | $ 25 | 19,450 | 19,475 | |||
Issuance of shares in initial public offering, net (in shares) | 2,500,000 | |||||
Noncontrolling interest resulting from exchange offer | $ (1) | (616) | 617 | |||
Noncontrolling interest resulting from exchange offer (in shares) | (78,621) | |||||
Beneficial shares issued | $ 44 | 44 | ||||
Beneficial shares issued (in shares) | 40,000 | |||||
Balance at end of period at Dec. 31, 2015 | $ 212 | $ 44 | $ 170,910 | $ (80,803) | $ 564 | $ 90,927 |
Balance (in shares) at Dec. 31, 2015 | 21,205,382 | 40,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flow - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | |||
Net loss | $ (43,633) | $ (9,670) | $ (5,387) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 11 | 9 | 3 |
Stock-based compensation | 3,940 | 251 | 748 |
Deferred income tax benefit | (450) | (480) | (93) |
Impairment on investment in Antisense Therapeutics | 551 | ||
Change in fair value of foreign currency forward contracts | 438 | (279) | (159) |
Changes in operating assets and liabilities, net of effect of acquisition: | |||
Accounts payable | 1,737 | 236 | 519 |
Accrued liabilities | 1,263 | 736 | 994 |
Other assets | (52) | 2 | |
Prepaid expenses and other current assets | (1,165) | (309) | (100) |
Net cash used in operating activities | (37,360) | (9,504) | (3,475) |
Cash flows from investing activities: | |||
Payments for acquisitions | (3,168) | ||
Investment in Antisense Therapeutics | (1,101) | ||
Purchase of equipment | (25) | (24) | (2) |
Net cash used in investing activities | (4,294) | (24) | (2) |
Cash flows from financing activities: | |||
Proceeds from initial public offering, net | 19,475 | ||
Proceeds from issuance of ordinary shares | 58,341 | 10,193 | 14,924 |
U.S. non-accredited shares repurchased | (412) | ||
Net cash provided by financing activities | 77,404 | 10,193 | 14,924 |
Effect of exchange rate changes on cash and cash equivalents | 241 | 70 | (455) |
Net increase in cash and cash equivalents | 35,991 | 735 | 10,992 |
Cash and cash equivalents-beginning of period | 15,632 | 14,897 | 3,905 |
Cash and cash equivalents-end of period | 51,623 | 15,632 | 14,897 |
Supplemental non-cash investing and financing activities: | |||
Ordinary shares issued for acquisition of COR-005 | $ 33,211 | ||
Ordinary shares exchanged for BioPancreate | $ 43 | $ 2,915 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2015 | |
Organization | |
Organization | 1. Organizatio n Strongbridge Biopharma plc (formerly known as Cortendo AB) is a biopharmaceutical company incorporated in Ireland and based in the United States. We are focused on the development, in ‑licensing, acquisition and eventual commercialization of multiple complementary products and product candidates within the franchises that target rare diseases. Our primary focus to date has been to build our rare endocrine franchise, which includes product candidates for the treatment of Cushing’s syndrome and acromegaly, two rare diseases with a high unmet need for innovative treatment options. We also intend to identify and in ‑license or acquire products or product candidates that will be complementary to our existing rare endocrine franchise or that would form the basis for new rare disease franchises. On October 15, 2015, a registration statement was declared effective by the U.S. Securities and Exchange Commission and on October 16, 2015 we initiated our initial U.S. public offering (IPO) of 2,500,000 ordinary shares at a price of $10.00 per share. The aggregate net proceeds received by us from the IPO were $19.5 million. Our shares began trading on The NASDAQ Global Select Market under the symbol "SBBP". On October 20, 2015, trading ceased on the Norwegian Over ‑The ‑Counter Market, or NOTC. Exchange offer On May 26, 2015, Strongbridge Biopharma plc (then named Cortendo plc), was incorporated under the laws of Ireland. On August 7, 2015, Strongbridge Biopharma plc initiated an exchange offer for the outstanding shares of Cortendo AB. The exchange offer was structured as a one ‑for ‑one exchange offer in which shareholders of Cortendo AB exchanged their common shares, with a par value of $0.15 , for beneficial interests in ordinary shares of Strongbridge Biopharma plc, with a par value of $0.01 , in the form of Norwegian depositary receipts and, as the case may be, Swedish depositary receipts (except for non ‑accredited investors who hold Cortendo AB shares located in the United States, who were offered cash in an amount equivalent to the value of the Strongbridge Biopharma plc shares such investors would otherwise receive for their Cortendo AB shares exchanged). The exchange offer was settled on September 8, 2015, and Cortendo AB became a subsidiary with 99.582% of its shares being owned by Strongbridge Biopharma plc. Accordingly, Strongbridge Biopharma plc is a continuation of Cortendo AB, the predecessor, and the consolidated financial statements represent the assets, liabilities and results of operations of Cortendo AB, for all periods presented. On September 8, 2015, Strongbridge Biopharma plc effected a 1 ‑for ‑11 reverse stock split of its ordinary shares. Accordingly, the consolidated financial statements and notes retroactively reflect the capital structure of Strongbridge Biopharma plc after giving effect to the exchange offer and the reverse stock split. With affect from September 8, 2015, the 0.418% of Cortendo AB not owned by Strongbridge Biopharma plc, is accounted for as a non ‑controlling interest. Liquidity We believe that our cash resources of $51. 6 million at December 31, 2015 will be sufficient to allow us to fund planned operations into the fourth quarter of 2017, which is after the expected receipt of data from the COR-003 SONICS trial. As we continue to incur losses, our transition to profitability is dependent upon the successful development, approval and commercialization of our product candidates and achieving a level of revenues adequate to support our cost structure. We may never achieve profitability, and unless and until we do, we will continue to need to raise additional capital. Our management intends to fund future operations through additional equity offerings, and may seek additional capital through arrangements with strategic partners or from other sources. There can be no assurances, however, that additional funding will be available on terms acceptable to us. |
Summary of significant accounti
Summary of significant accounting policies and basis of presentation | 12 Months Ended |
Dec. 31, 2015 | |
Summary of significant accounting policies and basis of presentation | |
Summary of significant accounting policies and basis of presentation | 2. Summary of significant accounting policies and basis of presentation Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, BioPancreate Inc. (Trevose, Pennsylvania, United States), Cortendo AB (Gothenburg, Sweden), Cortendo Invest AB (Gothenburg, Sweden) and Cortendo Caymans (Georgetown, Cayman Islands). All intercompany balances and transactions have been eliminated in consolidation. These audited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). Foreign currency translation The consolidated financial statements are reported in United States dollars, which is the functional currency of our subsidiaries and Cortendo AB. Transactions in foreign currencies are remeasured into our functional currency at the rate of exchange prevailing at the date of the transaction. Any monetary assets and liabilities arising from these transactions are remeasured into our functional currency at exchange rates prevailing at the balance sheet date or on settlement. Resulting gains and losses are recorded in foreign exchange loss in our consolidated statements of operations. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. We must apply significant judgment in this process. Actual results could materially differ from those estimates. Reclassifications The prior year consolidated financial statements contain certain reclassifications to our consolidated statements of cash flow for the year ended December 31, 2013 and 2014 to conform to the presentation for the year ended December 31, 2015. Segment information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment. Our material long ‑lived assets, which primarily consists of in ‑process research and development, reside in the United States, Sweden and Cayman Islands. Cash and cash equivalents We consider all short ‑term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively. Concentration of credit risk and other risks and uncertainties Cash deposits in Ireland, Norway and Sweden for the years ended December 31, 2014 and 2015 of $15.4 million and $ 3.1 million, respectively, are subject to local banking laws and may bear higher or lower risk than cash deposited in the United States. As part of our cash and investment management processes, we perform periodic evaluations of the credit standing of the financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any credit losses from instruments held at these financial institutions. Fair value of financial instruments Fair value accounting is applied 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 (at least annually). We are required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2—Valuations based on quoted prices for similar assets or liabilities, or quoted prices in markets that are not active, and for which all significant inputs are observable, either directly or indirectly. Level 3—Valuations that require inputs that reflect our own assumptions that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Through June 30, 2015, we entered into foreign currency forward contracts to offset some of the foreign exchange risks we bear on operating expenses that were not denominated in U.S. dollars. These instruments were not entered into for speculative purposes and, although we believe they served as effective economic hedges, we did not seek to qualify for hedge accounting. The forward contracts settled on June 30, 2015, and we have not entered into new forward contracts. These forward contracts were recorded at fair value on the accompanying consolidated balance sheets as prepaid expenses and other current assets. These forward contracts were measured using observable quoted prices for similar instruments. The outstanding notional amount of our unsettled foreign currency forward contracts as of December 31, 2014 and 2015 was $2.3 million and $0 million, respectively, and the fair values of those assets were $0.4 million and $0 , respectively. The gain and loss recognized in other income, net, for these forward contracts was a gain of $0.3 million and a loss of $0.4 million for the years ended December 31, 2014 and 2015, respectively. These amounts represent the net gain or loss on the forward contracts and do not include changes in the related exposures, which generally offset a portion of the gain or loss on the forward contracts. We considered our foreign currency forward contracts under Level 2 of the fair value hierarchy. On May 13, 2015, as part of our agreement to acquire an exclusive license agreement from Antisense Therapeutics Limited (ATL), we purchased 15,025,075 shares of ATL’s common stock that had a fair value of $0.095 per share, which was the quoted market price of the ATL common stock on the Australian Securities Exchange (ASX). As we may not contractually sell ATL’s common shares for 24 months from the date of purchase, we estimated a discount for the lack of marketability of $0.022 per share using an option pricing model that estimated the value of a protective put option using inputs that included quoted market prices and observable inputs other than quoted market prices. We initially recorded the net fair value amount of $1.1 million as a non-current other asset in our consolidated balance sheet. As of December 31, 2015, the non-current other asset was valued using the ASX closing market price of $0.051 per share and an updated discount for the lack of marketability of $0.014 per share using an option pricing model, resulting in an impairment charge recorded as a valuation allowance against the non-current other asset of $550,000 . We considered both the initial valuation as well as our year-end valuation under Level 2 of the fair value hierarchy. Property and equipment, net Property and equipment, net, consists of office equipment such as furniture, fixtures and computers. Depreciation expense for the years ended December 31, 2014 and 2015 was not significant. The following useful lives were used for the various classifications of property and equipment, net: Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years Business combinations When acquiring new enterprises over which we obtain control, the acquisition method is applied. Under this method, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date. Allowance is made for the tax effect of the adjustments made. The excess of the consideration transferred, the amount of the non ‑controlling interest in the acquiree and the acquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. In ‑process research and development Purchased identifiable intangible assets with indefinite lives, such as our in ‑process research and development, are evaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of these assets may not be recovered. To test these assets for impairment, we compare the fair value of the asset to its carrying value. The method we use to estimate the fair value measurements of indefinite ‑lived intangible assets is based on the income approach. For the impairment analysis for the year ended December 31, 2015, significant unobservable inputs used in the income approach valuation method including a discount rates, royalty rates and probabilities of product candidate advancement from one clinical trial phase to the next. The determination of fair value of indefinite lived assets is considered Level 3 for fair value measurement . Goodwill We test goodwill for impairment on an annual basis or whenever events occur that may indicate possible impairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment exists and (2) measure the amount of impairment. Because we have one operating segment, when testing for a potential impairment of goodwill, we are required to estimate the fair value of our business and determine the carrying value. If the estimated fair value is less than the carrying value of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in a manner similar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwill impairment be determined, if any. To estimate the fair value of the business, primarily a market ‑based approach is applied, utilizing our public market value. We did not record a charge for impairment for the years ended December 31, 2013, 2014 and 2015. Research and development expenses Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include compensation and related expenses. External expenses include development, clinical trials, report writing and regulatory compliance costs incurred with clinical research organizations and other third ‑party vendors. At the end of the reporting period, we compare payments made to third ‑party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that we estimate has been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs. Upfront and milestone payments made to third parties who perform research and development services on our behalf are expensed as services are rendered. Stock ‑based compensation We account for stock ‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock ‑based payments including grants of stock options and restricted stock and modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fair values. Our stock ‑based awards are subject to either service ‑based or performance ‑based vesting conditions. Vesting of certain awards could also be accelerated upon achievement of defined market ‑based vesting conditions. Certain awards also contain a combination of service and market conditions or performance and market conditions. We account for employee stock ‑based awards at grant ‑date fair value. If we issue awards with an exercise price denominated in a currency other than our functional currency, trading currency or the currency for which we compensate our employee, we account for these as liabilities. We account for non ‑employee and liability ‑classified stock ‑based awards based on the then ‑current fair values at each financial reporting date until the performance is complete for non ‑employee awards, or until the award is settled (exercised) for liability ‑classified awards. Changes in the amounts attributed to these awards between the reporting dates are included in stock ‑based compensation expense (credit) in our statements of operations. We include liability ‑classified stock options in non ‑current liabilities in our balance sheets as their settlement (exercise) does not require use of cash, cash equivalents or other current assets. We record compensation expense for service ‑based awards over the vesting period of the award on a straight ‑line basis. Compensation expense related to awards with performance ‑based vesting conditions is recognized over the requisite service period using the accelerated attribution method to the extent achievement of the performan ce condition is probable. For those awards in which the performance condition was the completion of our IPO , we did not recognize compensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market ‑based vesting conditions is recognized using the accelerated attribution method over the shorter of the requisite service period or the implied period associated with achievement of the market ‑based vesting provisions. We estimate the fair value of our awards with service conditions or a combination of service and market conditions using the Black ‑Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk ‑free interest rate and (iv) expected dividends. Due to the lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. We selected companies with comparable characteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share price information sufficient to meet the expected term of the stock ‑based awards. We compute historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock ‑based awards. We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine the probability of satisfying the market condition. We make this estimate using the con ditions that exist at the grant date. The derived service period, which may be the requisite service period, is also determined at this time. Compensation cost for our awards with a market condition is recognized ratably using the accelerated attribution method if the award is subject to graded vesting over the requisite service period. The compensation cost for our awards with a market condition is not reversed if the market condition is not satisfied. We have estimated the expected term of employee service ‑based stock options using the “simplified” method, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option, due to our lack of sufficient historical data. We have estimated the expected term of employee awards with service and market conditions using a Monte ‑Carlo simulation model. This approach involves generating random stock ‑price paths through a lattice ‑type structure. Each path results in a certain financial outcome, such as accelerated vesting or specific option payout. We have estimated the expected term of nonemployee service ‑ and performance ‑based awards based on the remaining contractual term of such awards. The risk ‑free interest rates for periods within the expected term of the option are based on the Swedish Government Bond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associated award. We have never paid dividends, and do not expect to pay dividends in the foreseeable future. We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from estimates. We record stock ‑based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from our estimates, the differences are recorded as a cumulative adjustment in the period the estimates were revised. Historical forfeitures have been insignificant. Income taxes We use the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes (ASC 740). Under this method, income tax expense is recognized for the amount of (1) taxes payable or refundable for the current year and (2) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de ‑recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have no material uncertain tax positions for any of the reporting periods presented. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014 and 2015, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our statements of operations. Net loss per share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted ‑average number of shares of common stock outstanding for the period, including any dilutive effect from outstanding stock options or other equity - based awards. Shares used in the diluted net loss per share calculations exclude anti ‑dilutive common equivalent shares, which currently consist of stock options. Due to the Company operating at a net loss these anti ‑dilutive shares of common stock totaled 465,540 shares, 925,077 shares and 2,591,520 shares for the years ended December 31, 2013, 2014 and 2015, respectively. While these common equivalent shares are currently anti ‑dilutive, they could be dilutive in the future. Recently adopted accounting pronouncements During the quarter ended September 30, 2014, the FASB issued ASU No. 2014 ‑15 , Presentation of Financial Statements—Going Concern (ASU No. 2014 ‑15) . The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted, but we have not elected to do so. We do not expect the adoption of ASU 2014 ‑15 to have an impact on our financial position or results of operations. In September 2015, the FASB issued ASU 2015-15, Business Combinations— Simplifying the Accounting Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement period adjustments for business combinations. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The guidance is effective for fiscal years beginning on or after December 15, 2015, and interim periods within those years and should be applied prospectively to measurement period adjustments that occur after the effective date. We will prospectively apply the guidance to applicable transactions . In November 2015, the FASB issued ASU 2015-17, Income Taxes —Balance Sheet Classification of Deferred Taxes that amends the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. Previous guidance required deferred tax liabilities and assets to be separated into current and noncurrent amounts on the balance sheet. The guidance is effective for fiscal years beginning on or after December 15, 2016, and interim periods within those years. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements. |
Fair value measurement
Fair value measurement | 12 Months Ended |
Dec. 31, 2015 | |
Fair value measurement | |
Fair value measurement | 3. Fair value measurement The following table sets forth the fair value of our financial assets by level within the fair value hierarchy. Our foreign currency forward contracts are classified within Level II because of the use of observable inputs for similar derivative instruments in active markets, or quoted prices for identical or similar instruments in markets that are not active, and are directly or indirectly observable, and are classified as prepaid expenses and other current assets. The noncurrent asset comprising of our investment in ATL common stock is classified as Level II as we discounted the active market quoted price of the security to reflect our contractual restriction on selling the investment. Because of their short term nature, the amounts reported in the balance sheet for cash and cash equivalents, and accounts payable approximate fair value. Our financial assets are as follows (in thousands): As of December 31, 2014 Level I Level II Level III Total Financial assets: Foreign currency forward contracts $ — $ $ — $ Total financial assets $ — $ $ — $ As of December 31, 2015 Level I Level II Level III Total Financial assets: Cash equivalents $ $ — $ — $ Noncurrent asset — — Total financial assets $ $ $ — $ |
In-process research and develop
In-process research and development and goodwill | 12 Months Ended |
Dec. 31, 2015 | |
In-process research and development and goodwill | |
In-process research and development and goodwill | 4. In ‑process research and development and goodwill The gross carrying amount of in ‑process research and development and goodwill is as follows (in thousands): As of December 31, 2014 Cost Additions Disposals Total In-process research and development $ $ — $ — $ Goodwill — — Total $ $ — $ — $ As of December 31, 2015 Cost Additions Disposals Total In-process research and development $ $ $ — $ Goodwill — Total $ $ $ — $ Goodwill and in ‑process research and development as of December 31, 2014 and 2015 resulted from our acquisition of BioPancreate and our 2015 acquisition of product candidate COR-005 from Aspireo Pharmaceuticals, Ltd. (see Note 7). In ‑process research and development is initially measured at its fair value and is not amortized until commercialization. Once commercialization occurs, in ‑process research and development will be amortized over its estimated useful life. We did not identify any indicators of impairment of our in ‑process research and development as of December 31, 2015. |
Accrued liabilities
Accrued liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Accrued liabilities | |
Accrued liabilities | 5. Accrued liabilities Accrued liabilities consist of the following (in thousands): As of December 31, 2014 2015 Consulting and professional fees $ $ Employee compensation Other Total accrued liabilities $ $ |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and contingencies | |
Commitments and contingencies | 6. Commitments and contingencies (a) Lease On April 22, 2014, we entered into a 48 ‑month building lease for approximately 3,000 square feet of space in Radnor, Pennsylvania. The lease has annual rent escalations. We obtained access to the newly leased space on August 1, 2014, and this was considered the lease commencement date for accounting purposes. Thus, rent expense began on this date and is recognized on a straight ‑line basis over the term of the lease. In March 2015, the Company entered into a 52 ‑month building sublease agreement for 14,743 square feet of office space in Trevose, Pennsylvania. The lease has annual rent escalations and is recognized on a straight ‑line basis over the term of the lease. As a result of this lease, we vacated the previously leased Radnor, Pennsylvania facility as of April 13, 2015 and determined that the Radnor, Pennsylvania facility was not likely to be utilized during the remaining lease term and as such we commenced efforts to sublease the facility. The Company recorded a liability as of the April 13, 2015 cease ‑use date of $0.1 million for the estimated fair value of its obligations under the lease. The most significant assumptions used in determining the amount of the estimated liability are the potential sublease revenues and the credit ‑adjusted risk ‑free rate utilized to discount the estimated future cash flows. As of December 31, 2015, future minimum commitments under facility operating leases were as follows (in thousands): Operating leases 2016 $ 2017 2018 2019 Total minimum lease payments $ Rent expense recognized under our operating lease, including additional rent charges for utilities, parking, maintenance and real estate taxes, was $83,000 and $254,000 for the years ended December 31, 2014 and 2015, respectively. (b) License Agreements Cornell Center for Technology Enterprise and Commercialization In 2011, a license agreement was executed between BioPancreate and the Cornell Center for Technology Enterprise and Commercialization (CCTEC). Under the terms of the license agreement, BioPancreate obtained certain rights from the CCTEC for commercial development, use and sale of products that use the technology associated with the license. We are obligated to make milestone payments upon the achievement of certain regulatory and clinical milestones up to $2.6 million in the aggregate. For years in which licensed products are sold, we are required to pay a royalty based on a low single ‑digit percentage of net sales. The minimum annual royalty in such years is $100,000 . In the event the product is sublicensed, up to $3.5 million of certain fees we receive that are not earned royalties or reimbursements for direct costs are due to CCTEC upon achievement of certain regulatory and clinical milestones. Antisense Therapeutics In May 2015, we entered into an exclusive license agreement, or the Antisense License Agreement, with Antisense Therapeutics that provided us with development and commercialization rights to Antisense Therapeutics’ product candidate, ATL1103, for endocrinology applications (specifically excluding the treatment of any form of cancer and the treatment of any complications of diabetes). We refer to this product candidate as COR ‑004. Under the terms of the Antisense License Agreement, we paid Antisense Therapeutics an initial upfront license fee of $3.0 million in cash which was recorded as research and development expenses. We also invested $2.0 million in Antisense Therapeutics equity which was initially recorded as a non-current other asset for $1.1 million with the difference constituting the cost of the license which was recorded as research and development expense. The terms of the Antisense License Agreement provided that we could terminate the Antisense License Agreement upon 90 days’ prior written notice to Antisense Therapeutics if we believed the further development and commercialization of COR ‑004 was no longer feasible due to a material change that was beyond our control. If, however, it is determined that we terminated the Antisense License Agreement for convenience, we would be required to pay Antisense Therapeutics a $2.0 million termination fee. On March 7, 2016, we provided a notice to Antisense Therapeutics of our intent to terminate the Antisense License Agreement effective June 7, 2016 because we believe the further development and commercialization of COR ‑004 is no longer feasible due to material change s that were beyond our control. We have received a reply from Antisense Therapeutics objecting to our termination notice and to our assertion that the further development and commercialization of COR-004 was no longer feasible due to material changes that were beyond our control. The reply also requests that the parties appoint an independent expert to resolve this dispute in accordance with the terms of th e Antisense License Agreement . (c) Other Commitments In 2012, we entered into consulting agreements with two individuals to serve as Chief Executive Officer and Chief Operating Officer, respectively. In connection with those agreements, each individual is entitled to a payment in the event of the sale or license by us prior to December 31, 2016 of BioPancreate or major assets derived from the BioPancreate technology. The payment amounts are based on a percentage of the acquisition price or up ‑front license fee, as applicable. The maximum amount payable per individual in the event of a sale or license is $1.25 million or $2.5 million in total. Each individual is entitled to such payments even though each is no longer serving in their respective officer roles. |
Business combinations
Business combinations | 12 Months Ended |
Dec. 31, 2015 | |
Business combinations | |
Business combinations | 7. Business combinations BioPancreate On October 29, 2013, we exercised our option to acquire the remaining interest in BioPancreate. As consideration for this acquisition of shares, we issued 336,136 shares of our ordinary shares in October 2013 and an additional 5,272 ordinary shares in January 2014. The transaction was recorded as an equity transaction and the previously held non ‑controlling interest in BioPancreate was reclassified to equity. Aspireo Pharmaceuticals Ltd. Acquisition On June 30, 2015, we acquired from Aspireo Pharmaceuticals Ltd. (Aspireo), an Israeli company, its product candidate, DG3173, and the rights and obligations to the on ‑going research and development contracts, the combination of which represented “substantially all” of the Aspireo business. We refer to this product candidate as COR ‑005. Under the terms of the acquisition agreement, we issued to Aspireo 2,062,677 common shares, which had a value of $33.2 million on June 30, 2015. In connection with this acquisition, we also made a payment to the Office of the Chief Scientist of the Israeli Ministry of Economy, or OCS, in the amount of $3.0 million, which represents the repayment of amounts granted by the OCS to Aspireo, plus interest, that were used in support of research and development conducted by Aspireo for the development of DG3173. The acquisition was accounted for using the acquisition method of accounting for business combinations. The total consideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values. The fair value of $16.10 per ordinary share of the 2,062,677 ordinary shares issued was determined based on the closing market price on the NOTC of our ordinary shares on the acquisition date. To determine the fair value of the acquired in ‑process research and development intangible asset, we applied the income approach using the multi ‑period excess earnings method. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands): In process research and development $ Liabilities assumed: Other liabilities (net) OCS liability Total fair values of assets and liabilities Fair value of total consideration transferred Goodwill $ The excess of the consideration transferred over net assets acquired was assigned to goodwill in an amount of $5.1 million and is primarily related to expected synergies. A deferred tax liability was not recorded for the difference between the book and cost basis of the in ‑process research and development intangible asset because the asset is domiciled in the Cayman Islands and therefore we do not expect to pay income tax. The goodwill is not deductible for income tax purposes. We incurred $2.2 million in acquisition ‑related transaction costs for the period ended December 31, 2015, which is included as general and administration expense in the accompanying consolidated statements of operations. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income taxes | |
Income taxes | 8. Income taxes For the years ended December 31, 2013, 2014 and 2015, the components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2013 2014 2015 Sweden $ $ $ Ireland — — Cayman Islands — — U.S. Total $ $ $ The components of income tax (benefit) for the years ended December 31, 2013, 2014 and 2015 were as follows (in thousands): Year Ended December 31, 2013 2014 2015 Current tax expense (benefit): Sweden $ — $ — $ — Ireland — — — U.S. Federal — — — State — — — Total $ — $ — $ — Deferred tax expense (benefit): Sweden $ $ $ Ireland — — U.S. Federal State Change in valuation allowance Total $ $ $ We recorded tax benefits for the federal and state net operating loss carry forwards and federal tax credit carryforwards attributable to BioPancreate. These deferred benefits are realizable as they offset the non ‑current deferred tax liability recorded in connection with the acquisition of BioPancreate. We have incurred net operating losses since inception. We have not reflected any benefit of net operating loss carryforwards (NOLs), other than those attributable to BioPancreate, in the accompanying financial statements. We have established a valuation allowance against the remaining deferred tax assets due to the uncertainty surrounding the realization of such assets. Deferred taxes are recognized for temporary differences between the bases of assets and liabilities for financial statement and income tax purposes. The tax effect of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands): Year Ended December 31, 2014 2015 Deferred tax assets: Net operating loss carryforwards $ $ Tax credits Capitalized research and development costs Total deferred tax assets Valuation allowance Deferred tax assets recognized Deferred tax liabilities: Acquired intangible assets Total deferred tax liabilities Net deferred tax liabilities $ $ We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets, other than those attributable to BioPancreate, will not be realized. Accordingly, we have provided a full valuation allowance for the remaining deferred tax assets as of December 31, 2014 and 2015. The valuation allowance increased by approximately $3.3 million and $18.1 million during the year ended December 31, 2014 and 2015, respectively, due primarily to net operating losses. The Company’s effective income tax rate differs from the ultimate parent company, Strongbridge Biopharma plc’s, Irish domestic statutory rate of 12.5% for the year ended December 31, 2015. With respect to the prior periods, the effective income tax rate differs from previous ultimate parent company, Cortendo AB’s, Swedish domestic tax rate of 22% as follows: Year Ended December 31, 2013 2014 2015 Ireland statutory income tax rate — — % Swedish statutory income tax rate % % — Foreign tax differential between Sweden, U.S., Cayman Island and Ireland Federal tax credits Change in valuation allowance Other Effective income tax rate % % % At December 31, 2015, we had approximately $66.6 million of Swedish NOLs and approximately $0.2 million of Ireland NOLs , which have an indefinite life, and approximately $37.1 million of U.S. federal and $37.0 million of state NOLs, which begin to expire in 2031. We operate through a permanent establishment in the United States. Income from the permanent establishment is taxed in both Sweden and the United States. Relief is granted by way of crediting the U.S. tax against the Swedish tax. This tax credit can never exceed the Swedish tax on the income. Since the tax rate is higher in the United States than in Sweden, the Swedish taxable carryforward losses of $66. 6 million can only generate a tax benefit if income is derived from sources other than the permanent establishment in the United States. At December 31, 2015, we had $8.9 million of U.S. federal orphan drug tax credit carryforwards, which begin to expire in 2032, and $167,000 of U.S. federal research and development tax credit carryforwards, which begin to expire in 2031. Utilization of the NOLs may be subject to limitations under Swedish tax regulations or U.S. Internal Revenue Code Section 382 if there is a greater than 50% ownership change as determined under applicable regulations. |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2015 | |
Ordinary shares. | |
Ordinary shares | 9. Ordinary shares Voting rights and privileges As of December 31, 2015, there are 600,000,000 authorized shares and 21,205,382 outstanding shares, respectively . The holders of shares of our ordinary shares are entitled to one vote for each ordinary share held at all meetings of shareholders without limitation and written actions in lieu of meetings. The holders are entitled to receive dividends if and when declared by our Board of Directors. No dividends have been declared or paid since our inception. The holders are entitled to share ratably in our assets available for distribution to stockholders, in the event of any voluntary or involuntary liquidation. In addition, on May 26, 2015 the Company issued 40,000 deferred shares with a €1.00 euro par value per share (US$1.098) . The deferred shares are issued in order to satisfy an Irish legislative requirement to maintain a minimum level of issued share capital denominated in euro. The deferred shares carry no voting rights and are not entitled to any dividend or distribution. Equity financings In December 2014, we issued 1,755,909 shares of common stock for $10.2 million, net of transaction costs. The subscription price was $ 6.17 per share . On February 10, 2015, we issued 4,761,078 shares of our common stock for $25.8 million, net of transaction costs. The subscription price was $ 5.54 per share . On June 29 and 30, 2015, following shareholder approval of the share purchase agreement which we entered into on May 14, 2015, we issued 2,284,414 new shares to the investors. The subscription price was $14.54 per share and proceeds net of transaction costs were $32.6 million. On October 22, 2015, we closed on our initial U.S. public offering of 2,500,000 ordinary shares at a price to the public of $10.00 per ordinary share for aggregate gross proceeds of $25 million, before deducting the underwriting commission and estimated offering expenses of $5.5 million. We are listed on The NASDAQ Global Select Market under the symbol "SBBP". A registration statement relating to these securities was declared effective by the U.S. Securities and Exchange Commission on October 15, 2015. Shares reserved for issuance There were 925,077 and 2,591,520 shares of common stock reserved for future issuance upon exercise of stock options as of December 31, 2014 and 2015, respectively. |
Stock based compensation
Stock based compensation | 12 Months Ended |
Dec. 31, 2015 | |
Stock based compensation | |
Stock based compensation | 10. Stock ‑based compensation The Board of Directors approve the granting of awards to our officers, directors, employees and third party ‑consultants. Under these grants, the beneficiaries are given the right to acquire new shares of common stock at a pre ‑determined option price. The purpose of the grants is to assist us in attracting, retaining and motivating officers, employees, directors and consultants. In addition, these awards provide us with the ability to provide incentives that are directly linked to the performance of our business and the related increase in shareholder value. Our awards have terms that range from five to ten years. As determined by our Board of Directors, our awards vest over service periods ranging up to four years or upon achievement of defined performance or market criteria such as the vesting of certain awards upon our IPO or awards that are accelerated when the fair value of our stock price reaches defined targets. The exercise price for each stock option is determined by the Board of Directors based upon considerations such as the fair value of the underlying ordinary shares and certain market conditions. For options granted prior to our October 22, 2015, IPO, the determination of the fair value of our common stock takes into account the price at which our shares were being quoted on the NOTC, recent equity financings and our valuations calculated with the assistance of third ‑parties. On July 21, 2015, we cancelled 465,262 of our options for certain employees that were not vested and for which service was expected to be rendered and concurrently replaced these with 586,710 options. We accounted for the cancellation and replacement as a modification whereby we determined value of the original options based on current assumptions, without regard to the assumptions made on the grant date. We then compared the fair value of the modified award to the fair value of the original options immediately before the terms were modified, measured based on the share price and other pertinent factors on the date of the modification The incremental value of $468,000 was recorded over the remaining requisite service periods as these awards are expected to vest. On September 8, 2015, we effected a 1 -for-11 reverse stock split of our ordinary shares. In conjunction with the reverse stock split, we adjusted our outstanding stock options by the same ratio. On October 22, 2015, we converted all of our Cortendo AB awards which were previously denominated in Swedish Krona (SEK) and Norwegian Kroner (NOK), into awards to acquire shares in Strongbridge Biopharma plc which were denominated in U.S. dollars. For the stock options denominated in NOK, the calculation was based on 8.1935 NOK per U.S. dollars. Due to the effects of foreign exchange related to the exercise price, we accounted for the conversion as a modification whereby we determined value of the original options based on current assumptions, without regard to the assumptions made on the grant date. We then compared the fair value of the modified award to the fair value of the original options immediately before the terms were modified, measured based on the share price and other pertinent factors on the date of the modification. Because the effected options were vested, the incremental value of $325,000 was recorded as expense during the period ended December 31, 2015. For the awards denominated in SEK which were classified as liability awards, we accounted for the conversion as a modification whereby we determined the value of the original options based on current assumptions, without regard to the assumptions made on the grant date. We then compared the fair value of the modified award to the fair value of the original options immediately before the terms were modified, measured based on the share price and other pertinent factors on the date of the modification. The incremental value was recorded as expense in the statement of operations. The liability awards were fully vested as of October 22, 2015 and therefore the resulting liability after modification of $1.5 million, was reclassified from liability to additional paid-in capital on the October 22, 2015. As these stock options are now equity-classified and fully vested, we will not remeasure these stock options in the future. A summary of the outstanding stock options as of December 31, 2015 is as follows: Options Outstanding Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Term Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding—January 1, 2013 $ $ Granted $ Exercised — Outstanding—December 31, 2013 $ $ Granted $ Forfeited $ Exercised — Outstanding—December 31, 2014 $ $ Granted $ Forfeited and cancelled $ Exercised — Outstanding—December 31, 2015 $ $ Vested and exercisable—December 31, 2015 $ $ Vested and expected to vest—December 31, 2015 $ $ Included in the stock options outstanding at December 31, 2015, are unvested stock options to purchase 143,302 shares at a weighted average exercise $18.80 per share for which the vesting of certain tranches will accelerate if the fair value per share of our stock reaches $16.11 , $31.46 or $37.62 for the respective grantee. In addition, the options outstanding include 106,738 shares that vest upon a market appreciation event so long as it occurs prior to May 26, 2019 of which all were unvested as of December 31, 2015 and 106,738 shares that will vest upon the one year anniversary of the market appreciation event of which all were unvested as of December 31, 2015. The market appreciation event is defined as the last trading day in the period in which the closing stock price on each of 20 consecutive trading days reported on NASDAQ has been at least $30.14 or $33.66 for the respective grantee. The aggregate intrinsic values of options outstanding, vested and exercisable, and vested and expected to vest were calculated as the difference between the exercise price of the options and the estimated fair value of our common stock as of December 31, 2013, 2014 and 2015, respectively. Stock ‑based compensation expense We recognized stock ‑based compensation expense for employees and non ‑employees in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2013 2014 2015 Research and development $ $ $ General and administrative Total stock-based compensation $ $ $ Included in these amounts was stock compensation expense (credit) attributed to liability ‑classified awards of $402,000 , $(229,000) and $359,000 , for the years ended December 31, 2013, 2014 and 2015, respectively. As of December 31, 2015, the total unrecognized compensation expense related to unvested options, net of estimated forfeitures, was $9.9 million, which we expect to recognize over an estimated weighted ‑average period of 1.73 years. In determining the estimated fair value of the stock ‑based awards, we use the Black ‑Scholes option ‑pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment. The fair value of stock option awards was estimated with the following assumptions: Year Ended December 31, 2013 2014 2015 Expected term (in years) 4.42 3.23 3.23 Risk-free interest rate 0.0% - 1.7% 0.0% - 0.6% 0.0% - 0.6% Expected volatility 70.8% - 84.4% 68.3% - 80.7% 79.0% - 83.1% Dividend rate —% —% —% |
Summary of significant accoun17
Summary of significant accounting policies and basis of presentation (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of significant accounting policies and basis of presentation | |
Basis of presentation and principles of consolidation | Basis of presentation and principles of consolidation The accompanying consolidated financial statements include the accounts of our wholly owned subsidiaries, BioPancreate Inc. (Trevose, Pennsylvania, United States), Cortendo AB (Gothenburg, Sweden), Cortendo Invest AB (Gothenburg, Sweden) and Cortendo Caymans (Georgetown, Cayman Islands). All intercompany balances and transactions have been eliminated in consolidation. These audited consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States (U.S. GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). |
Foreign currency translation | Foreign currency translation The consolidated financial statements are reported in United States dollars, which is the functional currency of our subsidiaries and Cortendo AB. Transactions in foreign currencies are remeasured into our functional currency at the rate of exchange prevailing at the date of the transaction. Any monetary assets and liabilities arising from these transactions are remeasured into our functional currency at exchange rates prevailing at the balance sheet date or on settlement. Resulting gains and losses are recorded in foreign exchange loss in our consolidated statements of operations. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. We must apply significant judgment in this process. Actual results could materially differ from those estimates. |
Reclassifications | Reclassifications The prior year consolidated financial statements contain certain reclassifications to our consolidated statements of cash flow for the year ended December 31, 2013 and 2014 to conform to the presentation for the year ended December 31, 2015. |
Segment information | Segment information Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. We view our operations and manage our business in one operating segment. Our material long ‑lived assets, which primarily consists of in ‑process research and development, reside in the United States, Sweden and Cayman Islands. |
Cash and cash equivalents | Cash and cash equivalents We consider all short ‑term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of account balances at banks and money market accounts, respectively. |
Concentration of credit risk and other risks and uncertainties | Concentration of credit risk and other risks and uncertainties Cash deposits in Ireland, Norway and Sweden for the years ended December 31, 2014 and 2015 of $15.4 million and $ 3.1 million, respectively, are subject to local banking laws and may bear higher or lower risk than cash deposited in the United States. As part of our cash and investment management processes, we perform periodic evaluations of the credit standing of the financial institutions with which we deposit our cash or purchase cash equivalents, and we have not sustained any credit losses from instruments held at these financial institutions. |
Fair value of financial instruments | Fair value of financial instruments Fair value accounting is applied 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 (at least annually). We are required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described as follows: Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2—Valuations based on quoted prices for similar assets or liabilities, or quoted prices in markets that are not active, and for which all significant inputs are observable, either directly or indirectly. Level 3—Valuations that require inputs that reflect our own assumptions that are both significant to the fair value measurement and unobservable. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment we exercise in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Through June 30, 2015, we entered into foreign currency forward contracts to offset some of the foreign exchange risks we bear on operating expenses that were not denominated in U.S. dollars. These instruments were not entered into for speculative purposes and, although we believe they served as effective economic hedges, we did not seek to qualify for hedge accounting. The forward contracts settled on June 30, 2015, and we have not entered into new forward contracts. These forward contracts were recorded at fair value on the accompanying consolidated balance sheets as prepaid expenses and other current assets. These forward contracts were measured using observable quoted prices for similar instruments. The outstanding notional amount of our unsettled foreign currency forward contracts as of December 31, 2014 and 2015 was $2.3 million and $0 million, respectively, and the fair values of those assets were $0.4 million and $0 , respectively. The gain and loss recognized in other income, net, for these forward contracts was a gain of $0.3 million and a loss of $0.4 million for the years ended December 31, 2014 and 2015, respectively. These amounts represent the net gain or loss on the forward contracts and do not include changes in the related exposures, which generally offset a portion of the gain or loss on the forward contracts. We considered our foreign currency forward contracts under Level 2 of the fair value hierarchy. On May 13, 2015, as part of our agreement to acquire an exclusive license agreement from Antisense Therapeutics Limited (ATL), we purchased 15,025,075 shares of ATL’s common stock that had a fair value of $0.095 per share, which was the quoted market price of the ATL common stock on the Australian Securities Exchange (ASX). As we may not contractually sell ATL’s common shares for 24 months from the date of purchase, we estimated a discount for the lack of marketability of $0.022 per share using an option pricing model that estimated the value of a protective put option using inputs that included quoted market prices and observable inputs other than quoted market prices. We initially recorded the net fair value amount of $1.1 million as a non-current other asset in our consolidated balance sheet. As of December 31, 2015, the non-current other asset was valued using the ASX closing market price of $0.051 per share and an updated discount for the lack of marketability of $0.014 per share using an option pricing model, resulting in an impairment charge recorded as a valuation allowance against the non-current other asset of $550,000 . We considered both the initial valuation as well as our year-end valuation under Level 2 of the fair value hierarchy. |
Property and equipment, net | Property and equipment, net Property and equipment, net, consists of office equipment such as furniture, fixtures and computers. Depreciation expense for the years ended December 31, 2014 and 2015 was not significant. The following useful lives were used for the various classifications of property and equipment, net: Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years |
Business combinations | Business combinations When acquiring new enterprises over which we obtain control, the acquisition method is applied. Under this method, we identify assets and liabilities of these enterprises and measure them at fair value at the acquisition date. Allowance is made for the tax effect of the adjustments made. The excess of the consideration transferred, the amount of the non ‑controlling interest in the acquiree and the acquisition date fair value of previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. |
In process research and development | In ‑process research and development Purchased identifiable intangible assets with indefinite lives, such as our in ‑process research and development, are evaluated for impairment annually in accordance with our policy and whenever events or changes in circumstances indicate that it is more likely than not that the fair value of these assets may not be recovered. To test these assets for impairment, we compare the fair value of the asset to its carrying value. The method we use to estimate the fair value measurements of indefinite ‑lived intangible assets is based on the income approach. For the impairment analysis for the year ended December 31, 2015, significant unobservable inputs used in the income approach valuation method including a discount rates, royalty rates and probabilities of product candidate advancement from one clinical trial phase to the next. The determination of fair value of indefinite lived assets is considered Level 3 for fair value measurement . |
Goodwill | Goodwill We test goodwill for impairment on an annual basis or whenever events occur that may indicate possible impairment. This analysis requires us to make a series of critical assumptions to (1) evaluate whether any impairment exists and (2) measure the amount of impairment. Because we have one operating segment, when testing for a potential impairment of goodwill, we are required to estimate the fair value of our business and determine the carrying value. If the estimated fair value is less than the carrying value of our business, then we are required to estimate the fair value of all identifiable assets and liabilities in a manner similar to a purchase price allocation for an acquired business. Only after this process is completed can the goodwill impairment be determined, if any. To estimate the fair value of the business, primarily a market ‑based approach is applied, utilizing our public market value. We did not record a charge for impairment for the years ended December 31, 2013, 2014 and 2015. |
Research and development expenses | Research and development expenses Research and development costs are expensed as incurred. Research and development expenses consist of internal and external expenses. Internal expenses include compensation and related expenses. External expenses include development, clinical trials, report writing and regulatory compliance costs incurred with clinical research organizations and other third ‑party vendors. At the end of the reporting period, we compare payments made to third ‑party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that we estimate has been made as a result of the service provided, we may record net prepaid or accrued expense relating to these costs. Upfront and milestone payments made to third parties who perform research and development services on our behalf are expensed as services are rendered. |
Stock based compensation | Stock ‑based compensation We account for stock ‑based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). ASC 718 requires all stock ‑based payments including grants of stock options and restricted stock and modifications to existing stock options, to be recognized in the consolidated statements of operations based on their fair values. Our stock ‑based awards are subject to either service ‑based or performance ‑based vesting conditions. Vesting of certain awards could also be accelerated upon achievement of defined market ‑based vesting conditions. Certain awards also contain a combination of service and market conditions or performance and market conditions. We account for employee stock ‑based awards at grant ‑date fair value. If we issue awards with an exercise price denominated in a currency other than our functional currency, trading currency or the currency for which we compensate our employee, we account for these as liabilities. We account for non ‑employee and liability ‑classified stock ‑based awards based on the then ‑current fair values at each financial reporting date until the performance is complete for non ‑employee awards, or until the award is settled (exercised) for liability ‑classified awards. Changes in the amounts attributed to these awards between the reporting dates are included in stock ‑based compensation expense (credit) in our statements of operations. We include liability ‑classified stock options in non ‑current liabilities in our balance sheets as their settlement (exercise) does not require use of cash, cash equivalents or other current assets. We record compensation expense for service ‑based awards over the vesting period of the award on a straight ‑line basis. Compensation expense related to awards with performance ‑based vesting conditions is recognized over the requisite service period using the accelerated attribution method to the extent achievement of the performan ce condition is probable. For those awards in which the performance condition was the completion of our IPO , we did not recognize compensation expense until the close of the IPO as we did not deem the IPO probable until it occurred. Compensation expense for awards with service and market ‑based vesting conditions is recognized using the accelerated attribution method over the shorter of the requisite service period or the implied period associated with achievement of the market ‑based vesting provisions. We estimate the fair value of our awards with service conditions or a combination of service and market conditions using the Black ‑Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk ‑free interest rate and (iv) expected dividends. Due to the lack of historical and implied volatility data of our common stock, we based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. We selected companies with comparable characteristics to us, including enterprise value, risk profiles and position within the industry, and with historical share price information sufficient to meet the expected term of the stock ‑based awards. We compute historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock ‑based awards. We estimate the fair value of our awards with market conditions using a Monte Carlo simulation to determine the probability of satisfying the market condition. We make this estimate using the con ditions that exist at the grant date. The derived service period, which may be the requisite service period, is also determined at this time. Compensation cost for our awards with a market condition is recognized ratably using the accelerated attribution method if the award is subject to graded vesting over the requisite service period. The compensation cost for our awards with a market condition is not reversed if the market condition is not satisfied. We have estimated the expected term of employee service ‑based stock options using the “simplified” method, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option, due to our lack of sufficient historical data. We have estimated the expected term of employee awards with service and market conditions using a Monte ‑Carlo simulation model. This approach involves generating random stock ‑price paths through a lattice ‑type structure. Each path results in a certain financial outcome, such as accelerated vesting or specific option payout. We have estimated the expected term of nonemployee service ‑ and performance ‑based awards based on the remaining contractual term of such awards. The risk ‑free interest rates for periods within the expected term of the option are based on the Swedish Government Bond rate or the U.S. Treasury Bond rate with a maturity date commensurate with the expected term of the associated award. We have never paid dividends, and do not expect to pay dividends in the foreseeable future. We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from estimates. We record stock ‑based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from our estimates, the differences are recorded as a cumulative adjustment in the period the estimates were revised. Historical forfeitures have been insignificant. |
Income taxes | Income taxes We use the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, Income Taxes (ASC 740). Under this method, income tax expense is recognized for the amount of (1) taxes payable or refundable for the current year and (2) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de ‑recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have no material uncertain tax positions for any of the reporting periods presented. We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014 and 2015, we had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in our statements of operations. |
Net loss per share | Net loss per share Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted ‑average number of shares of common stock outstanding for the period, including any dilutive effect from outstanding stock options or other equity - based awards. Shares used in the diluted net loss per share calculations exclude anti ‑dilutive common equivalent shares, which currently consist of stock options. Due to the Company operating at a net loss these anti ‑dilutive shares of common stock totaled 465,540 shares, 925,077 shares and 2,591,520 shares for the years ended December 31, 2013, 2014 and 2015, respectively. While these common equivalent shares are currently anti ‑dilutive, they could be dilutive in the future. |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements During the quarter ended September 30, 2014, the FASB issued ASU No. 2014 ‑15 , Presentation of Financial Statements—Going Concern (ASU No. 2014 ‑15) . The new guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted, but we have not elected to do so. We do not expect the adoption of ASU 2014 ‑15 to have an impact on our financial position or results of operations. In September 2015, the FASB issued ASU 2015-15, Business Combinations— Simplifying the Accounting Measurement-Period Adjustments that eliminates the requirement to restate prior period financial statements for measurement period adjustments for business combinations. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The guidance is effective for fiscal years beginning on or after December 15, 2015, and interim periods within those years and should be applied prospectively to measurement period adjustments that occur after the effective date. We will prospectively apply the guidance to applicable transactions . In November 2015, the FASB issued ASU 2015-17, Income Taxes —Balance Sheet Classification of Deferred Taxes that amends the balance sheet classification of deferred taxes. The new guidance requires that deferred tax liabilities and assets be classified as noncurrent on the balance sheet. Previous guidance required deferred tax liabilities and assets to be separated into current and noncurrent amounts on the balance sheet. The guidance is effective for fiscal years beginning on or after December 15, 2016, and interim periods within those years. We are currently evaluating the impact that the new guidance will have on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities , that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. We are currently assessing the impact that adopting this new accounting guidance will have on our consolidated financial statements. |
Summary of significant accoun18
Summary of significant accounting policies and basis of presentation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary of significant accounting policies and basis of presentation | |
Schedule of useful lives of various classification of property and equipment, net | Amortization Periods Computer hardware - years Computer software - years Furniture and fixtures - years |
Fair value measurement (Tables)
Fair value measurement (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair value measurement | |
Schedule of fair value of financial assets by level | Our financial assets are as follows (in thousands): As of December 31, 2014 Level I Level II Level III Total Financial assets: Foreign currency forward contracts $ — $ $ — $ Total financial assets $ — $ $ — $ As of December 31, 2015 Level I Level II Level III Total Financial assets: Cash equivalents $ $ — $ — $ Noncurrent asset — — Total financial assets $ $ $ — $ |
In-process research and devel20
In-process research and development and goodwill (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
In-process research and development and goodwill | |
Schedule of gross carrying amount of in process research and development and goodwill | The gross carrying amount of in ‑process research and development and goodwill is as follows (in thousands): As of December 31, 2014 Cost Additions Disposals Total In-process research and development $ $ — $ — $ Goodwill — — Total $ $ — $ — $ As of December 31, 2015 Cost Additions Disposals Total In-process research and development $ $ $ — $ Goodwill — Total $ $ $ — $ |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accrued liabilities | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): As of December 31, 2014 2015 Consulting and professional fees $ $ Employee compensation Other Total accrued liabilities $ $ |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and contingencies | |
Schedule of future minimum commitments under facility operating leases | As of December 31, 2015, future minimum commitments under facility operating leases were as follows (in thousands): Operating leases 2016 $ 2017 2018 2019 Total minimum lease payments $ |
Business combinations (Tables)
Business combinations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business combinations | |
Schedule of estimated fair values of the assets acquired and liabilities assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed (in thousands): In process research and development $ Liabilities assumed: Other liabilities (net) OCS liability Total fair values of assets and liabilities Fair value of total consideration transferred Goodwill $ |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income taxes | |
Schedule of components of loss before income taxes | For the years ended December 31, 2013, 2014 and 2015, the components of loss before income taxes were as follows (in thousands): Year Ended December 31, 2013 2014 2015 Sweden $ $ $ Ireland — — Cayman Islands — — U.S. Total $ $ $ |
Schedule of components of income tax (benefit) | The components of income tax (benefit) for the years ended December 31, 2013, 2014 and 2015 were as follows (in thousands): Year Ended December 31, 2013 2014 2015 Current tax expense (benefit): Sweden $ — $ — $ — Ireland — — — U.S. Federal — — — State — — — Total $ — $ — $ — Deferred tax expense (benefit): Sweden $ $ $ Ireland — — U.S. Federal State Change in valuation allowance Total $ $ $ |
Schedule of tax effect of temporary differences that give rise to significant portions of the deferred tax assets | The tax effect of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands): Year Ended December 31, 2014 2015 Deferred tax assets: Net operating loss carryforwards $ $ Tax credits Capitalized research and development costs Total deferred tax assets Valuation allowance Deferred tax assets recognized Deferred tax liabilities: Acquired intangible assets Total deferred tax liabilities Net deferred tax liabilities $ $ |
Schedule of effective tax rate reconciliation to statutory rate | Year Ended December 31, 2013 2014 2015 Ireland statutory income tax rate — — % Swedish statutory income tax rate % % — Foreign tax differential between Sweden, U.S., Cayman Island and Ireland Federal tax credits Change in valuation allowance Other Effective income tax rate % % % |
Stock based compensation (Table
Stock based compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock based compensation | |
Schedule of summary of outstanding stock options | Options Outstanding Weighted- Average Weighted- Remaining Average Contractual Number of Exercise Term Aggregate Shares Price (Years) Intrinsic Value (in thousands) Outstanding—January 1, 2013 $ $ Granted $ Exercised — Outstanding—December 31, 2013 $ $ Granted $ Forfeited $ Exercised — Outstanding—December 31, 2014 $ $ Granted $ Forfeited and cancelled $ Exercised — Outstanding—December 31, 2015 $ $ Vested and exercisable—December 31, 2015 $ $ Vested and expected to vest—December 31, 2015 $ $ |
Schedule of stock-based compensation | We recognized stock ‑based compensation expense for employees and non ‑employees in the accompanying consolidated statements of operations as follows (in thousands): Year Ended December 31, 2013 2014 2015 Research and development $ $ $ General and administrative Total stock-based compensation $ $ $ |
Schedule of assumptions for estimating fair value of stock option awards | Year Ended December 31, 2013 2014 2015 Expected term (in years) 4.42 3.23 3.23 Risk-free interest rate 0.0% - 1.7% 0.0% - 0.6% 0.0% - 0.6% Expected volatility 70.8% - 84.4% 68.3% - 80.7% 79.0% - 83.1% Dividend rate —% —% —% |
Organization (Details)
Organization (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 16, 2015 | Dec. 31, 2015 |
Organization | ||
Proceeds from initial public offering, net | $ 19,475 | |
Ordinary Shares | ||
Organization | ||
Share price (in dollars per share) | $ 10 | |
Ordinary Shares | IPO | ||
Organization | ||
Number of shares in offering | 2,500,000 |
Organization - Exchange offer (
Organization - Exchange offer (Details) | Sep. 08, 2015 | Aug. 07, 2015$ / shares | Dec. 31, 2015$ / shares | Dec. 31, 2014$ / shares |
Exchange offer | ||||
Exchange ratio (as a percent) | 1 | |||
Par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Reverse stock split conversion ratio (as a percent) | 0.09090 | |||
Cortendo AB | ||||
Exchange offer | ||||
Par value (in dollars per share) | $ 0.15 | |||
Shares owned (as a percent) | 99.582% | |||
Shares not owned (as a percent) | 0.418% |
Organization - Liquidity (Detai
Organization - Liquidity (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Organization | ||||
Cash | $ 51,623 | $ 15,632 | $ 14,897 | $ 3,905 |
Summary of significant accoun29
Summary of significant accounting policies and basis of presentation - Segments and Risks and uncertainties (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2015USD ($)segment | Dec. 31, 2014USD ($) | |
Segment information | ||
Number of operating segments | segment | 1 | |
Concentration of credit risk and other risks and uncertainties | ||
Cash subject to local banking laws | $ | $ 3.1 | $ 15.4 |
Summary of significant accoun30
Summary of significant accounting policies and basis of presentation - Fair value (Details) - USD ($) | May. 13, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
ATL | |||
Fair value of financial instruments | |||
Shares purchased | 15,025,075 | ||
Share market price (in dollars per share) | $ 0.095 | $ 0.051 | |
Period from date of purchase entity may not sell shares | 24 months | ||
Discount (in dollars per share) | $ 0.022 | $ 0.014 | |
Foreign currency forward contracts | Not designated as hedging instrument | Other Income | |||
Fair value of financial instruments | |||
Gain (loss) recognized | $ (400,000) | $ 300,000 | |
Foreign currency forward contracts | Not designated as hedging instrument | Prepaid expenses and other current assets | |||
Fair value of financial instruments | |||
Notional amount | 0 | 2,300,000 | |
Fair value | 0 | $ 400,000 | |
Level II | Noncurrent other assets | ATL | |||
Fair value of financial instruments | |||
Net fair value of shares | $ 1,100,000 | $ 550,000 |
Summary of significant accoun31
Summary of significant accounting policies and basis of presentation - Property and equipment, net (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Computer hardware | Minimum | |
Property and equipment, net | |
Amortization Periods | 3 years |
Computer hardware | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Computer software | Minimum | |
Property and equipment, net | |
Amortization Periods | 2 years |
Computer software | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Furniture and fixtures | Minimum | |
Property and equipment, net | |
Amortization Periods | 2 years |
Furniture and fixtures | Maximum | |
Property and equipment, net | |
Amortization Periods | 5 years |
Summary of significant accoun32
Summary of significant accounting policies and basis of presentation - Goodwill, Income taxes and Net loss per share (Details) | 12 Months Ended | ||
Dec. 31, 2015USD ($)segmentshares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013shares | |
Goodwill | |||
Number of operating segments | segment | 1 | ||
Income taxes | |||
Accrued interest or penalties related to uncertain tax positions | $ 0 | $ 0 | |
Interest or penalties related to uncertain tax positions | $ 0 | $ 0 | |
Net loss per share | |||
Anti-dilutive shares of common stock (in shares) | shares | 2,591,520 | 925,077 | 465,540 |
Fair value measurement (Details
Fair value measurement (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Assets | ||
Cash equivalents | $ 45,296 | |
Foreign currency forward contracts | $ 438 | |
Noncurrent asset | 550 | |
Total financial assets | 45,846 | 438 |
Level I | ||
Financial Assets | ||
Cash equivalents | 45,296 | |
Total financial assets | 45,296 | |
Level II | ||
Financial Assets | ||
Foreign currency forward contracts | 438 | |
Noncurrent asset | 550 | |
Total financial assets | $ 550 | $ 438 |
In-process research and devel34
In-process research and development and goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
In-process research and development and goodwill | |||
In-process research and development | $ 36,551 | $ 5,228 | $ 5,228 |
Goodwill | 7,256 | 2,200 | 2,200 |
Total | 43,807 | $ 7,428 | $ 7,428 |
In-process research and development, Additions | 31,323 | ||
Goodwill , Additions | 5,056 | ||
Total, Additions | $ 36,379 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Accrued liabilities | ||
Consulting and professional fees | $ 1,288 | $ 516 |
Employee compensation | 1,172 | 804 |
Other | 225 | 102 |
Total accrued liabilities | $ 2,685 | $ 1,422 |
Commitments and contingencies -
Commitments and contingencies - Lease (Details) | Apr. 22, 2014ft² | Mar. 31, 2015ft² | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Apr. 13, 2015USD ($) |
Future minimum commitments under facility operating leases | |||||
2,016 | $ 227,000 | ||||
2,017 | 311,000 | ||||
2,018 | 319,000 | ||||
2,019 | 184,000 | ||||
Total minimum lease payments | 1,041,000 | ||||
Rent expense | $ 254,000 | $ 83,000 | |||
Building lease, April 2014 | |||||
Lease | |||||
Lease term | 48 months | ||||
Amount of space leased (in square feet) | ft² | 3,000 | ||||
Building lease, March 2015 | |||||
Lease | |||||
Lease term | 52 months | ||||
Amount of space leased (in square feet) | ft² | 14,743 | ||||
Recorded liability for vacated leased space | $ 100,000 |
Commitments and contingencies37
Commitments and contingencies - License Agreements (Details) - License agreement - USD ($) | 1 Months Ended | |
May. 31, 2015 | Mar. 30, 2011 | |
Antisense Therapeutics | ||
License agreement | ||
Amount invested | $ 2,000,000 | |
Prior written notice period for termination of agreement | 90 days | |
Termination fee if terminated for convenience | $ 2,000,000 | |
Noncurrent other assets | Antisense Therapeutics | ||
License agreement | ||
Value of equity | 1,100,000 | |
BioPancreate | CCTEC | ||
License agreement | ||
Maximum milestone payments | $ 2,600,000 | |
Minimum annual royalty | 100,000 | |
Maximum amount due in the event product is sublicensed | $ 3,500,000 | |
Research and development | Antisense Therapeutics | ||
License agreement | ||
Upfront license fee paid | $ 3,000,000 |
Commitments and contingencies38
Commitments and contingencies - Other Commitments (Details) - Consulting agreements $ in Thousands | Dec. 31, 2012USD ($)individual |
Other Commitments | |
Number of individuals | individual | 2 |
Amount payable per individual in the event of a sale | $ 1,250 |
Amount payable per individual in the event of a license | $ 2,500 |
Business combinations - BioPanc
Business combinations - BioPancreate (Details) - shares | Oct. 29, 2013 | Jan. 31, 2014 |
BioPancreate | ||
Business combinations | ||
Shares issued | 336,136 | 5,272 |
Business combinations - Aspireo
Business combinations - Aspireo Pharmaceuticals Ltd. (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Liabilities assumed: | ||||
Goodwill | $ (7,256) | $ (2,200) | $ (2,200) | |
Aspireo Pharmaceuticals Ltd. | ||||
Business combinations | ||||
Shares issued for acquisition (in shares) | 2,062,677 | |||
Shares issued for acquisition (in dollars) | $ 33,200 | |||
Amount of payment to OCS | $ 3,000 | |||
Fair value of common stock (in dollars per share) | $ 16.10 | |||
Estimated fair values of the assets acquired and liabilities assumed | ||||
In-process research and development | $ 31,323 | |||
Liabilities assumed: | ||||
Other liabilities (net) | (195) | |||
OCS liability | (2,973) | |||
Total fair values of assets and liabilities | 28,155 | |||
Fair value of total consideration transferred | (33,211) | |||
Goodwill | $ (5,056) | |||
Acquisition-related transaction costs | $ 2,200 |
Income taxes - Components of lo
Income taxes - Components of loss (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of loss before income taxes | |||
Loss before income taxes | $ (44,083) | $ (10,150) | $ (5,480) |
Sweden | |||
Components of loss before income taxes | |||
Domestic | (9,165) | (5,267) | |
Foreign | (33,960) | ||
Ireland | |||
Components of loss before income taxes | |||
Domestic | (191) | ||
Cayman Islands | |||
Components of loss before income taxes | |||
Foreign | (8,722) | ||
U.S. | |||
Components of loss before income taxes | |||
Foreign | $ (1,210) | $ (985) | $ (213) |
Income taxes - Components of in
Income taxes - Components of income tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Foreign | |||
Change in valuation allowance | $ 18,138 | $ 3,321 | $ 1,796 |
Total | (450) | (480) | (93) |
Sweden | |||
Deferred tax expense (benefit): | |||
Deferred domestic | (648) | (761) | |
Foreign | |||
Deferred foreign | 212 | ||
Ireland | |||
Deferred tax expense (benefit): | |||
Deferred domestic | (24) | ||
U.S. | |||
Foreign | |||
Deferred foreign, Federal | (17,543) | (2,433) | (903) |
Deferred foreign, State | $ (1,233) | $ (720) | $ (225) |
Income taxes - Deferred taxes (
Income taxes - Deferred taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 22,039 | $ 8,775 |
Tax credits | 9,135 | 3,811 |
Capitalized research and development costs | 161 | 161 |
Total deferred tax assets | 31,335 | 12,747 |
Valuation allowance | (30,150) | (12,012) |
Deferred tax assets recognized | 1,185 | 735 |
Deferred tax liabilities: | ||
Acquired intangible assets | (2,111) | (2,111) |
Total deferred tax liabilities | (2,111) | (2,111) |
Net deferred tax liabilities | (926) | (1,376) |
Increase in valuation allowance | $ 18,100 | $ 3,300 |
Income taxes - Effective tax ra
Income taxes - Effective tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Sweden | |||
Schedule of effective tax rate of our benefit for income taxes differs from the statutory rate | |||
Domestic statutory income tax rate | 22.00% | 22.00% | |
Foreign tax differential between Sweden, U.S., Cayman Island and Ireland | (4.60%) | (3.40%) | |
Federal tax credits | 20.90% | 15.20% | |
Change in valuation allowance | (32.70%) | (32.80%) | |
Other | (0.90%) | 0.70% | |
Effective income tax rate | 4.70% | 1.70% | |
Ireland | |||
Schedule of effective tax rate of our benefit for income taxes differs from the statutory rate | |||
Domestic statutory income tax rate | 12.50% | ||
Foreign tax differential between Sweden, U.S., Cayman Island and Ireland | 15.70% | ||
Federal tax credits | 12.10% | ||
Change in valuation allowance | (41.20%) | ||
Other | 1.90% | ||
Effective income tax rate | 1.00% |
Income taxes - NOLs (Details)
Income taxes - NOLs (Details) $ in Millions | Dec. 31, 2015USD ($) |
Sweden | Foreign | |
Operating Loss Carryforwards | |
NOLs | $ 66.6 |
Ireland | Domestic | |
Operating Loss Carryforwards | |
NOLs | 0.2 |
U.S. | Foreign - Federal | |
Operating Loss Carryforwards | |
NOLs | 37.1 |
U.S. | Foreign - State | |
Operating Loss Carryforwards | |
NOLs | $ 37 |
Income taxes - Tax credit carry
Income taxes - Tax credit carryfowards (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
IRS | |
Tax credit carryforward | |
Ownership change threshold (as a percent) | 50.00% |
Sweden | Foreign - Federal | |
Tax credit carryforward | |
Ownership change threshold (as a percent) | 50.00% |
U.S. | Orphan drug tax credit carryforward | Foreign - Federal | |
Tax credit carryforward | |
Tax credit carryforward | $ 8,900,000 |
U.S. | Research and development tax credit carryforward | Foreign - Federal | |
Tax credit carryforward | |
Tax credit carryforward | $ 167,000 |
Ordinary shares (Details)
Ordinary shares (Details) $ / shares in Units, $ in Thousands | Oct. 22, 2015USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | May. 26, 2015$ / sharesshares | Feb. 10, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2015USD ($)item$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($) | Dec. 31, 2015$ / sharesshares | May. 26, 2015€ / shares |
Voting rights and privileges | ||||||||||
Ordinary shares, shares authorized | shares | 175,000,000 | 600,000,000 | 175,000,000 | 600,000,000 | ||||||
Ordinary shares, shares outstanding | shares | 9,700,789 | 21,205,382 | 9,700,789 | 21,205,382 | ||||||
Vote per ordinary share | item | 1 | |||||||||
Dividends declared (in dollars per share) | $ / shares | $ 0 | |||||||||
Dividends paid (in dollars per share) | $ / shares | 0 | |||||||||
Deferred shares, par value (in dollars/euro per share) | $ / shares | $ 1.098 | $ 1.098 | ||||||||
Equity financings | ||||||||||
Issuance of shares (in shares) | shares | 2,284,414 | 4,761,078 | 1,755,909 | |||||||
Proceeds, net of transaction costs | $ | $ 32,600 | $ 25,800 | $ 10,200 | $ 58,341 | $ 10,193 | $ 14,924 | ||||
Price per share (in dollars per share) | $ / shares | $ 14.54 | $ 5.54 | $ 6.17 | $ 6.17 | ||||||
Deferred Shares | ||||||||||
Voting rights and privileges | ||||||||||
Beneficial shares issued (in shares) | shares | 40,000 | 40,000 | ||||||||
Deferred shares, par value (in dollars/euro per share) | (per share) | $ 1.098 | € 1 | ||||||||
IPO | ||||||||||
Equity financings | ||||||||||
Price per share (in dollars per share) | $ / shares | $ 10 | |||||||||
Issuance of shares in initial public offering, net (in shares) | shares | 2,500,000 | |||||||||
Aggregate gross proceeds | $ | $ 25,000 | |||||||||
Offering expenses | $ | $ 5,500 |
Ordinary shares - Shares reserv
Ordinary shares - Shares reserved for issuance (Details) - shares | Dec. 31, 2015 | Dec. 31, 2014 |
Stock Options | ||
Shares reserved for issuance | ||
Common stock reserved for future issuance (in shares) | 2,591,520 | 925,077 |
Stock based compensation - Stoc
Stock based compensation - Stock options (Details) | Oct. 22, 2015USD ($)NOK / $ | Sep. 08, 2015 | Jul. 21, 2015shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | Dec. 31, 2013USD ($)$ / sharesshares | Dec. 31, 2012USD ($)$ / sharesshares |
Stock based compensation | |||||||
Vesting period | 4 years | ||||||
Reverse stock split conversion ratio (as a percent) | 0.09090 | ||||||
Foreign currency exchange rate | NOK / $ | 8.1935 | ||||||
Reclass of stock-based liability award to equity | $ | $ 1,500,000 | $ 1,542,000 | |||||
Summary of outstanding stock options | |||||||
Outstanding at beginning of period (in shares) | 925,077 | 465,540 | 272,727 | ||||
Granted (in shares) | 1,710,530 | 504,990 | 192,813 | ||||
Forfeited and cancelled (in shares) | (44,087) | (45,453) | |||||
Outstanding at end of period (in shares) | 2,591,520 | 925,077 | 465,540 | 272,727 | |||
Vested and exercisable at end of period (in shares) | 727,280 | ||||||
Vested and expected to vest at end of the period (in shares) | 2,591,520 | ||||||
Weighted-Average Exercise Price | |||||||
Granted (in dollars per share) | $ / shares | $ 16.87 | $ 11.18 | $ 7.21 | ||||
Forfeited and cancelled (in dollars per share) | $ / shares | 7.60 | 8.64 | |||||
Outstanding (in dollars per share) | $ / shares | 13.59 | $ 8.01 | $ 4.63 | $ 2.81 | |||
Vested and exercisable at end of period (in dollars per share) | $ / shares | 6.53 | ||||||
Vested and expected to vest at end of period (in dollars per share) | $ / shares | $ 13.59 | ||||||
Additional Disclosures | |||||||
Weighted Average Remaining Contractual Term, Outstanding | 5 years 11 months 19 days | 3 years 8 months 19 days | 3 years 9 months 4 days | 4 years 3 months 29 days | |||
Weighted Average Remaining Contractual Term, Vested and exercisable | 3 years 1 month 13 days | ||||||
Weighted Average Remaining Contractual Term, Vested and expected to vest | 5 years 11 months 19 days | ||||||
Aggregate Intrinsic Value (in dollars) | $ | $ 1,844,000 | $ 1,011,000 | $ 1,182,000 | $ 584,000 | |||
Vested and exercisable at end of the period (in dollars) | $ | 1,844,000 | ||||||
Vested and expected to vest at end of the period (in dollars) | $ | 1,844,000 | ||||||
Certain employees | |||||||
Stock based compensation | |||||||
Incremental fair value recorded (in dollars) | $ | 468,000 | ||||||
Summary of outstanding stock options | |||||||
Granted (in shares) | 586,710 | ||||||
Forfeited and cancelled (in shares) | (465,262) | ||||||
Cortendo AB Plan | |||||||
Stock based compensation | |||||||
Incremental fair value recorded (in dollars) | $ | $ 325,000 | ||||||
Minimum | |||||||
Stock based compensation | |||||||
Award term | 5 years | ||||||
Maximum | |||||||
Stock based compensation | |||||||
Award term | 10 years |
Stock based compensation - Opti
Stock based compensation - Options outstanding (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Stock options | ||||
Options outstanding (in shares) | 2,591,520 | 925,077 | 465,540 | 272,727 |
Options outstanding, weighted-average exercise price (in dollars per share) | $ 13.59 | $ 8.01 | $ 4.63 | $ 2.81 |
Vesting subject to acceleration | ||||
Stock options | ||||
Options outstanding (in shares) | 143,302 | |||
Options outstanding, weighted-average exercise price (in dollars per share) | $ 18.80 | |||
Vesting subject to acceleration | Grantee, One | ||||
Stock options | ||||
Share price threshold | 16.11 | |||
Vesting subject to acceleration | Grantee, Two | ||||
Stock options | ||||
Share price threshold | 31.46 | |||
Vesting subject to acceleration | Grantee, Three | ||||
Stock options | ||||
Share price threshold | 37.62 | |||
Vesting based on market appreciation event | Grantee, Four | ||||
Stock options | ||||
Share price threshold | 30.14 | |||
Vesting based on market appreciation event | Grantee, Five | ||||
Stock options | ||||
Share price threshold | $ 33.66 | |||
Vesting based on market appreciation event | Vesting at market appreciation event | ||||
Stock options | ||||
Options outstanding (in shares) | 106,738 | |||
Consecutive trading days threshold | 20 days | |||
Vesting based on market appreciation event | Vesting at one year anniversary of market appreciation event | ||||
Stock options | ||||
Options outstanding (in shares) | 106,738 | |||
Vesting period following event | 1 year |
Stock based compensation - St51
Stock based compensation - Stock-based compensation expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stock-based compensation expense | |||
Total stock-based compensation | $ 3,940,000 | $ 251,000 | $ 748,000 |
Total unrecognized compensation expense | $ 9,900,000 | ||
Estimated weighted average period over which expense is expected to be recognized | 1 year 8 months 23 days | ||
Stock options accounted for as liabilities | |||
Stock-based compensation expense | |||
Total stock-based compensation | $ 359,000 | (229,000) | 402,000 |
Research and development | |||
Stock-based compensation expense | |||
Total stock-based compensation | 793,000 | 268,000 | 438,000 |
General and administration expense | |||
Stock-based compensation expense | |||
Total stock-based compensation | $ 3,147,000 | $ (17,000) | $ 310,000 |
Stock based compensation - Fair
Stock based compensation - Fair value assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||
Expected term (in years) | 3 years 2 months 23 days | 3 years 2 months 23 days | 4 years 5 months 1 day |
Minimum Risk-free interest rate | 0.00% | 0.00% | 0.00% |
Maximum Risk-free interest rate | 0.60% | 0.60% | 1.70% |
Minimum Expected volatility | 79.00% | 68.30% | 70.80% |
Maximum Expected volatility | 83.10% | 80.70% | 84.40% |