Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 27, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | LA JOLLA PHARMACEUTICAL CO | |
Entity Central Index Key | 920,465 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,226,201 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 241,427 | $ 90,915 |
Accounts receivable, net | 372 | 0 |
Inventory | 939 | 0 |
Prepaid expenses and other current assets | 5,282 | 3,147 |
Total current assets | 248,020 | 94,062 |
Property and equipment, net | 24,211 | 24,568 |
Restricted cash | 909 | 909 |
Total assets | 273,140 | 119,539 |
Current liabilities: | ||
Accounts payable | 6,069 | 11,484 |
Accrued expenses | 6,952 | 703 |
Accrued payroll and related expenses | 4,618 | 4,995 |
Deferred rent, current portion | 1,370 | 1,370 |
Total current liabilities | 19,009 | 18,552 |
Deferred rent, less current portion | 14,161 | 12,785 |
Deferred royalty obligation, net | 124,303 | 0 |
Total liabilities | 157,473 | 31,337 |
Shareholders’ equity: | ||
Common Stock, $0.0001 par value; 100,000,000 shares authorized, 26,218,522 and 22,167,529 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 3 | 2 |
Additional paid-in capital | 933,841 | 803,071 |
Accumulated deficit | (824,820) | (721,514) |
Total shareholders’ equity | 115,667 | 88,202 |
Total liabilities and shareholders’ equity | 273,140 | 119,539 |
Series C-1 Convertible Preferred Stock [Member] | ||
Shareholders’ equity: | ||
Convertible preferred stock, value | 3,906 | 3,906 |
Series F Convertible Preferred Stock [Member] | ||
Shareholders’ equity: | ||
Convertible preferred stock, value | $ 2,737 | $ 2,737 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Common stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 26,218,522 | 22,167,529 |
Common stock, shares outstanding (in shares) | 26,218,522 | 22,167,529 |
Series C-1 Convertible Preferred Stock [Member] | ||
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 11,000 | 11,000 |
Preferred stock, shares issued (in shares) | 3,906 | 3,906 |
Preferred stock, shares outstanding (in shares) | 3,906 | 3,906 |
Preferred stock, liquidation | $ 3,906 | $ 3,906 |
Series F Convertible Preferred Stock [Member] | ||
Preferred stock, par value (usd per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 10,000 | 10,000 |
Preferred stock, shares issued (in shares) | 2,737 | 2,737 |
Preferred stock, shares outstanding (in shares) | 2,737 | 2,737 |
Preferred stock, liquidation | $ 2,737 | $ 2,737 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue | ||||
Net product sales | $ 1,593 | $ 0 | $ 2,402 | $ 0 |
Total revenue | 1,593 | 0 | 2,402 | 0 |
Operating expenses | ||||
Cost of product sales | 129 | 0 | 187 | 0 |
Research and development | 30,867 | 20,808 | 59,296 | 38,573 |
Selling, general and administrative | 22,164 | 6,022 | 45,180 | 11,525 |
Total operating expenses | 53,160 | 26,830 | 104,663 | 50,098 |
Loss from operations | (51,567) | (26,830) | (102,261) | (50,098) |
Interest (expense) income, net | (1,211) | 101 | (1,045) | 129 |
Net loss | $ (52,778) | $ (26,729) | $ (103,306) | $ (49,969) |
Net loss per share, basic and diluted (usd per share) | $ (2.02) | $ (1.21) | $ (4.22) | $ (2.46) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 26,182 | 22,123 | 24,462 | 20,277 |
Unaudited Condensed Consolidat5
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating activities | ||
Net loss | $ (103,306,000) | $ (49,969,000) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Share-based compensation expense | 19,246,000 | 9,694,000 |
Depreciation expense | 2,088,000 | 581,000 |
Loss on disposal of equipment | 150,000 | 0 |
Interest expense | 1,655,000 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (372,000) | 0 |
Inventory | (939,000) | 0 |
Prepaid expenses and other current assets | (2,135,000) | (270,000) |
Other assets | 0 | 219,000 |
Accounts payable | (5,415,000) | (732,000) |
Accrued expenses | 4,608,000 | (541,000) |
Accrued payroll and related expenses | (377,000) | (214,000) |
Deferred rent | 1,376,000 | 0 |
Net cash used for operating activities | (83,421,000) | (41,232,000) |
Investing activities | ||
Purchase of property and equipment | (1,881,000) | (2,021,000) |
Net cash used for investing activities | (1,881,000) | (2,021,000) |
Financing activities | ||
Net proceeds from royalty financing | 124,289,000 | 0 |
Net proceeds from the issuance of common stock | 109,809,000 | 117,480,000 |
Proceeds from the exercise of stock options for common stock | 1,716,000 | 2,074,000 |
Net cash provided by financing activities | 235,814,000 | 119,554,000 |
Net increase in cash, cash equivalents and restricted cash | 150,512,000 | 76,301,000 |
Cash, cash equivalents and restricted cash at beginning of period | 91,824,000 | 65,926,000 |
Cash, cash equivalents and restricted cash at end of period | 242,336,000 | 142,227,000 |
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets | ||
Total cash, cash equivalents and restricted cash | $ 91,824,000 | $ 65,926,000 |
Business
Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business La Jolla Pharmaceutical Company (collectively with its subsidiaries, the Company) is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases. GIAPREZA TM (angiotensin II), formerly known as LJPC-501, was approved by the U.S. Food and Drug Administration (FDA) on December 21, 2017 as a vasoconstrictor to increase blood pressure in adults with septic or other distributive shock. LJPC-401 (synthetic human hepcidin), a clinical-stage investigational product, is being developed for the potential treatment of conditions characterized by iron overload, such as hereditary hemochromatosis, beta thalassemia, sickle cell disease and myelodysplastic syndrome. As of June 30, 2018 , the Company had $241.4 million in cash and cash equivalents, compared to $90.9 million in cash and cash equivalents as of December 31, 2017 . Based on the Company’s current operating plans and projections, management believes that available cash and cash equivalents are sufficient to fund operations for at least one year from the date this Quarterly Report on Form 10-Q is filed with the U.S. Securities and Exchange Commission (SEC). The Company was incorporated in 1989 as a Delaware corporation and reincorporated in California in 2012. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of the SEC Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 22, 2018 (the Form 10-K). The accompanying unaudited condensed consolidated financial statements include the accounts of La Jolla Pharmaceutical Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the condensed consolidated balance sheet of the Company at June 30, 2018 , the condensed consolidated statement of operations for the three and six months ended June 30, 2018 and the condensed consolidated statement of cash flows for the six months ended June 30, 2018 . The preparation of the Company’s unaudited condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year or any future interim periods. The accompanying condensed consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated balance sheet at December 31, 2017 contained in the Form 10-K. Summary of Significant Accounting Policies During the three and six months ended June 30, 2018 , there have been no changes to the Company’s significant accounting policies as described in the Form 10-K, except as described below. Accounts Receivable Accounts receivable are recorded net of customers’ allowances for prompt-pay discounts, chargebacks and doubtful accounts. Allowances for prompt-pay discounts and chargebacks are based on contractual terms. The Company estimates the allowance for doubtful accounts based on existing contractual payment terms, actual payment patterns of its customers and individual customer circumstances. At June 30, 2018, the Company did not have any allowances for doubtful accounts. Inventory Inventory is stated at the lower of cost or estimated net realizable value on a first-in, first-out (FIFO) basis. The Company periodically analyzes its inventory levels and writes down inventory as cost of product sales when: inventory has become obsolete; inventory has a cost basis in excess of its estimated net realizable value; or inventory quantities are in excess of expected sales. As of June 30, 2018 , the Company had $0.9 million of inventory, which consisted of work in process of $0.2 million and finished goods of $0.7 million . Revenue Recognition The Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606 - Revenue from Contracts with Customers (ASC 606) at the time of its first commercial shipment of GIAPREZA in the first quarter of 2018. The Company had no revenue from product sales prior to the first quarter of 2018. Under ASC 606, the Company recognizes revenue when distributors (our customers) obtain control of the Company’s product, which typically occurs on delivery. Revenue is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. To determine revenue recognition for contracts with customers within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue from product sales is recorded at the transaction price, net of estimates for variable consideration consisting of chargebacks, discounts, returns and other allowances offered to our customers. Variable consideration is estimated using the most-likely amount method, which is the single-most likely outcome under a contract and is typically at the stated contractual rate. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary materially from the Company’s estimates, the Company will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted. Chargebacks. Chargebacks are discounts the Company provides to distributors in the event that the sales prices to end users are below the distributors’ acquisition price. Chargebacks are estimated based on known chargeback rates and recorded as a reduction of revenue upon delivery to the Company’s customers. Discounts. The Company offers customers various forms of incentives and consideration, including prompt-pay discounts, service fees and other contract fees. The Company estimates discounts and fees primarily based on contractual terms. These discounts and fees are recorded as a reduction of revenue upon delivery to the Company’s customers. Returns. The Company offers customers a limited right of return, generally for damaged or expired product. The Company estimates returns based on an internal analysis, which includes actual experience and a review of comparable companies. The estimates for returns are recorded as a reduction of revenue upon delivery to the Company’s customers. The Company will continue to assess its estimates of variable consideration as it accumulates additional historical data and will adjust these estimates accordingly. Interest Expense Interest expense and the amortization of debt issuance costs related to the deferred royalty obligation (see Note 5) are recognized over the expected repayment term of the deferred royalty obligation using the effective interest method. The assumptions used in determining the expected repayment term of the deferred royalty obligation require the Company to make estimates that could impact the effective interest rate. Each reporting period, the Company estimates the expected repayment term of the deferred royalty obligation based on forecasted net product sales of GIAPREZA. Changes in interest expense resulting from changes in the effective interest rate, if any, are recorded on a prospective basis. Net Loss per Share Basic net loss per share is calculated based on the weighted-average number of common shares outstanding. Diluted net loss per share is calculated based on the weighted-average number of common shares outstanding plus common stock equivalents. Convertible preferred stock, stock options and warrants are considered common stock equivalents and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Common stock equivalents are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. As of June 30, 2018 and 2017 , there were 14.2 million shares and 11.5 million shares, respectively, of common stock equivalents, which were excluded from the calculation of diluted net loss per share because their effect was anti-dilutive. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In the first quarter of 2018, the Company adopted Accounting Standard Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The standard clarifies the presentation of restricted cash and cash equivalents and requires companies to include restricted cash and cash equivalents in the beginning and ending balances of cash and cash equivalents on the statement of cash flows. The standard also requires additional disclosures to describe the amount and detail of the restriction by balance sheet line item. Accordingly, restricted cash is included as a component of cash, cash equivalents and restricted cash in the unaudited condensed consolidated statement of cash flows for all periods presented, and we have disclosed the amount and detail of the restriction by balance sheet line item. Not Yet Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting. The standard expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods and services. The provisions of this standard are effective for annual periods beginning after December 15, 2018, and for interim periods within those years. Early adoption is permitted. The Company will adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact of this standard on it consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize right-of-use assets and lease liabilities for most leases. The provisions of this standard are effective for annual periods beginning after December 15, 2018, and for interim periods within those years; early adoption is permitted. The Company will adopt the standard in the first quarter of 2019 using the modified retrospective approach. Although the Company is in the process of evaluating the impact of adoption of the standard on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of a new right-of-use asset and lease liability on the balance sheet for its 10 -year operating lease agreement for its corporate headquarters, which commenced October 30, 2017. |
Balance Sheet Account Details
Balance Sheet Account Details | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Account Details | Balance Sheet Account Details Cash, Cash Equivalents and Restricted Cash Restricted cash as of June 30, 2018 and December 31, 2017 represents a standby letter of credit for the Company’s building lease in lieu of a security deposit during the term of such lease. There is a requirement to maintain $0.9 million of cash collateral in an account pledged as security for such letter of credit. Accrued Expenses Accrued expenses consist of the following (in thousands): June 30, December 31, Accrued clinical trials $ 1,972 $ 577 Accrued interest expense 1,641 — Accrued other 3,339 126 Total accrued expenses $ 6,952 $ 703 |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Shareholders’ Equity | Shareholders’ Equity 2017 Common Stock Offering In March 2017, the Company offered and sold 3,731,344 shares of common stock in an underwritten public offering at a price of $33.50 per share for gross proceeds of approximately $125.0 million . The Company received proceeds of approximately $117.5 million , net of approximately $7.5 million in underwriting commissions, discounts and other issuance costs. 2018 Common Stock Offering In March 2018, the Company offered and sold 3,910,000 shares of common stock in an underwritten public offering at a price of $29.50 per share for gross proceeds of approximately $115.3 million . The Company received proceeds of approximately $109.8 million , net of approximately $5.5 million in underwriting commissions, discounts and other issuance costs. Stock Option Activity The Company’s stock option activity under its option plans for the six months ended June 30, 2018 was comprised of the following: Shares Underlying Stock Options Weighted- average Exercise Price per Share Outstanding at December 31, 2017 6,037,302 $ 24.19 Granted 886,900 $ 30.15 Exercised (97,937 ) $ 17.54 Forfeited (140,757 ) $ 26.35 Outstanding at June 30, 2018 6,685,508 $ 25.03 As of June 30, 2018 , there were 1,129,589 shares of common stock available for future grants under its option plans, and the Company has reserved an additional 6,685,508 shares of common stock for future issuance upon exercise of all outstanding stock options granted under its option plans. During the six months ended June 30, 2018 , stock options to purchase 97,937 shares of common stock were exercised with an intrinsic value of $1.4 million . Share-based Compensation Expense Total share-based compensation expense related to all share-based awards for the three and six months ended June 30, 2018 and 2017 was comprised of the following (in thousands): Three Months Ended Six Months Ended 2018 2017 2018 2017 Research and development: Stock options $ 5,695 $ 2,563 $ 11,081 $ 5,016 Warrants 6 16 16 33 Research and development share-based compensation expense 5,701 2,579 11,097 5,049 Selling, general and administrative: Stock options 4,143 1,993 8,149 3,948 Restricted stock — — — 409 Warrants — 139 — 288 Selling, general and administrative share-based compensation expense 4,143 2,132 8,149 4,645 Total share-based compensation expense $ 9,844 $ 4,711 $ 19,246 $ 9,694 As of June 30, 2018 , $98.0 million of total unrecognized share-based compensation expense related to unvested stock options remains and is expected to be recognized over a weighted-average period of 3.1 years. Warrants As of June 30, 2018 , the Company had outstanding warrants to purchase 10,000 shares of common stock. In March 2018, the Company issued 43,056 shares of common stock in a cashless exercise of 83,013 warrants to a third-party warrant holder. |
Deferred Royalty Obligation
Deferred Royalty Obligation | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Deferred Royalty Obligation | Deferred Royalty Obligation On May 10, 2018, the Company closed a $125.0 million royalty financing agreement (the Royalty Agreement) with HealthCare Royalty Partners (HCR). Under the terms of the Royalty Agreement, the Company received $125.0 million in exchange for tiered royalty payments on worldwide net product sales of GIAPREZA. HCR is entitled to receive royalties on worldwide net product sales of GIAPREZA beginning April 1, 2018. Payments to HCR under the Royalty Agreement start annually at a maximum royalty rate, with step-downs based on the achievement of annual net product sales thresholds. Through December 31, 2021, the royalty rate will be a maximum of 10% . Starting January 1, 2022, the maximum royalty rate may increase by 4% if an agreed-upon, cumulative sales threshold has not been met, and, starting January 1, 2024, the maximum royalty rate may increase by an additional 4% if a different agreed-upon, cumulative sales threshold has not been met. The Royalty Agreement is subject to maximum aggregate royalty payments to HCR of 180% of the $125.0 million to be received by the Company, at which time the payment obligations under the Royalty Agreement would expire. The Royalty Agreement was entered into by the Company’s wholly owned subsidiary, La Jolla Pharma, LLC, and HCR has no recourse under the Royalty Agreement against La Jolla Pharmaceutical Company or any assets other than GIAPREZA. On receipt of the $125.0 million payment from HCR, the Company recorded a deferred royalty obligation of $125.0 million , net of debt issuance costs of $0.7 million . For both the three and six months ended June 30, 2018, the Company recognized interest expense, including amortization of the debt discount, of $1.7 million . The carrying value of the deferred royalty obligation as of June 30, 2018 was $124.3 million , net of unamortized debt discount of $0.7 million , and was classified as non-current. Accrued interest expense of $1.6 million is included in accrued expenses in the condensed consolidated balance sheet as of June 30, 2018. In the event of certain material breaches of the Royalty Agreement, HCR would have the right to terminate the Royalty Agreement and demand payment of an amount equal to either $125.0 million , minus aggregate royalties paid to HCR, or $225.0 million , minus aggregate royalties paid to HCR. The Company concluded that certain of these material breaches are embedded derivatives that require bifurcation from the deferred royalty obligation and fair value recognition. The Company determined the fair value of each derivative by assessing the probability of each event occurring, as well as the potential repayment amounts and timing of such repayments that would result under various scenarios. As a result of this assessment, the Company determined that the fair value of the embedded derivatives is immaterial as of June 30, 2018. Each reporting period, the Company estimates the fair value of the embedded derivatives until the features lapse and/or the termination of the Royalty Agreement. Any change in the fair value of the embedded derivatives will be recorded as either a gain or loss on the consolidated statements of operations. |
Basis of Presentation and Sum11
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation and Use of Estimates The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of the SEC Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 22, 2018 (the Form 10-K). |
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements include the accounts of La Jolla Pharmaceutical Company and its wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the condensed consolidated balance sheet of the Company at June 30, 2018 , the condensed consolidated statement of operations for the three and six months ended June 30, 2018 and the condensed consolidated statement of cash flows for the six months ended June 30, 2018 . |
Use of Estimates | The preparation of the Company’s unaudited condensed consolidated financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in the Company’s unaudited condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from those estimates. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year or any future interim periods. The accompanying condensed consolidated balance sheet at December 31, 2017 has been derived from the audited consolidated balance sheet at December 31, 2017 contained in the Form 10-K. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded net of customers’ allowances for prompt-pay discounts, chargebacks and doubtful accounts. Allowances for prompt-pay discounts and chargebacks are based on contractual terms. The Company estimates the allowance for doubtful accounts based on existing contractual payment terms, actual payment patterns of its customers and individual customer circumstances. |
Inventory | Inventory Inventory is stated at the lower of cost or estimated net realizable value on a first-in, first-out (FIFO) basis. The Company periodically analyzes its inventory levels and writes down inventory as cost of product sales when: inventory has become obsolete; inventory has a cost basis in excess of its estimated net realizable value; or inventory quantities are in excess of expected sales. |
Revenue Recognition | Revenue Recognition The Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606 - Revenue from Contracts with Customers (ASC 606) at the time of its first commercial shipment of GIAPREZA in the first quarter of 2018. The Company had no revenue from product sales prior to the first quarter of 2018. Under ASC 606, the Company recognizes revenue when distributors (our customers) obtain control of the Company’s product, which typically occurs on delivery. Revenue is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. To determine revenue recognition for contracts with customers within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue from product sales is recorded at the transaction price, net of estimates for variable consideration consisting of chargebacks, discounts, returns and other allowances offered to our customers. Variable consideration is estimated using the most-likely amount method, which is the single-most likely outcome under a contract and is typically at the stated contractual rate. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results vary materially from the Company’s estimates, the Company will adjust these estimates, which will affect revenue from product sales and earnings in the period such estimates are adjusted. Chargebacks. Chargebacks are discounts the Company provides to distributors in the event that the sales prices to end users are below the distributors’ acquisition price. Chargebacks are estimated based on known chargeback rates and recorded as a reduction of revenue upon delivery to the Company’s customers. Discounts. The Company offers customers various forms of incentives and consideration, including prompt-pay discounts, service fees and other contract fees. The Company estimates discounts and fees primarily based on contractual terms. These discounts and fees are recorded as a reduction of revenue upon delivery to the Company’s customers. Returns. The Company offers customers a limited right of return, generally for damaged or expired product. The Company estimates returns based on an internal analysis, which includes actual experience and a review of comparable companies. The estimates for returns are recorded as a reduction of revenue upon delivery to the Company’s customers. The Company will continue to assess its estimates of variable consideration as it accumulates additional historical data and will adjust these estimates accordingly. |
Interest Expense | Interest Expense Interest expense and the amortization of debt issuance costs related to the deferred royalty obligation (see Note 5) are recognized over the expected repayment term of the deferred royalty obligation using the effective interest method. The assumptions used in determining the expected repayment term of the deferred royalty obligation require the Company to make estimates that could impact the effective interest rate. Each reporting period, the Company estimates the expected repayment term of the deferred royalty obligation based on forecasted net product sales of GIAPREZA. Changes in interest expense resulting from changes in the effective interest rate, if any, are recorded on a prospective basis. |
Net Loss per Share | Net Loss per Share Basic net loss per share is calculated based on the weighted-average number of common shares outstanding. Diluted net loss per share is calculated based on the weighted-average number of common shares outstanding plus common stock equivalents. Convertible preferred stock, stock options and warrants are considered common stock equivalents and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Common stock equivalents are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In the first quarter of 2018, the Company adopted Accounting Standard Update (ASU) 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The standard clarifies the presentation of restricted cash and cash equivalents and requires companies to include restricted cash and cash equivalents in the beginning and ending balances of cash and cash equivalents on the statement of cash flows. The standard also requires additional disclosures to describe the amount and detail of the restriction by balance sheet line item. Accordingly, restricted cash is included as a component of cash, cash equivalents and restricted cash in the unaudited condensed consolidated statement of cash flows for all periods presented, and we have disclosed the amount and detail of the restriction by balance sheet line item. Not Yet Adopted Accounting Pronouncements In June 2018, the FASB issued ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting. The standard expands the scope of ASC 718 to include share-based payments granted to nonemployees in exchange for goods and services. The provisions of this standard are effective for annual periods beginning after December 15, 2018, and for interim periods within those years. Early adoption is permitted. The Company will adopt the standard in the first quarter of 2019. The Company is currently evaluating the impact of this standard on it consolidated financial statements and disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize right-of-use assets and lease liabilities for most leases. The provisions of this standard are effective for annual periods beginning after December 15, 2018, and for interim periods within those years; early adoption is permitted. The Company will adopt the standard in the first quarter of 2019 using the modified retrospective approach. Although the Company is in the process of evaluating the impact of adoption of the standard on its consolidated financial statements, the Company currently believes the most significant changes will be related to the recognition of a new right-of-use asset and lease liability on the balance sheet for its 10 -year operating lease agreement for its corporate headquarters, which commenced October 30, 2017. |
Balance Sheet Account Details (
Balance Sheet Account Details (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accrued Expenses | Accrued expenses consist of the following (in thousands): June 30, December 31, Accrued clinical trials $ 1,972 $ 577 Accrued interest expense 1,641 — Accrued other 3,339 126 Total accrued expenses $ 6,952 $ 703 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | The Company’s stock option activity under its option plans for the six months ended June 30, 2018 was comprised of the following: Shares Underlying Stock Options Weighted- average Exercise Price per Share Outstanding at December 31, 2017 6,037,302 $ 24.19 Granted 886,900 $ 30.15 Exercised (97,937 ) $ 17.54 Forfeited (140,757 ) $ 26.35 Outstanding at June 30, 2018 6,685,508 $ 25.03 |
Summary of Share-based Compensation Expense | Total share-based compensation expense related to all share-based awards for the three and six months ended June 30, 2018 and 2017 was comprised of the following (in thousands): Three Months Ended Six Months Ended 2018 2017 2018 2017 Research and development: Stock options $ 5,695 $ 2,563 $ 11,081 $ 5,016 Warrants 6 16 16 33 Research and development share-based compensation expense 5,701 2,579 11,097 5,049 Selling, general and administrative: Stock options 4,143 1,993 8,149 3,948 Restricted stock — — — 409 Warrants — 139 — 288 Selling, general and administrative share-based compensation expense 4,143 2,132 8,149 4,645 Total share-based compensation expense $ 9,844 $ 4,711 $ 19,246 $ 9,694 |
Business (Narrative) (Details)
Business (Narrative) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Cash and cash equivalents | $ 241,427 | $ 90,915 | $ 141,317 |
Basis of Presentation and Sum15
Basis of Presentation and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands, shares in Millions | Oct. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Inventory, Work in Process, Net of Reserves | $ 200 | |||
Total inventory | 939 | $ 0 | ||
Finished goods | $ 700 | |||
Potentially dilutive common shares related to the outstanding preferred stock, stock options, restricted stock units and warrants (in shares) | 14.2 | 11.5 | ||
Term of lease agreement | 10 years |
Balance Sheet Account Details
Balance Sheet Account Details (Narrative) (Details) $ in Millions | Jun. 30, 2018USD ($) |
4550 Towne Centre Court, San Diego, California | Financial Standby Letter of Credit | Letter of Credit | |
Restricted Cash and Cash Equivalents Items [Line Items] | |
Cash collateral as security | $ 0.9 |
Balance Sheet Account Details17
Balance Sheet Account Details (Summary of Accrued Expenses) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued clinical trials | $ 1,972 | $ 577 |
Accrued interest expense | 1,641 | 0 |
Accrued other | 3,339 | 126 |
Total accrued expenses | $ 6,952 | $ 703 |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 6 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares of common stock exercised (in shares) | 97,937 | ||
Intrinsic value of common stock exercised | $ 1.4 | ||
Unamortized share-based compensation expense | $ 98 | ||
Recognized weighted average period | 3 years 1 month | ||
Warrants outstanding (in shares) | 10,000 | ||
Warrants exercised during period (in shares) | 83,013 | ||
Common Stock [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock issued during period (in shares) | 43,056 | ||
2013 Equity Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for grant (in shares) | 1,129,589 | ||
Additional shares reserved for future issuance (in shares) | 6,685,508 | ||
Public Stock Offering [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock issued (in shares) | 3,731,344 | ||
Price per share (usd per share) | $ 33.50 | ||
Gross proceeds | $ 125 | ||
Proceeds, net of underwriting commissions | 117.5 | ||
Underwriting commissions | $ 7.5 | ||
Underwritten Public Offering [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares of common stock issued (in shares) | 3,910,000 | ||
Price per share (usd per share) | $ 29.50 | ||
Gross proceeds | $ 115.3 | ||
Proceeds, net of underwriting commissions | 109.8 | ||
Underwriting commissions | $ 5.5 |
Shareholders' Equity (Stock Opt
Shareholders' Equity (Stock Option Activity) (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Shares Underlying Stock Options | |
Outstanding beginning balance, Shares underlying stock options and restricted stock awards (in shares) | shares | 6,037,302 |
Granted, Shares underlying stock options and restricted stock awards (in shares) | shares | 886,900 |
Exercised, Shares underlying stock options and restricted stock awards (in shares) | shares | (97,937) |
Forfeited, Shares underlying stock options and restricted stock awards (in shares) | shares | (140,757) |
Outstanding ending balance, Shares underlying stock options and restricted stock awards (in shares) | shares | 6,685,508 |
Weighted- Average Exercise Price per Share | |
Outstanding beginning balance, Weighted - average exercise price (usd per share) | $ / shares | $ 24.19 |
Granted, Weighted - average exercise price (usd per share) | $ / shares | 30.15 |
Exercised, Weighted - average exercise price (usd per share) | $ / shares | 17.54 |
Forfeited, Weighted - average exercise price (usd per share) | $ / shares | 26.35 |
Outstanding ending balance, Weighted - average exercise price (usd per share) | $ / shares | $ 25.03 |
Shareholders' Equity (Share-bas
Shareholders' Equity (Share-based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 9,844 | $ 4,711 | $ 19,246 | $ 9,694 |
Research and development [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 5,701 | 2,579 | 11,097 | 5,049 |
General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 4,143 | 2,132 | 8,149 | 4,645 |
Stock Option [Member] | Research and development [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 5,695 | 2,563 | 11,081 | 5,016 |
Stock Option [Member] | General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 4,143 | 1,993 | 8,149 | 3,948 |
Restricted Stock [Member] | General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 0 | 0 | 0 | 409 |
Warrant [Member] | Research and development [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | 6 | 16 | 16 | 33 |
Warrant [Member] | General and administrative [Member] | ||||
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items] | ||||
Share-based compensation expense | $ 0 | $ 139 | $ 0 | $ 288 |
Deferred Royalty Obligation (De
Deferred Royalty Obligation (Details) - USD ($) | May 10, 2018 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||||
Deferred royalty obligation, net | $ 124,303,000 | $ 124,303,000 | $ 0 | ||
Interest expense | 1,655,000 | $ 0 | |||
Accrued interest expense | 1,641,000 | 1,641,000 | $ 0 | ||
HealthCare Royalty Partners | |||||
Debt Instrument [Line Items] | |||||
Proceeds from royalty agreement | $ 125,000,000 | ||||
Maximum potential royalty payout | 180.00% | ||||
Required payment for breach of agreement, payment one | $ 125,000,000 | ||||
Required payment for breach of agreement, payment two | 225,000,000 | ||||
HealthCare Royalty Partners | Loans Payable | Royalty Financing Agreement | |||||
Debt Instrument [Line Items] | |||||
Deferred royalty obligation, net | 125,000,000 | 124,300,000 | 124,300,000 | ||
Debt issuance costs | $ 700,000 | ||||
Interest expense | 1,700,000 | 1,700,000 | |||
Unamortized debt discount | 700,000 | 700,000 | |||
Accrued interest expense | $ 1,600,000 | $ 1,600,000 | |||
HealthCare Royalty Partners | Period One | |||||
Debt Instrument [Line Items] | |||||
Maximum potential royalty payout | 10.00% | ||||
HealthCare Royalty Partners | Period Two | |||||
Debt Instrument [Line Items] | |||||
Increase in maximum potential payout percent | 4.00% | ||||
HealthCare Royalty Partners | Payout Period | |||||
Debt Instrument [Line Items] | |||||
Increase in maximum potential payout percent | 4.00% |
Uncategorized Items - ljpc-2018
Label | Element | Value |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | $ 0 |
Restricted Cash, Noncurrent | us-gaap_RestrictedCashNoncurrent | 909,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 910,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | $ 0 |