þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
q | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 76-0474169 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
Yes | þ | No |
Yes | þ | No |
Yes | No | þ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 6. | ||
As of September 30, | As of December 31, | |||||||
2017 | 2016 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 83,293 | $ | 46,600 | ||||
Short-term investments | 113,524 | 299,904 | ||||||
Accounts receivable, net of allowances of $4 | 10,597 | 7,492 | ||||||
Inventory | 2,149 | — | ||||||
Prepaid expenses and other current assets | 4,458 | 3,878 | ||||||
Total current assets | 214,021 | 357,874 | ||||||
Property and equipment, net of accumulated depreciation and amortization of $58,794 and $59,875, respectively | 18,167 | 19,390 | ||||||
Goodwill | 44,543 | 44,543 | ||||||
Other intangible assets, net of accumulated amortization of $1,030 and $0, respectively | 52,327 | 53,357 | ||||||
Other assets | 429 | 461 | ||||||
Total assets | $ | 329,487 | $ | 475,625 | ||||
Liabilities and Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 52,628 | $ | 52,877 | ||||
Accrued liabilities | 12,729 | 32,114 | ||||||
Current portion of deferred revenue | 48,738 | 63,372 | ||||||
Current portion of long-term debt, net of deferred issuance costs | 14,633 | 16,280 | ||||||
Total current liabilities | 128,728 | 164,643 | ||||||
Deferred revenue, net of current portion | 26,545 | 48,934 | ||||||
Long-term debt, net of deferred issuance costs | 85,512 | 85,167 | ||||||
Deferred tax liabilities | 10,023 | 18,675 | ||||||
Other long-term liabilities | 303 | 805 | ||||||
Total liabilities | 251,111 | 318,224 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Preferred stock, $.01 par value; 5,000 shares authorized; no shares issued and outstanding | — | — | ||||||
Common stock, $.001 par value; 225,000 shares authorized; 105,710 and 104,582 shares issued, respectively | 106 | 105 | ||||||
Additional paid-in capital | 1,433,263 | 1,411,222 | ||||||
Accumulated deficit | (1,353,026 | ) | (1,250,363 | ) | ||||
Accumulated other comprehensive loss | (63 | ) | (195 | ) | ||||
Treasury stock, at cost, 122 and 306 shares, respectively | (1,904 | ) | (3,368 | ) | ||||
Total equity | 78,376 | 157,401 | ||||||
Total liabilities and equity | $ | 329,487 | $ | 475,625 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Net product revenue | $ | 5,830 | $ | — | $ | 10,443 | $ | — | ||||||||
Collaborative agreements | 21,112 | 27,686 | 46,781 | 60,181 | ||||||||||||
Subscription and license fees | — | 31 | 64 | 119 | ||||||||||||
Total revenues | 26,942 | 27,717 | 57,288 | 60,300 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of sales (including finite-lived intangible asset amortization) | 599 | — | 1,361 | — | ||||||||||||
Research and development, including stock-based compensation of $1,345, $1,051, $3,698 and $3,013, respectively | 39,137 | 52,533 | 109,653 | 137,751 | ||||||||||||
Increase (decrease) in fair value of Symphony Icon, Inc. purchase liability | — | (2,146 | ) | 2,101 | (703 | ) | ||||||||||
Selling, general and administrative, including stock-based compensation of $1,235, $879, $3,516 and $2,709, respectively | 16,724 | 12,263 | 50,069 | 29,077 | ||||||||||||
Total operating expenses | 56,460 | 62,650 | 163,184 | 166,125 | ||||||||||||
Loss from operations | (29,518 | ) | (34,933 | ) | (105,896 | ) | (105,825 | ) | ||||||||
Interest expense | (1,619 | ) | (1,646 | ) | (4,821 | ) | (4,933 | ) | ||||||||
Interest and other income, net | 415 | 564 | 1,393 | 1,748 | ||||||||||||
Net loss before taxes | (30,722 | ) | (36,015 | ) | (109,324 | ) | (109,010 | ) | ||||||||
Income tax benefit | — | — | 8,652 | — | ||||||||||||
Net loss | $ | (30,722 | ) | $ | (36,015 | ) | $ | (100,672 | ) | $ | (109,010 | ) | ||||
Net loss per common share, basic and diluted | $ | (0.29 | ) | $ | (0.35 | ) | $ | (0.96 | ) | $ | (1.05 | ) | ||||
Shares used in computing net loss per common share, basic and diluted | 105,582 | 103,885 | 105,119 | 103,799 | ||||||||||||
Other comprehensive loss: | ||||||||||||||||
Unrealized gain (loss) on investments | 151 | (258 | ) | 132 | 297 | |||||||||||
Comprehensive loss | $ | (30,571 | ) | $ | (36,273 | ) | $ | (100,540 | ) | $ | (108,713 | ) |
Common Stock | Additional | Accumulated Other | |||||||||||||||||||||||||
Shares | Par Value | Paid-In Capital | Accumulated Deficit | Comprehensive Gain (Loss) | Treasury Stock | Total | |||||||||||||||||||||
Balance at December 31, 2015 | 103,860 | $ | 104 | $ | 1,397,646 | $ | (1,108,934 | ) | $ | (219 | ) | $ | (2,747 | ) | $ | 285,850 | |||||||||||
Stock-based compensation | — | — | 5,722 | — | — | — | 5,722 | ||||||||||||||||||||
Issuance of common stock under Equity Incentive Plans | 463 | — | 2,943 | — | — | — | 2,943 | ||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (621 | ) | (621 | ) | ||||||||||||||||||
Net loss | — | — | — | (109,010 | ) | — | — | (109,010 | ) | ||||||||||||||||||
Unrealized gain on investments | — | — | — | — | 297 | — | 297 | ||||||||||||||||||||
Balance at September 30, 2016 | 104,323 | $ | 104 | $ | 1,406,311 | $ | (1,217,944 | ) | $ | 78 | $ | (3,368 | ) | $ | 185,181 | ||||||||||||
Balance at December 31, 2016 | 104,582 | $ | 105 | $ | 1,411,222 | $ | (1,250,363 | ) | $ | (195 | ) | $ | (3,368 | ) | $ | 157,401 | |||||||||||
Cumulative effect of change in accounting principle | — | — | 1,991 | (1,991 | ) | — | — | — | |||||||||||||||||||
Issuance of common stock to designees of Symphony Icon Holdings LLC | 660 | — | 10,499 | — | — | — | 10,499 | ||||||||||||||||||||
Stock-based compensation | — | — | 7,214 | — | — | — | 7,214 | ||||||||||||||||||||
Issuance of common stock under Equity Incentive Plans | 468 | 1 | 5,480 | — | — | — | 5,481 | ||||||||||||||||||||
Issuance of treasury stock | — | — | (3,143 | ) | — | — | 3,143 | — | |||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | (1,679 | ) | (1,679 | ) | ||||||||||||||||||
Net loss | — | — | — | (100,672 | ) | — | — | (100,672 | ) | ||||||||||||||||||
Unrealized gain on investments | — | — | — | — | 132 | — | 132 | ||||||||||||||||||||
Balance at September 30, 2017 | 105,710 | $ | 106 | $ | 1,433,263 | $ | (1,353,026 | ) | $ | (63 | ) | $ | (1,904 | ) | $ | 78,376 |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (100,672 | ) | $ | (109,010 | ) | ||
Adjustments to reconcile consolidated net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 2,475 | 1,548 | ||||||
Increase (decrease) in fair value of Symphony Icon, Inc. purchase liability | 2,101 | (703 | ) | |||||
Stock-based compensation | 7,214 | 5,722 | ||||||
Amortization of debt issuance costs | 412 | 389 | ||||||
Deferred tax benefit | (8,652 | ) | — | |||||
Loss on disposal of property and equipment | 2 | 12 | ||||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | (3,105 | ) | 173 | |||||
(Increase) in inventory | (2,149 | ) | — | |||||
(Increase) decrease in prepaid expenses and other current assets | (580 | ) | 7,694 | |||||
(Increase) decrease in other assets | 32 | (25 | ) | |||||
Increase (decrease) in accounts payable and other liabilities | (11,738 | ) | 18,705 | |||||
Decrease in deferred revenue | (37,023 | ) | (51,342 | ) | ||||
Net cash used in operating activities | (151,683 | ) | (126,837 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (224 | ) | (83 | ) | ||||
Purchases of investments | (59,237 | ) | (336,649 | ) | ||||
Maturities of investments | 245,749 | 298,525 | ||||||
Net cash provided by (used in) investing activities | 186,288 | (38,207 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common stock | 5,481 | 2,943 | ||||||
Repurchase of common stock | (1,679 | ) | (621 | ) | ||||
Repayment of debt borrowings | (1,714 | ) | (1,495 | ) | ||||
Net cash provided by financing activities | 2,088 | 827 | ||||||
Net increase (decrease) in cash and cash equivalents | 36,693 | (164,217 | ) | |||||
Cash and cash equivalents at beginning of period | 46,600 | 202,989 | ||||||
Cash and cash equivalents at end of period | $ | 83,293 | $ | 38,772 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 3,272 | $ | 3,406 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Common stock issued in satisfaction of Symphony Icon payment obligation | $ | 10,499 | $ | — | ||||
Unrealized gain on investments | $ | 132 | $ | 297 |
Raw materials | $ | 734 | ||
Work-in-process | 41 | |||
Finished goods | 1,374 | |||
Total inventory | $ | 2,149 |
• | The delivered item or items have value to the customer on a stand-alone basis; and |
• | If there is a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and within the Company’s control. |
• | The consideration payable to the Company is commensurate with the Company’s performance necessary to achieve the milestone or the increase in value to the collaboration resulting from the Company’s performance; |
• | Relates solely to the Company’s past performance; and |
• | Is reasonable relative to all of the other deliverables and payments within the arrangement. |
Expected Volatility | Risk-free Interest Rate | Expected Term | Dividend Rate | ||||||||
September 30, 2017: | |||||||||||
Employees | 61 | % | 1.7 | % | 4 | — | % | ||||
Officers and non-employee directors | 70 | % | 2.2 | % | 8 | — | % | ||||
September 30, 2016: | |||||||||||
Employees | 63 | % | 1.1 | % | 4 | — | % | ||||
Officers and non-employee directors | 83 | % | 1.6 | % | 8 | — | % |
Options | Weighted Average Exercise Price | ||||||
(in thousands) | |||||||
Outstanding at December 31, 2016 | 4,834 | $ | 11.24 | ||||
Granted | 847 | 14.51 | |||||
Exercised | (458 | ) | 11.98 | ||||
Expired | (149 | ) | 26.59 | ||||
Forfeited | (82 | ) | 13.55 | ||||
Outstanding at September 30, 2017 | 4,992 | 11.23 | |||||
Exercisable at September 30, 2017 | 2,896 | $ | 11.06 |
Shares | Weighted Average Grant Date Fair Value | ||||||
(in thousands) | |||||||
Outstanding at December 31, 2016 | 875 | $ | 8.13 | ||||
Granted | 418 | 14.44 | |||||
Vested | (286 | ) | 8.78 | ||||
Forfeited | (38 | ) | 10.98 | ||||
Outstanding at September 30, 2017 | 969 | $ | 10.55 |
2. | Recent Accounting Pronouncements |
3. | Cash and Cash Equivalents and Investments |
As of September 30, 2017 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 83,293 | $ | — | $ | — | $ | 83,293 | ||||||||
Securities maturing within one year: | ||||||||||||||||
U.S. treasury securities | 90,533 | — | (57 | ) | 90,476 | |||||||||||
Corporate debt securities | 23,054 | — | (6 | ) | 23,048 | |||||||||||
Total short-term investments | $ | 113,587 | $ | — | $ | (63 | ) | $ | 113,524 | |||||||
Total cash and cash equivalents and investments | $ | 196,880 | $ | — | $ | (63 | ) | $ | 196,817 | |||||||
As of December 31, 2016 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 46,600 | $ | — | $ | — | $ | 46,600 | ||||||||
Securities maturing within one year: | ||||||||||||||||
U.S. treasury securities | 227,911 | 1 | (107 | ) | 227,805 | |||||||||||
Corporate debt securities | 72,188 | 1 | (90 | ) | 72,099 | |||||||||||
Total short-term investments | $ | 300,099 | $ | 2 | $ | (197 | ) | $ | 299,904 | |||||||
Total cash and cash equivalents and investments | $ | 346,699 | $ | 2 | $ | (197 | ) | $ | 346,504 |
4. | Fair Value Measurements |
• | Level 1 - quoted prices in active markets for identical investments, which include U.S. treasury securities |
• | Level 2 - other significant observable inputs (including quoted prices for similar investments, market corroborated inputs, etc.), which includes corporate debt securities |
• | Level 3 - significant unobservable inputs (including the Company’s own assumptions in determining the fair value of the Symphony Icon purchase consideration liability) |
Assets and Liabilities at Fair Value as of September 30, 2017 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 83,293 | $ | — | $ | — | $ | 83,293 | ||||||||
Short-term investments | 90,476 | 23,048 | — | 113,524 | ||||||||||||
Total cash and cash equivalents and investments | $ | 173,769 | $ | 23,048 | $ | — | $ | 196,817 |
Assets and Liabilities at Fair Value as of December 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 45,093 | $ | 1,507 | $ | — | $ | 46,600 | ||||||||
Short-term investments | 227,805 | 72,099 | — | 299,904 | ||||||||||||
Total cash and cash equivalents and investments | $ | 272,898 | $ | 73,606 | $ | — | $ | 346,504 | ||||||||
Liabilities | ||||||||||||||||
Accrued liabilities | $ | — | $ | — | $ | 18,912 | $ | 18,912 | ||||||||
Total liabilities | $ | — | $ | — | $ | 18,912 | $ | 18,912 |
Balance at December 31, 2016 | $ | 18,912 | ||
Change in valuation of purchase consideration payable to former Symphony Icon stockholders | 2,101 | |||
Payment of contingent payment obligation with common stock and cash | (21,013 | ) | ||
Balance at September 30, 2017 | $ | — | ||
Balance at December 31, 2015 | $ | 22,815 | ||
Change in valuation of purchase consideration payable to former Symphony Icon stockholders | (703 | ) | ||
Payment of contingent payment obligation with cash | (3,200 | ) | ||
Balance at September 30, 2016 | $ | 18,912 |
5. | Debt Obligations |
6. | Arrangements with Symphony Icon, Inc. |
8. | Collaboration and License Agreements |
• | The exclusive license granted to Ipsen to develop and commercialize telotristat ethyl in the Licensed Territory; |
• | The obligation to participate in committees which govern the development of telotristat ethyl until commercialization; and |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | We have obtained approval from the FDA to sell our first commercial product, XERMELO® (telotristat ethyl), an orally-delivered small molecule drug for the treatment of carcinoid syndrome diarrhea in combination with somatostatin analog, or SSA, therapy in adults inadequately controlled by SSA therapy. We have commenced sales and marketing of XERMELO, and it is now commercially available to patients in the United States. We have granted Ipsen Pharma SAS an exclusive, royalty-bearing right to commercialize XERMELO outside of the United States and Japan, and Ipsen has obtained approval from the European Commission to market XERMELO in the member states of the European Union, Norway and Iceland. |
• | We are developing sotagliflozin, an orally-delivered small molecule drug candidate, as a treatment for type 1 and type 2 diabetes. We have reported positive top-line data from two pivotal Phase 3 clinical trials and a third Phase 3 clinical trial of sotagliflozin in type 1 diabetes patients. We have granted Sanofi an exclusive, worldwide (excluding Japan), royalty-bearing right to develop, manufacture and commercialize sotagliflozin, and Sanofi is presently conducting Phase 3 development of sotagliflozin in type 2 diabetes. |
• | We are developing LX2761, an orally-delivered small molecule drug candidate, as a treatment for diabetes. We are presently conducting Phase 1 clinical development of LX2761. We have granted Sanofi certain rights of first negotiation with respect to the future development and commercialization of LX2761. |
• | We are developing LX9211, an orally-delivered small molecule drug candidate, as a treatment for neuropathic pain. We are presently conducting Phase 1 clinical development of LX9211. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Total revenues | $ | 26.9 | $ | 27.7 | $ | 57.3 | $ | 60.3 | ||||||||
Dollar decrease | $ | (0.8 | ) | $ | (3.0 | ) | ||||||||||
Percentage decrease | (3 | )% | (5 | )% |
• | Net product revenue – Net product revenue for the three and nine months ended September 30, 2017 was $5.8 million and $10.4 million, respectively, due to revenues recognized from the sale of XERMELO in the United States and sales of bulk tablets of telotristat ethyl to Ipsen. Product revenues are recorded net of estimated product returns, pricing discounts including rebates offered pursuant to mandatory federal and state government programs and chargebacks, |
• | Collaborative agreements – Revenue from collaborative agreements for the three months ended September 30, 2017 decreased 24% to $21.1 million, and for the nine months ended September 30, 2017 decreased 22% to $46.8 million, primarily due to revenues recognized as a result of the timing of clinical trial activities under the collaboration and license agreement with Sanofi. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Total research and development expense | $ | 39.1 | $ | 52.5 | $ | 109.7 | $ | 137.8 | ||||||||
Dollar decrease | $ | (13.4 | ) | $ | (28.1 | ) | ||||||||||
Percentage decrease | (26 | )% | (20 | )% |
• | Third-party and other services – Third-party and other services for the three months ended September 30, 2017 decreased 31% to $30.5 million, and for the nine months ended September 30, 2017 decreased 28% to $81.9 million as compared to the corresponding periods in 2016, primarily due to decreases in external clinical development costs relating to sotagliflozin. Third-party and other services relate principally to our clinical trial and related development activities, such as nonclinical and clinical studies and contract manufacturing. |
• | Personnel – Personnel costs for the three months ended September 30, 2017 increased 10% to $5.1 million, and for the nine months ended September 30, 2017 increased 24% to $17.2 million, as compared to the corresponding periods in 2016, primarily due to increases in personnel. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs. |
• | Stock-based compensation – Stock-based compensation expense for the three months ended September 30, 2017 increased 28% to $1.3 million, and for the nine months ended September 30, 2017 increased 23% to $3.7 million, as compared to the corresponding periods in 2016. |
• | Facilities and equipment – Facilities and equipment costs for the three months ended September 30, 2017 decreased 11% to $0.8 million, and for the nine months ended September 30, 2017 decreased 8% to $2.3 million, as compared to the corresponding periods in 2016. |
• | Other – Other costs for the three months ended September 30, 2017 decreased 4% to $1.4 million, and for the nine months ended September 30, 2017 increased 20% to $4.5 million, as compared to the corresponding periods in 2016. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Total selling, general and administrative expense | $ | 16.7 | $ | 12.3 | $ | 50.1 | $ | 29.1 | ||||||||
Dollar increase | $ | 4.5 | $ | 21.0 | ||||||||||||
Percentage increase | 36 | % | 72 | % |
• | Personnel – Personnel costs for the three months ended September 30, 2017 increased 90% to $7.1 million, and for the nine months ended September 30, 2017 increased 134% to $22.9 million, as compared to the corresponding periods in 2016, primarily due to increases in personnel, including increases in sales and marketing personnel, in connection with commercialization of XERMELO. Salaries, bonuses, employee benefits, payroll taxes, recruiting and relocation costs are included in personnel costs. |
• | Professional and consulting fees – Professional and consulting fees for the three months ended September 30, 2017 decreased 9% to $5.8 million, and for the nine months ended September 30, 2017 increased 17% to $15.7 million, as compared to the corresponding periods in 2016, primarily due to changes in marketing and consulting costs in connection with commercialization of XERMELO. |
• | Stock-based compensation – Stock-based compensation expense for the three months ended September 30, 2017 increased 41% to $1.2 million, and for the nine months ended September 30, 2017 increased 30% to $3.5 million, as compared to the corresponding periods in 2016, primarily due to awards granted to sales and marketing personnel. |
• | Facilities and equipment – Facilities and equipment costs for the three months ended September 30, 2017 increased 26% to $0.5 million, and for the nine months ended September 30, 2017 increased 37% to $1.6 million, as compared to the corresponding periods in 2016. |
• | Other – Other costs for the three months ended September 30, 2017 increased 136% to $2.1 million, and for the nine months ended September 30, 2017 increased 210% to $6.4 million, as compared to the corresponding periods in 2016, primarily due to increases in travel and contributions to a foundation supporting carcinoid syndrome patients. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | We will need additional capital in the future and, if it is unavailable, we will be forced to delay, reduce or eliminate our commercialization efforts or product development programs. If additional capital is not available on reasonable terms, we will be forced to obtain funds, if at all, by entering into financing agreements on unattractive terms. |
• | We have a history of net losses, and we expect to continue to incur net losses and may not achieve or maintain profitability. |
• | Our operating results have been and likely will continue to fluctuate, and we believe that period-to-period comparisons of our operating results are not a good indication of our future performance. |
• | We have substantial indebtedness that may limit cash flow available to invest in the ongoing needs of our business. |
• | We may not have the ability to raise the funds necessary to repurchase the notes evidencing our existing indebtedness upon a fundamental change, and our future debt may contain limitations on our ability to repurchase the notes. |
• | We will depend heavily on the commercial success of XERMELO in the United States. If we do not achieve commercial success with XERMELO, our business will suffer and our stock price will likely decline. |
• | Clinical testing of our drug candidates in humans is an inherently risky and time-consuming process that may fail to demonstrate safety and efficacy, which could result in the delay, limitation or prevention of regulatory approval. |
• | Our drug candidates are subject to a lengthy and uncertain regulatory process that may not result in the necessary regulatory approvals, which could adversely affect our and our collaborators’ ability to commercialize products. |
• | The commercial success of XERMELO and any other products that we or our collaborators may develop will depend upon the degree of market acceptance among physicians, patients, health care payers, private health insurers and the medical community. |
• | If we are unable to implement and maintain an effective and specialized sales force, marketing infrastructure and distribution capabilities, we will not be able to commercialize XERMELO or our drug candidates successfully. |
• | If we are unable to obtain adequate coverage and reimbursement from third-party payors for XERMELO and any other products that we or our collaborators may develop, our revenues and prospects for profitability will suffer. |
• | We and our collaborators are subject to extensive and rigorous ongoing regulation relating to XERMELO and any other approved products. |
• | We are subject to certain healthcare laws, regulation and enforcement; our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition. |
• | Current healthcare laws and regulations and future legislative or regulatory reforms to the healthcare system may negatively affect our revenues and prospects for profitability. |
• | Our competitors may develop products that make XERMELO or our collaborators’ other products obsolete. |
• | We may not be able to manufacture our drug candidates in commercial quantities, which would prevent us from commercializing our drug candidates. |
• | We depend on third-party manufacturers, including sole source suppliers, to manufacture commercial quantities of XERMELO. We may not be able to maintain these relationships and could experience supply disruptions outside of our control. |
• | We rely on a single third-party logistics provider and two independent specialty pharmacies for distribution of XERMELO in the United States, and their failure to distribute XERMELO effectively would adversely affect sales of XERMELO. |
• | We are significantly dependent upon our collaborations with Ipsen, Sanofi and other pharmaceutical and biotechnology companies. If pharmaceutical products are not successfully and timely developed and commercialized under our collaborations, our opportunities to generate revenues from milestones and royalties will be greatly reduced. |
• | Conflicts with our collaborators could jeopardize the success of our collaborative agreements and harm our product development efforts. |
• | We rely on third parties to carry out drug development activities. |
• | We lack the capability to manufacture materials for nonclinical studies, clinical trials or commercial sales and rely on third parties to manufacture our drug candidates, which may harm or delay our product development and commercialization efforts. |
• | If we are unable to adequately protect our intellectual property, third parties may be able to use our products and technologies, which could adversely affect our ability to compete in the market. |
• | We may be involved in patent litigation and other disputes regarding intellectual property rights and may require licenses from third parties for our planned nonclinical and clinical development and commercialization activities. We may not prevail in any such litigation or other dispute or be able to obtain required licenses. |
• | We have not sought patent protection outside of the United States for some of our inventions, and some of our licensed patents only provide coverage in the United States. As a result, our international competitors could be granted foreign patent protection with respect to our discoveries. |
• | We may be subject to damages resulting from claims that we, our employees or independent contractors have wrongfully used or disclosed alleged trade secrets of their former employers. |
• | The loss of key personnel or the inability to attract and retain additional personnel could impair our ability to expand our operations. |
• | Our collaborations with outside scientists may be subject to restriction and change. |
• | Data breaches and cyber-attacks could compromise our intellectual property or other sensitive information and cause significant damage to our business and reputation. |
• | Facility security breaches may disrupt our operations and harm our operating results. |
• | Our facilities are located near coastal zones, and the occurrence of a hurricane or other disaster could damage our facilities and equipment, which could harm our operations. |
• | We have used hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage or disposal of these materials could be time consuming and costly. |
• | Our business has a substantial risk of product liability and we face potential product liability exposure far in excess of our limited insurance coverage. |
• | Invus, L.P., Invus C.V. and their affiliates own a controlling interest in our outstanding common stock and may have interests which conflict with those of our other stockholders. |
• | Conversion of the notes evidencing our current indebtedness may dilute the ownership interest of our existing stockholders, including holders who had previously converted their notes, or may otherwise depress the price of our common stock. |
• | Invus has additional rights under our stockholders’ agreement with Invus, L.P. which provides Invus with substantial influence over certain significant corporate matters. |
• | Our stock price may be extremely volatile. |
• | We may engage in future acquisitions, which may be expensive and time consuming and from which we may not realize anticipated benefits. |
• | Future sales of our common stock, or the perception that such sales may occur, may depress our stock price. |
• | If we are unable to meet Nasdaq continued listing requirements, Nasdaq may take action to delist our common stock. |
Item 6. | Exhibits |
Exhibit No. | Description | |
*†10.1 | — | |
*31.1 | — | |
*31.2 | — | |
*32.1 | — | |
101.INS | — | XBRL Instance Document |
101.SCH | — | XBRL Taxonomy Extension Schema Document |
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
† | Confidential treatment has been requested for a portion of this exhibit. The confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission. |
Lexicon Pharmaceuticals, Inc. | |||
Date: | November 8, 2017 | By: | /s/ Lonnel Coats |
Lonnel Coats | |||
President and Chief Executive Officer |
Date: | November 8, 2017 | By: | /s/ Jeffrey L. Wade |
Jeffrey L. Wade | |||
Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer |
Exhibit No. | Description | |
*†10.1 | — | Amendment No. 1 to Collaboration and License Agreement, dated July 1, 2017, with Sanofi-Aventis Deutschland GmbH |
*31.1 | — | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*31.2 | — | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
*32.1 | — | Certification of Principal Executive and Principal Financial Officers Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS | — | XBRL Instance Document |
101.SCH | — | XBRL Taxonomy Extension Schema Document |
101.CAL | — | XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | — | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | — | XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | — | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
† | Confidential treatment has been requested for a portion of this exhibit. The confidential portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission. |
1. | Amended Development Plan for T2DM |
2. | Amendments to Definitions. The Agreement shall be amended as follows, with effect from and after the Amendment Effective Date |
2.1 | The definition of “306 Study” shall be deleted and replaced with the following: |
2.2 | The definition of “311 Study” shall be deleted and replaced with the following: |
2.3 | The definition of “T2DM CVOT” shall be deleted and replaced with the following: |
2.4 | The following new definition shall be added: |
2.5 | The definition of “Benefit Data” shall be replaced with the following: |
2.6 | The definition of “Initial Data” shall be replaced with the following: |
2.7 | The definition of “European Union” shall be replaced with the following: |
2.8 | A new definition of “European Territory” shall be added as Section 1.196 as follows: |
2.9 | The definition of “Tier 2 Countries” shall be replaced with the following |
3. | Amendment of Positive Results Definition |
4. | Amendment of Development Milestone Payments |
(a) | Development Milestones. |
(i) | achievement of Positive Results (as determined in accordance with Section 3.1.3(a)) with respect to [**],[**]; provided that, if [**], this milestone payment shall become payable concurrently with [**]; |
(ii) | achievement of Positive Results (as determined in accordance with Section 3.1.3(c)) from [**],[**]; |
(iii) | achievement of Positive Results (as determined in accordance with Section 3.1.3(c)) from [**],[**]; |
(iv) | achievement of Positive Results (as determined in accordance with Section 3.1.3(b)) from [**],[**]; and |
(v) | [**], one hundred million Dollars ($100,000,000). |
5. | Amendment to Royalties for Major Markets (ex-US) |
5.1 | Section 7.3.1(iii) of the Agreement shall be deleted and replaced by the following effective as of the Amendment Effective Date: |
5.2 | Section 7.3.1(iv) of the Agreement shall be deleted and replaced by the following effective as of the Amendment Effective Date: |
6. | No other Amendment. Except as expressly modified by this Amendment, the Agreement remains in full force and effect. |
7. | Other applicable provisions. This Amendment shall be considered part of the Agreement and Section 13.8 of the Agreement shall be interpreted to include this Amendment as part of the Parties’ agreement. Article 13 of the Agreement is incorporated herein by reference and shall apply hereto. |
SANOFI-AVENTIS DEUTSCHLAND GmbH | LEXICON PHARMACEUTICALS, INC. |
Sanofi Code | Study Design | Background Therapy (Rescue) | N Total/ arm | Arms | Core Treatment period Double-bl. | eGFR mL/min/ 1.73 m2 | Long-term Extension: Double- blind | Primary endpoints | Comments / Core Development Plan (CDP) | Decision Points |
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1. | I have reviewed this Quarterly Report on Form 10-Q of Lexicon Pharmaceuticals, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Lonnel Coats | |
Lonnel Coats | |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Lexicon Pharmaceuticals, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Jeffrey L. Wade |
Jeffrey L. Wade |
Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer |
1. | Lexicon's Quarterly Report on Form 10-Q for the period ended September 30, 2017, and to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934, and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of Lexicon. |
By: | /s/ Lonnel Coats |
Lonnel Coats | |
President and Chief Executive Officer |
By: | /s/ Jeffrey L. Wade |
Jeffrey L. Wade | |
Executive Vice President, Corporate and Administrative Affairs and Chief Financial Officer |
Document and Entity Information Document - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 06, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | LEXICON PHARMACEUTICALS, INC./DE | |
Entity Central Index Key | 0001062822 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 105,587,794 |
Balance Sheet Parenthetical (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Allowances for accounts receivable | $ 4 | $ 4 |
Accumulated depreciation and amortization, property and equipment | 58,794 | 59,875 |
Accumulated intangible assets amortization | $ 1,030 | $ 0 |
Preferred stock, par value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 225,000 | 225,000 |
Treasury stock, shares | 122 | 306 |
Common Stock | ||
Common stock, shares issued | 105,710 | 104,582 |
Statements of Comprehensive Loss Parenthetical (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Stock-based compensation expense associated with research and development expense | $ 1,345 | $ 1,051 | $ 3,698 | $ 3,013 |
Stock-based compensation expense associated with selling, general and administrative expense | $ 1,235 | $ 879 | $ 3,516 | $ 2,709 |
Summary of Significant Accounting Policies (Notes) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Text Block] | Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited consolidated financial statements of Lexicon Pharmaceuticals, Inc. (“Lexicon” or the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The accompanying consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. For further information, refer to the financial statements and footnotes thereto included in Lexicon’s annual report on Form 10-K for the year ended December 31, 2016, as filed with the SEC. Use of Estimates: The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2017 and December 31, 2016, short-term investments consist of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method. Accounts Receivable: Lexicon records trade accounts receivable in the normal course of business related to the sale of products or services. The allowance for doubtful accounts takes into consideration such factors as historical write-offs, the economic climate and other factors that could affect collectibility. Write-offs are evaluated on a case by case basis. Inventory: Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. The Company began capitalizing inventory during the nine months ended September 30, 2017 once the U.S. Food and Drug Administration (“FDA”) approved XERMELO® (telotristat ethyl) as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of XERMELO were recorded as research and development expense in the consolidated statements of comprehensive loss. As a result, cost of sales for approximately the next two years will reflect a lower average per unit cost of materials. Inventory consisted of the following as of September 30, 2017 (in thousands):
Concentration of Credit Risk: Lexicon’s cash equivalents, investments and accounts receivable represent potential concentrations of credit risk. The Company attempts to minimize potential concentrations of risk in cash equivalents and investments by placing investments in high-quality financial instruments. The Company’s accounts receivable are unsecured and are concentrated in pharmaceutical and biotechnology companies located in Europe and the United States. The Company has not experienced any significant credit losses to date. Segment Information and Significant Customers: Lexicon operates in one business segment, which primarily focuses on the discovery, development and commercialization of pharmaceutical products for the treatment of human disease. Substantially all of the Company’s revenues have been derived from drug discovery alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, technology licenses, subscriptions to its databases, government grants and contracts, compound library sales and product sales. Property and Equipment: Property and equipment that is held and used is carried at cost and depreciated using the straight-line method over the estimated useful life of the assets which ranges from three to 40 years. Maintenance, repairs and minor replacements are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Significant renewals and betterments are capitalized. Other Intangible Assets: Other intangible assets, net consist of in-process research and development acquired in business combinations, which are reported at fair value, less accumulated amortization. Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. During the nine months ended September 30, 2017, intangible assets relating to XERMELO of $24.7 million were reclassified from indefinite-lived to finite-lived assets once the FDA approved XERMELO. The Company recorded $0.4 million and $1.0 million in amortization expense related to this asset, which is recorded as cost of sales in the accompanying consolidated statements of comprehensive loss for the three and nine months ended September 30, 2017, respectively. During the nine months ended September 30, 2017, the Company’s valuation allowance for its deferred tax assets decreased by $8.7 million due to the reclassification of intangible assets relating to XERMELO from indefinite-lived to finite-lived assets, which resulted in the related deferred tax liability now being considered a source of taxable income. The Company recorded a $8.7 million deferred tax benefit with a corresponding reduction in its deferred tax liability in the nine months ended September 30, 2017 as a result of this reclassification. Impairment of Long-Lived Assets: Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There was no impairment of long-lived assets in the nine months ended September 30, 2017 and 2016. Indefinite lived intangible assets are also tested annually for impairment and whenever indicators of impairment are present. When performing the impairment assessment, the Company first assesses qualitative factors to determine whether it is necessary to recalculate the fair value of its intangible assets. If management believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of the intangible assets is less than its carrying amount, the Company calculates the asset’s fair value. If the carrying value of the asset exceeds its fair value, then the intangible asset is written down to its fair value. Goodwill Impairment: Goodwill is not amortized, but is tested at least annually for impairment at the reporting unit level. The Company has determined that the reporting unit is the single operating segment disclosed in its current financial statements. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. The first step in the impairment process is to determine the fair value of the reporting unit and then compare it to the carrying value, including goodwill. If the fair value exceeds the carrying value, no further action is required and no impairment loss is recognized. Additional impairment assessments may be performed on an interim basis if the Company encounters events or changes in circumstances that would indicate that, more likely than not, the carrying value of goodwill has been impaired. There was no impairment of goodwill in the nine months ended September 30, 2017 and 2016. Revenue Recognition: Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectibility is reasonably assured. Product Revenues Product revenues consist of U.S. sales of XERMELO and sales of bulk tablets of telotristat ethyl to Ipsen Pharma SAS (“Ipsen”). Product revenues are recognized once the Company meets all four revenue recognition criteria described above. In March 2017, Lexicon began shipping XERMELO to its customers in the U.S. The Company recognizes revenue for product sales of XERMELO at the time the product is received by its specialty pharmacy customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, and government rebates, such as Medicare Part D coverage gap reimbursements in the U.S. Product shipping and handling costs are included in cost of sales. Customer Credits: The specialty pharmacies are offered various forms of consideration, including allowances, service fees and prompt payment discounts. Lexicon expects the specialty pharmacies will earn prompt payment discounts and, therefore, the Company deducts the full amount of these discounts from total product sales when revenues are recognized. Service fees are also deducted from product sales as they are earned. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company’s estimates for expected utilization of rebates are based in part on third party market research data, and data received from the specialty pharmacies. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy, in turn, charges back to Lexicon the difference between the price initially paid by the specialty pharmacy and the discounted price paid to the specialty pharmacy by the customer. The allowance for chargebacks is based on known sales to contracted customers. Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company’s estimates for the expected Medicare Part D coverage gap are based on data received from the specialty pharmacies. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. Collaborative Agreements Revenues under collaborative agreements include both license revenue and contract research revenue. Activities under collaborative agreements are evaluated to determine if they represent a multiple element revenue agreement. The Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting. The Company accounts for those components as separate units of accounting if the following two criteria are met:
Factors considered in this determination include, among other things, whether any other vendors sell the items separately and if the licensee could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the Company allocates the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative estimated selling price. Revenue is recognized for each unit of accounting when the appropriate revenue recognition criteria are met. Future milestone payments that are contingent upon the achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. A milestone is substantive if:
Commercial milestones will be accounted for as royalties and recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met. Subscription and license fees are recognized as revenue upon the grant of the technology license when performance is complete and there is no continuing involvement. Royalty revenues are recognized as earned in accordance with the contract terms at the time the royalty amount is fixed and determinable based on information received from the sublicensees and at the time collectibility is reasonably assured. Cost of Sales: Cost of sales consists of third-party manufacturing costs, freight and indirect overhead costs associated with sales of XERMELO. The Company began capitalizing inventory during the nine months ended September 30, 2017 once the FDA approved XERMELO as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of XERMELO have been recorded as research and development expense in the consolidated statements of comprehensive loss. As a result, cost of sales for approximately the next two years will reflect a lower average per unit cost of materials. Product shipping and handling costs are included in cost of sales. Cost of sales also includes the amortization of the in-process research and development intangible asset for XERMELO using the straight-line method over the estimated useful life of 14 years. Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred. Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. Stock-Based Compensation: The Company recognizes compensation expense in its consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units issued to employees, based on their fair values on the date of the grant, with the compensation expense recognized over the period in which an employee is required to provide service in exchange for the stock award. Stock-based compensation expense for awards without performance conditions is recognized on a straight-line basis. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met. The fair value of stock options is estimated at the date of grant using the Black-Scholes method. The Black-Scholes option-pricing model requires the input of subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in a change in the assumptions used for expected option lives and forfeitures. Expected volatility is based on the historical volatility in the Company’s stock price. The Company utilized the Black-Scholes valuation model for estimating the fair value of the stock compensation granted, with the following weighted-average assumptions for options granted in the nine months ended September 30, 2017 and 2016:
The following is a summary of option activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2017:
During the nine months ended September 30, 2017, Lexicon also granted its employees annual restricted stock units. These restricted stock units vest in four annual installments. The following is a summary of restricted stock units activity under Lexicon’s stock-based compensation plans for the nine months ended September 30, 2017:
During the nine months ended September 30, 2017, Lexicon granted its non-employee directors 10,248 shares of restricted stock awards. The restricted stock awards had a weighted average grant date fair value of $15.61 per share and vested immediately. Net Loss per Common Share: Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive. |
Recent Accounting Pronouncements Level 1 (Notes) |
9 Months Ended |
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Sep. 30, 2017 | |
Recent Accounting Pronouncements [Abstract] | |
New Accounting Pronouncements, Policy | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers”, which amends FASB ASC Topic 606. ASU 2014-09 provides a single, comprehensive revenue recognition model for all contracts with customers. This standard contains principles for the determination of the measurement of revenue and the timing of when such revenue is recognized. Revenue recognition will reflect the transfer of goods or services to customers at an amount that is expected to be earned in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of Effective Date”, which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual periods after December 15, 2017 including interim periods within that reporting period. Early application is permitted only for annual periods beginning after December 15, 2016, including interim periods within that reporting period. Management plans to adopt ASU 2014-09 using the modified retrospective method. The Company does not expect that ASU 2014-09 will have a material impact on the recognition of revenue from product sales. Management is also currently evaluating the impact of the new standard on historical revenue recorded for its collaboration agreements. Specifically, the timing of recognition for certain contingent payments from the Company’s collaborators may be impacted by the adoption of the new revenue standard. ASU 2014-09 differs from the current accounting standard in many respects, such as in the accounting for variable consideration, including milestone payments or contingent payments, which are not dependent on the Company’s performance. Under the Company’s current accounting policy, Lexicon recognizes contingent or milestone payments as revenue in the period that the payment-triggering event occurs or is achieved. However, under the new revenue standard, it is possible to start to recognize contingent or milestone payments before the payment-triggering event is completely achieved, subject to management’s assessment of whether it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. Management does not expect the adoption of this pronouncement to have a material impact on Lexicon’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases.” ASU 2016-02 requires companies that lease assets to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The pronouncement will also require additional disclosures about the amount, timing and uncertainty of cash flows arising from leases. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. Management is currently evaluating the impact of this pronouncement on Lexicon’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Stock Compensation,” which is intended to simplify several aspects of the accounting for share-based payment award transactions. The Company adopted this pronouncement effective January 1, 2017. Upon adoption, the Company recognized approximately $6.1 million of accumulated excess tax benefits as deferred tax assets that under the previous guidance could not be recognized until the benefits were realized through a reduction in cash taxes paid. This part of the guidance is applied using a modified retrospective method with a cumulative-effect adjustment to the accumulated deficit for the excess tax benefits not previously recognized. However, given the full valuation allowance placed on the additional $6.1 million of deferred tax assets, the recognition of this provision of ASU 2016-09 had no impact to the Company’s accumulated deficit as of January 1, 2017. Additionally, the Company recorded an adjustment to accumulated deficit of $2.0 million as a result of making an entity-wide accounting policy election to account for forfeitures of share-based payment awards as they occur instead of estimating the number of awards that are expected to vest. |
Cash and Cash Equivalents and Investments |
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Cash and Cash Equivalents and Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents Disclosure | Cash and Cash Equivalents and Investments The fair value of cash and cash equivalents and investments held at September 30, 2017 and December 31, 2016 are as follows:
There were $7,000 in realized losses for the nine months ended September 30, 2017, and no realized gains or losses for the nine months ended September 30, 2016. The cost of securities sold is based on the specific identification method. |
Fair Value Measurements |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Measurement Inputs, Disclosure | Fair Value Measurements The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. The following levels are directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities:
The inputs or methodology used for valuing securities are not necessarily an indication of the credit risk associated with investing in those securities. The following table provides the fair value measurements of applicable Company assets and liabilities that are measured at fair value on a recurring basis according to the fair value levels described above as of September 30, 2017 and December 31, 2016:
The Company’s Level 3 liabilities, which consisted of the Symphony Icon purchase consideration liability, was estimated using a probability-based income approach utilizing an appropriate discount rate. Subsequent changes in the fair value of the Symphony Icon purchase consideration liability were recorded as an increase or decrease in Symphony Icon purchase liability expense in the accompanying consolidated statements of comprehensive loss. The following table summarizes the change in consolidated balance sheet carrying value associated with Level 3 liabilities for the nine months ended September 30, 2017 and 2016 (in thousands):
The Company also has assets that under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include goodwill associated with the acquisitions of Coelacanth Corporation in 2001 and Symphony Icon in 2010 and intangible assets associated with the acquisition of Symphony Icon in 2010. See Note 6, Arrangements with Symphony Icon, Inc., for additional information. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired. |
Debt Obligations |
9 Months Ended |
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Sep. 30, 2017 | |
Debt Obligations [Abstract] | |
Debt Disclosure | Debt Obligations Convertible Debt. In November 2014, Lexicon completed an offering of $87.5 million in aggregate principal amount of its 5.25% Convertible Senior Notes due 2021 (the “Notes”). The conversion feature did not meet the criteria for bifurcation as required by generally accepted accounting principles and the entire principal amount was recorded as long-term debt on the Company’s consolidated balance sheets. The Notes are governed by an indenture (the “Indenture”), dated as of November 26, 2014, between the Company and Wells Fargo Bank, N.A., as trustee. The Notes bear interest at a rate of 5.25% per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2015. The Notes mature on December 1, 2021. The Company may not redeem the Notes prior to the maturity date, and no sinking fund is provided for the Notes. Holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding the maturity date. Upon conversion, the Company will deliver for each $1,000 principal amount of converted Notes a number of shares of its common stock equal to the conversion rate, as described in the Indenture. The conversion rate is initially 118.4553 shares of common stock per $1,000 principal amount of Notes (equivalent to an initial conversion price of $8.442 per share of common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances. If the Company undergoes a fundamental change, holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In connection with the issuance of the Notes, the Company incurred $3.4 million of debt issuance costs, which offsets long-term debt on the consolidated balance sheets. The debt issuance costs are amortized as interest expense over the expected life of the Notes using the effective interest method. The Company determined the expected life of the debt was equal to the seven-year term of the Notes. As of September 30, 2017, the balance of unamortized debt issuance costs was $2.0 million. The fair value of the Notes was $141.6 million as of September 30, 2017 and was determined using Level 2 inputs based on the indicative pricing published by certain investment banks or trading levels of the Notes, which are not listed on any securities exchange or quoted on an inter-dealer automated quotation system. Mortgage Loan. In April 2004, Lexicon obtained a $34.0 million mortgage on its facilities in The Woodlands, Texas. The mortgage loan originally had a ten-year term with a 20-year amortization and a fixed interest rate of 8.23%. The mortgage was amended in September 2013 to extend the maturity date from April 2014 to April 2017, with the mortgage loan’s monthly payment amount and fixed interest rate each remaining unchanged. In April 2017, the mortgage was amended to extend the maturity date to April 2018, with the mortgage loan’s monthly payment amount and fixed interest rate each remaining unchanged. The mortgage had a principal balance outstanding of $14.7 million as of September 30, 2017. This entire balance is recorded as current portion of long-term debt in the accompanying consolidated balance sheet as of September 30, 2017 as there is a balloon payment due in April 2018. The buildings and land that serve as collateral for the mortgage loan are included in property and equipment at $59.2 million and $2.7 million, respectively, before accumulated depreciation, as of September 30, 2017. The fair value of Lexicon’s mortgage loan approximates its carrying value. The fair value of Lexicon’s mortgage loan was determined using Level 2 inputs using discounted cash flow analysis, based on the Company’s estimated current incremental borrowing rate. |
Arrangements with Symphony Icon Inc |
9 Months Ended |
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Sep. 30, 2017 | |
Arrangements with Symphony Icon Inc [Abstract] | |
Arrangements with Symphony Icon Inc | Arrangements with Symphony Icon, Inc. On June 15, 2007, Lexicon entered into a series of related agreements providing for the financing of the clinical development of certain of its drug candidates, including XERMELO, along with any other pharmaceutical compositions modulating the same targets as those drug candidates (the “Programs”). The agreements included a Novated and Restated Technology License Agreement pursuant to which the Company licensed to Symphony Icon, a then wholly-owned subsidiary of Symphony Icon Holdings LLC (“Holdings”), the Company's intellectual property rights related to the Programs. Holdings contributed $45 million to Symphony Icon in order to fund the clinical development of the Programs. Under a Share Purchase Agreement, dated June 15, 2007, between the Company and Holdings, the Company issued and sold to Holdings 1,092,946 shares of its common stock on June 15, 2007 in exchange for $15 million and an exclusive purchase option (the “Purchase Option”) that gave the Company the right to acquire all of the equity of Symphony Icon, thereby allowing the Company to reacquire all of the Programs. On July 30, 2010, Lexicon entered into an Amended and Restated Purchase Option Agreement (the “Purchase Option Agreement”) with Symphony Icon and Holdings and simultaneously exercised the Purchase Option, thereby reacquiring the Programs. Pursuant to the amended terms of the Purchase Option, Lexicon paid Holdings $10 million on July 30, 2010 and issued 1,891,074 shares of common stock to designees of Holdings on July 30, 2012 in satisfaction of an additional $35 million base payment obligation. Lexicon also agreed to make up to $45 million in additional contingent payments, which would consist of 50% of any consideration Lexicon receives pursuant to any licensing transaction (a “Licensing Transaction”) under which Lexicon grants a third party rights to commercialize XERMELO or other pharmaceutical compositions modulating the same target as XERMELO (the “LG103 Programs”), subject to certain exceptions. The contingent payments would be due if and when Lexicon receives such consideration from a Licensing Transaction. In the event Lexicon received regulatory approval in the United States for the marketing and sale of any product resulting from the LG103 Programs prior to entering into a Licensing Transaction for the commercialization of such product in the United States, in lieu of any contingent payment from such a Licensing Transaction, Lexicon would pay Holdings the sum of $15 million and the amount of certain expenses Lexicon incurred after its exercise of the Purchase Option which were attributable to the development of such product, reduced by up to 50% of such sum on account of any contingent payments paid prior to such United States regulatory approval attributable to any such Licensing Transaction outside of the United States with respect to such product. In the event Lexicon made any such payment upon United States regulatory approval, Lexicon would have no obligation to make subsequent contingent payments attributable to any such Licensing Transactions for the commercialization of such product outside the United States until the proceeds of such Licensing Transactions exceed 50% of the payment made as a result of such United States regulatory approval. The contingent payments were payable in cash or a combination of cash and common stock, in Lexicon’s discretion, provided that no more than 50% of any contingent payment would be paid in common stock. In December 2014, Lexicon paid $5.8 million in cash and issued 666,111 shares of common stock to designees of Holdings in satisfaction of a $11.5 million contingent payment obligation as a result of receiving an upfront payment pursuant to Lexicon’s license and collaboration agreement with Ipsen. In April 2015, Lexicon paid $0.75 million in cash to Holdings in satisfaction of its contingent payment obligation as a result of receiving an additional upfront payment from Ipsen in March 2015. In September 2016, Lexicon paid $3.2 million in cash to Holdings in satisfaction of its contingent payment obligation as a result of receiving a milestone payment from Ipsen in August 2016 (see Note 8, Collaboration and License Agreements). In September 2016, Lexicon entered into an amendment (the “Amendment”) to the Purchase Option Agreement with Holdings and Symphony Icon pursuant to which Lexicon agreed to pay Holdings $21.0 million upon Lexicon’s receipt of regulatory approval in the United States for the marketing and sale of XERMELO, such buyout amount to be in lieu of any remaining payments which may be or become payable to Holdings under the Purchase Option Agreement. The buyout amount may be paid in cash or a combination of cash and common stock, in Lexicon’s discretion, provided that no more than 50% of any contingent payment will be paid in common stock. In March 2017, Lexicon paid $10.5 million in cash and issued 659,905 shares of common stock to designees of Holdings in satisfaction of its remaining contingent payment obligation as a result of receiving regulatory approval in the United States for the marketing and sale of XERMELO. Lexicon accounted for the exercise of the Purchase Option and acquisition of Symphony Icon as a business combination. In connection with its acquisition of Symphony Icon, Lexicon paid $10.0 million in cash, and also agreed to pay Holdings additional base and contingent payments as discussed above. The fair value of the base and contingent consideration payments was $45.6 million and was estimated by applying a probability-based income approach utilizing an appropriate discount rate. This estimation was based on significant inputs that are not observable in the market, referred to as Level 3 inputs. Key assumptions include: (1) a discount rate of 14% for the base payments; (2) a discount rate of 18% for the contingent payments; and (3) a probability adjusted contingency. No discount rate was used in the valuation of the contingent consideration liability as of December 31, 2016 as the expected buyout was short-term in nature. As programs progress, the probability adjusted contingency was adjusted as necessary. Subsequent changes in the fair value of the Symphony Icon purchase consideration liability were recorded as increase or decrease in fair value of Symphony Icon purchase liability expense in the accompanying consolidated statements of comprehensive loss. The fair value of the Symphony Icon purchase consideration liability increased by $2.1 million during the nine months ended September 30, 2017 and decreased by $0.7 million during the nine months ended September 30, 2016. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies Disclosure | Commitments and Contingencies Operating Lease Obligations: A Lexicon subsidiary leases office space in Basking Ridge, New Jersey under an operating lease agreement, the term of which began in June 2015 and terminates in December 2022. Rent expense is recognized on a straight-line basis over the lease term. The maximum potential amount of future payments the Company could be required to make under this agreement is $3.3 million as of September 30, 2017. Additionally, Lexicon leases certain equipment under operating leases. Legal Proceedings. Lexicon is from time to time party to claims and legal proceedings that arise in the normal course of its business and that it believes will not have, individually or in the aggregate, a material adverse effect on its results of operations, financial condition or liquidity. |
Collaboration and License Agreements |
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Collaboration and License Agreements [Abstract] | |||||||||
Collaborative Arrangement Disclosure | Collaboration and License Agreements Lexicon has derived substantially all of its revenues from drug discovery and development collaborations, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, product sales, government grants and contracts, technology licenses, subscriptions to its databases and compound library sales. Sanofi. In November 2015, Lexicon entered into a Collaboration and License Agreement, which was subsequently amended in July 2017 (collectively, the “Sanofi Agreement”), with Sanofi for the worldwide development of Lexicon’s diabetes drug candidate sotagliflozin. In December 2016, Sanofi terminated its rights under the Sanofi Agreement with respect to Japan. Under the Sanofi Agreement, Lexicon has granted Sanofi an exclusive, worldwide (excluding Japan), royalty-bearing right and license under its patent rights and know-how to develop, manufacture and commercialize sotagliflozin. Subject to specified exceptions, neither party may (a) perform clinical development activities relating to any other compound which inhibits sodium-glucose cotransporters type 1 or type 2 or (b) commercialize any such compounds in the United States, countries of the European Union and certain other specified countries, in each case during the royalty terms applicable in such countries. Among the specified exceptions is a right Lexicon retained to pursue the development of its LX2761 drug candidate, with respect to which Lexicon granted Sanofi certain rights of first negotiation specified in the Sanofi Agreement. Under the Sanofi Agreement, Sanofi paid Lexicon an upfront payment of $300 million. In addition, Lexicon is eligible to receive from Sanofi (a) up to an aggregate of $110 million upon the achievement of four development milestones relating to the results of certain Phase 3 clinical trials of sotagliflozin in type 2 diabetes patients, (b) up to an aggregate of $220 million upon the achievement of four regulatory milestones relating to the first commercial sale following regulatory approval of sotagliflozin for type 1 and type 2 diabetes, respectively, in each of the United States and Europe, of which two milestones representing the substantial majority of such aggregate amount relate to type 2 diabetes and the remaining two milestones relate to type 1 diabetes, (c) $100 million upon the achievement of a milestone based on the results of either of two outcomes studies in type 2 diabetes patients, the completion of which would likely occur after initial regulatory approval of sotagliflozin in type 2 diabetes, and (d) up to an aggregate of $990 million upon the achievement of six commercial milestones that will be achieved upon reaching specified levels of sales. The Company believes that each of the development and regulatory milestones under the Sanofi Agreement is substantive. Due to the uncertainty surrounding the achievement of the future development and regulatory milestones, these payments will not be recognized as revenue unless and until they are earned, as the Company is not able to reasonably predict if and when the milestones will be achieved. Commercial milestones, which are not encompassed within the definition of milestones under generally accepted accounting principles, will be accounted for as royalties and recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria were met. Lexicon is also entitled to tiered, escalating royalties ranging from low double digit percentages to forty percent of net sales of sotagliflozin, based on indication and territory, with royalties for the higher band of such range attributable to net sales for type 1 diabetes in the United States, and subject in each case to customary royalty reduction provisions. Lexicon will continue to be responsible for all clinical development activities relating to type 1 diabetes and has exercised an exclusive option to co-promote and have a significant role, in collaboration with Sanofi, in the commercialization of sotagliflozin for the treatment of type 1 diabetes in the United States. Under the terms of its exercised co-promotion option, Lexicon will fund forty percent of the commercialization costs relating to such co-promotion activities. Sanofi will be responsible for all clinical development and commercialization of sotagliflozin for the treatment of type 2 diabetes worldwide and will be solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the United States. Lexicon will share in the funding of a portion of the planned type 2 diabetes development costs over the next three years, up to an aggregate of $100 million. Sanofi will book sales worldwide in all indications. The parties are responsible for using commercially reasonable efforts to perform their development and commercialization obligations pursuant to mutually approved development and commercialization plans. The parties’ activities under the Sanofi Agreement are governed by a joint steering committee and certain other governance committees which reflect equal or other appropriate representation from both parties. If the applicable governance committee is not able to make a decision by consensus and the parties are not able to resolve the issue through escalation to specified senior executive officers of the parties, then Sanofi will have final decision-making authority, subject to limitations specified in the Sanofi Agreement. The Sanofi Agreement will expire upon the expiration of all applicable royalty terms for all licensed products in all countries. The royalty term for each licensed product in each country is the period commencing on the effective date of the Sanofi Agreement and ending on the latest of expiration of specified patent coverage, expiration of specified regulatory exclusivity and 10 years following the first commercial sale in the applicable country. Either party may terminate the Sanofi Agreement in the event of an uncured material breach by the other party. Prior to completion of the core development activities for type 2 diabetes specified in the development plan, Sanofi may terminate the Sanofi Agreement on a country-by-country and licensed product-by-licensed product basis, in the event of (a) notification of a material safety issue relating to the licensed product or the class of sodium-glucose cotransporters type 1 or type 2 inhibitors resulting in a recommendation or requirement that Lexicon or Sanofi cease development, (b) failure to achieve positive results with respect to certain clinical trial results, (c) the occurrence of specified fundamental adverse events or (d) the exploitation of the licensed product infringing third party intellectual property rights in specified major markets and Sanofi is unable to obtain a license to such third party intellectual property rights. The Company considered the following deliverables with respect to the revenue recognition of the $300 million upfront payment: • The exclusive worldwide license granted to Sanofi to develop and commercialize sotagliflozin; • The development services Lexicon is performing for sotagliflozin relating to type 1 diabetes; and • The funding Lexicon will provide for development relating to type 2 diabetes. The Company determined that the license had stand-alone value because it is an exclusive license that gives Sanofi the right to develop and commercialize sotagliflozin or to sublicense its rights. In addition, sotagliflozin is currently in development and it is possible that Sanofi or another third party could conduct clinical trials without assistance from Lexicon. As a result, the Company considers the license and the development services under the Sanofi Agreement to be separate units of accounting. The Company recognized the portion of the consideration allocated to the license immediately because Lexicon delivered the license and earned the revenue at the inception of the arrangement. The Company is recognizing as revenue the amount allocated to the development services for type 1 diabetes and the obligation to provide funding for development services for type 2 diabetes over the period of time Lexicon performs services or provides funding, currently expected to be through 2020. The Company determined that the initial allocable arrangement consideration was the $300 million upfront payment because it was the only payment that was fixed and determinable at the inception of the arrangement. There was considerable uncertainty at the date of the agreement as to whether Lexicon would earn milestone payments or royalty payments. As such, the Company did not include those payments in the allocable consideration. The Company allocated the allocable consideration based on the relative best estimate of selling price of each unit of accounting. The Company estimated the selling price of the license deliverable by applying a probability-based income approach utilizing an appropriate discount rate. The significant inputs the Company used to determine the projected income of the license included: exercising the option to co-promote, estimated future product sales, estimated cost of goods sold, estimated operating expenses, income taxes, and an appropriate discount rate. The Company estimated the selling price of the development services for type 1 diabetes by using internal estimates of the cost to hire third parties to perform the services over the expected period to perform the development. The Company estimated the obligation to provide funding for type 2 diabetes by using internal estimates of the expected cash flows and timing for $100 million in funding. As a result of the allocation, the Company recognized $126.8 million of the $300 million upfront payment for the license in 2015. The Company is recognizing the $113.8 million allocated to the development services deliverable and the $59.4 million allocated to the funding deliverable over the estimated period of performance as the development and funding occurs. Revenue recognized under the Sanofi Agreement was $39.5 million and $52.7 million for the nine months ended September 30, 2017 and 2016, respectively. Ipsen Pharma SAS. In October 2014, Lexicon entered into a License and Collaboration Agreement, which was subsequently amended in March 2015 (collectively, the “Ipsen Agreement”), with Ipsen for the development and commercialization of telotristat ethyl outside of the United States and Japan (the “Licensed Territory”). Under the Ipsen Agreement, Lexicon granted Ipsen an exclusive, royalty-bearing right and license under its patent rights and know-how to commercialize telotristat ethyl in the Licensed Territory. Ipsen is responsible for using diligent efforts to commercialize telotristat ethyl in the Licensed Territory pursuant to a mutually approved commercialization plan. Subject to certain exceptions, Lexicon will be responsible for conducting clinical trials required to obtain regulatory approval for telotristat ethyl for carcinoid syndrome in the European Union, including those contemplated by a mutually approved initial development plan, and will have the first right to conduct most other clinical trials of telotristat ethyl. Lexicon is responsible for the costs of all clinical trials contemplated by the initial development plan. The costs of additional clinical trials will be allocated between the parties based on the nature of such clinical trials. Under the Ipsen Agreement, Ipsen has paid Lexicon an aggregate of $30.9 million through September 30, 2017, consisting of $24.5 million in upfront payments and a $6.4 million milestone payment in August 2016 upon the acceptance of the filing submitted by Ipsen to the European Medicines Agency for telotristat ethyl as an adjunct to somatostatin analog therapy for the long-term treatment of carcinoid syndrome. In September 2017, Ipsen received approval from the European Commission for the marketing of telotristat ethyl in all member states of the European Union, Norway and Iceland, thereby Lexicon earning a milestone payment, which was received in October 2017. In addition, Lexicon is eligible to receive from Ipsen (a) up to an aggregate of approximately $21 million upon the achievement of specified regulatory and commercial launch milestones and (b) up to an aggregate of €72 million upon the achievement of specified sales milestones. Due to the uncertainty surrounding the achievement of the future regulatory and sales milestones, these payments will not be recognized as revenue unless and until they are earned as the Company is not able to reasonably predict if and when the milestones will be achieved. Lexicon is also entitled to tiered, escalating royalties ranging from low twenties to mid-thirties percentages of net sales of telotristat ethyl in the Licensed Territory, subject to a credit for amounts previously paid to Lexicon by Ipsen for the manufacture and supply of such units of telotristat ethyl. Lexicon and Ipsen have entered into a commercial supply agreement pursuant to which Lexicon will supply Ipsen’s commercial requirements of telotristat ethyl, and Ipsen will pay an agreed upon transfer price for such commercial supply. The Company considered the following deliverables with respect to the revenue recognition of the $24.5 million upfront payments:
•The development services Lexicon is performing for telotristat ethyl;
•The obligation to supply commercial supply of telotristat ethyl, under a commercial supply agreement. The Company determined that the license had stand-alone value because it is an exclusive license that gives Ipsen the right to develop and commercialize telotristat ethyl or to sublicense its rights. In addition, telotristat ethyl is currently in development and it is possible that Ipsen or another third party could conduct clinical trials without assistance from Lexicon. As a result, the Company considers the license and the development services under the Ipsen Agreement to be separate units of accounting. The Company recognized the portion of the consideration allocated to the license immediately because Lexicon delivered the license and earned the revenue at the inception of the arrangement. The Company is recognizing as revenue the amount allocated to the development services and the obligation to participate in committees over the period of time Lexicon performs services, currently expected to be complete by mid-2018. Due to the inherent uncertainty in obtaining regulatory approval, the applicability of the commercial supply agreement is outside the control of Lexicon and Ipsen. Accordingly, the Company has determined the commercial supply agreement is a contingent deliverable at the onset of the Ipsen Agreement. As a result, the Company has determined the commercial supply agreement does not meet the definition of a deliverable that needs to be accounted for at the inception of the arrangement. The Company has also determined that there is no significant and incremental discount related to the commercial supply agreement that should be accounted for at the inception of the arrangement. The Company determined that the initial allocable arrangement consideration was the $24.5 million upfront payments because they were the only payments that were fixed and determinable at the inception of the arrangement. There was considerable uncertainty at the date of the agreement as to whether Lexicon would earn milestone payments, royalty payments or payments for finished drug product. As such, the Company did not include those payments in the allocable consideration. The Company allocated the allocable consideration based on the relative best estimate of selling price of each unit of accounting. The Company estimated the selling price of the license deliverable by applying a probability-based income approach utilizing an appropriate discount rate. The significant inputs the Company used to determine the projected income of the license included: estimated future product sales, estimated cost of goods sold, estimated operating expenses, income taxes, and an appropriate discount rate. The Company estimated the selling price of the development services by using internal estimates of the cost to hire third parties to perform the services over the expected period to perform the development. The Company estimated the selling price of the obligation to participate in committees by using internal estimates of the number of internal hours and salary and benefits costs to perform these services. As a result of the allocation, the Company recognized $21.2 million of the $24.5 million upfront payments for the license in 2014, and an additional $1.4 million in 2015 upon entering into the amendment. The Company is recognizing the $1.7 million allocated to the development services deliverable over the estimated period of performance as development occurs, and is recognizing the $0.1 million allocated to the committee participation deliverable ratably over the estimated period of performance. Milestone payments that are contingent upon the achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. The Company recognized the $5.1 million milestone payment earned in 2017 in the three and nine months ended September 30, 2017, and recognized the $6.4 million milestone payment earned in 2016 in the three and nine months ended September 30, 2016. Revenue recognized under the Ipsen Agreement was $7.9 million and $6.8 million for the nine months ended September 30, 2017 and 2016, respectively. Revenue for the nine months ended September 30, 2017 includes $0.8 million from sales of bulk tablets of telotristat ethyl to Ipsen. |
Summary of Significant Accounting Policies (Policies) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||
Consolidation, Policy [Policy Text Block] | The accompanying consolidated financial statements include the accounts of Lexicon and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. |
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Use of Estimates, Policy [Policy Text Block] | Use of Estimates: The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. |
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Cash and Cash Equivalents, Policy [Policy Text Block] | Cash, Cash Equivalents and Short-Term Investments: Lexicon considers all highly-liquid investments with original maturities of three months or less to be cash equivalents. As of September 30, 2017 and December 31, 2016, short-term investments consist of U.S. treasury bills and corporate debt securities. The Company’s short-term investments are classified as available-for-sale securities and are carried at fair value, based on quoted market prices of the securities. The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. Unrealized gains and losses on such securities are reported as a separate component of stockholders’ equity. Net realized gains and losses, interest and dividends are included in interest income. The cost of securities sold is based on the specific identification method. |
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Trade and Other Accounts Receivable, Policy [Policy Text Block] | Accounts Receivable: Lexicon records trade accounts receivable in the normal course of business related to the sale of products or services. The allowance for doubtful accounts takes into consideration such factors as historical write-offs, the economic climate and other factors that could affect collectibility. Write-offs are evaluated on a case by case basis. |
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Inventory, Policy [Policy Text Block] | Inventory: Inventories are determined at the lower of cost or market value with cost determined under the specific identification method and may consist of raw materials, work in process and finished goods. |
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Concentration Risk Disclosure [Text Block] | Concentration of Credit Risk: Lexicon’s cash equivalents, investments and accounts receivable represent potential concentrations of credit risk. The Company attempts to minimize potential concentrations of risk in cash equivalents and investments by placing investments in high-quality financial instruments. The Company’s accounts receivable are unsecured and are concentrated in pharmaceutical and biotechnology companies located in Europe and the United States. The Company has not experienced any significant credit losses to date. |
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Segment Reporting, Policy [Policy Text Block] | Segment Information and Significant Customers: Lexicon operates in one business segment, which primarily focuses on the discovery, development and commercialization of pharmaceutical products for the treatment of human disease. Substantially all of the Company’s revenues have been derived from drug discovery alliances, target validation collaborations for the development and, in some cases, analysis of the physiological effects of genes altered in knockout mice, technology licenses, subscriptions to its databases, government grants and contracts, compound library sales and product sales. |
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Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment: Property and equipment that is held and used is carried at cost and depreciated using the straight-line method over the estimated useful life of the assets which ranges from three to 40 years. Maintenance, repairs and minor replacements are charged to expense as incurred. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term. Significant renewals and betterments are capitalized. |
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Goodwill and Intangible Assets, Intangible Assets, Indefinite-Lived, Policy [Policy Text Block] | Other Intangible Assets: Other intangible assets, net consist of in-process research and development acquired in business combinations, which are reported at fair value, less accumulated amortization. Intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. |
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of Long-Lived Assets: Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount that the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
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Impairment or Disposal of Long-Lived Assets, Including Intangible Assets, Policy [Policy Text Block] | Indefinite lived intangible assets are also tested annually for impairment and whenever indicators of impairment are present. When performing the impairment assessment, the Company first assesses qualitative factors to determine whether it is necessary to recalculate the fair value of its intangible assets. If management believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of the intangible assets is less than its carrying amount, the Company calculates the asset’s fair value. If the carrying value of the asset exceeds its fair value, then the intangible asset is written down to its fair value. Goodwill Impairment: Goodwill is not amortized, but is tested at least annually for impairment at the reporting unit level. The Company has determined that the reporting unit is the single operating segment disclosed in its current financial statements. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. The first step in the impairment process is to determine the fair value of the reporting unit and then compare it to the carrying value, including goodwill. If the fair value exceeds the carrying value, no further action is required and no impairment loss is recognized. Additional impairment assessments may be performed on an interim basis if the Company encounters events or changes in circumstances that would indicate that, more likely than not, the carrying value of goodwill has been impaired. |
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Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition: Revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectibility is reasonably assured. Product Revenues Product revenues consist of U.S. sales of XERMELO and sales of bulk tablets of telotristat ethyl to Ipsen Pharma SAS (“Ipsen”). Product revenues are recognized once the Company meets all four revenue recognition criteria described above. In March 2017, Lexicon began shipping XERMELO to its customers in the U.S. The Company recognizes revenue for product sales of XERMELO at the time the product is received by its specialty pharmacy customers net of allowances for customer credits, including estimated rebates, chargebacks, discounts, returns, distribution service fees, and government rebates, such as Medicare Part D coverage gap reimbursements in the U.S. Product shipping and handling costs are included in cost of sales. Customer Credits: The specialty pharmacies are offered various forms of consideration, including allowances, service fees and prompt payment discounts. Lexicon expects the specialty pharmacies will earn prompt payment discounts and, therefore, the Company deducts the full amount of these discounts from total product sales when revenues are recognized. Service fees are also deducted from product sales as they are earned. Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program. Rebate amounts are based upon contractual agreements or legal requirements with public sector (e.g. Medicaid) benefit providers. Rebates are amounts owed after the final dispensing of the product to a benefit plan participant and are based upon contractual agreements or legal requirements with public sector benefit providers. The allowance for rebates is based on statutory discount rates and expected utilization. The Company’s estimates for expected utilization of rebates are based in part on third party market research data, and data received from the specialty pharmacies. Rebates are generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty pharmacy. Contracted customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy, in turn, charges back to Lexicon the difference between the price initially paid by the specialty pharmacy and the discounted price paid to the specialty pharmacy by the customer. The allowance for chargebacks is based on known sales to contracted customers. Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. The Company’s estimates for the expected Medicare Part D coverage gap are based on data received from the specialty pharmacies. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarters. If actual future funding varies from estimates, the Company may need to adjust prior period accruals, which would affect revenue in the period of adjustment. Co-payment assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators. Collaborative Agreements Revenues under collaborative agreements include both license revenue and contract research revenue. Activities under collaborative agreements are evaluated to determine if they represent a multiple element revenue agreement. The Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting. The Company accounts for those components as separate units of accounting if the following two criteria are met:
Factors considered in this determination include, among other things, whether any other vendors sell the items separately and if the licensee could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the Company allocates the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative estimated selling price. Revenue is recognized for each unit of accounting when the appropriate revenue recognition criteria are met. Future milestone payments that are contingent upon the achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. A milestone is substantive if:
Commercial milestones will be accounted for as royalties and recorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met. Subscription and license fees are recognized as revenue upon the grant of the technology license when performance is complete and there is no continuing involvement. Royalty revenues are recognized as earned in accordance with the contract terms at the time the royalty amount is fixed and determinable based on information received from the sublicensees and at the time collectibility is reasonably assured. |
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Cost of Sales, Policy [Policy Text Block] | Cost of Sales: Cost of sales consists of third-party manufacturing costs, freight and indirect overhead costs associated with sales of XERMELO. The Company began capitalizing inventory during the nine months ended September 30, 2017 once the FDA approved XERMELO as the related costs were expected to be recoverable through the commercialization of the product. Costs incurred prior to approval of XERMELO have been recorded as research and development expense in the consolidated statements of comprehensive loss. As a result, cost of sales for approximately the next two years will reflect a lower average per unit cost of materials. Product shipping and handling costs are included in cost of sales. Cost of sales also includes the amortization of the in-process research and development intangible asset for XERMELO using the straight-line method over the estimated useful life of 14 years. |
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Research and Development Expense, Policy [Policy Text Block] | Research and Development Expenses: Research and development expenses consist of costs incurred for company-sponsored as well as collaborative research and development activities. These costs include direct and research-related overhead expenses and are expensed as incurred. Technology license fees for technologies that are utilized in research and development and have no alternative future use are expensed when incurred. Substantial portions of the Company’s preclinical and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. For clinical studies, expenses are accrued based upon the number of patients enrolled and the duration of the study. The Company monitors patient enrollment, the progress of clinical studies and related activities to the extent possible through internal reviews of data reported to the Company by the vendors and clinical site visits. The Company’s estimates depend on the timeliness and accuracy of the data provided by the vendors regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation: The Company recognizes compensation expense in its consolidated statements of comprehensive loss for share-based payments, including stock options and restricted stock units issued to employees, based on their fair values on the date of the grant, with the compensation expense recognized over the period in which an employee is required to provide service in exchange for the stock award. Stock-based compensation expense for awards without performance conditions is recognized on a straight-line basis. Stock-based compensation expense for awards with performance conditions is recognized over the period from the date the performance condition is determined to be probable of occurring through the time the applicable condition is met. The fair value of stock options is estimated at the date of grant using the Black-Scholes method. The Black-Scholes option-pricing model requires the input of subjective assumptions. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. For purposes of determining the fair value of stock options, the Company segregates its options into two homogeneous groups, based on exercise and post-vesting employment termination behaviors, resulting in a change in the assumptions used for expected option lives and forfeitures. Expected volatility is based on the historical volatility in the Company’s stock price. |
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Earnings Per Share, Policy [Policy Text Block] | Net Loss per Common Share: Net loss per common share is computed using the weighted average number of shares of common stock outstanding. Shares associated with convertible debt, stock options and restricted stock units are not included because they are antidilutive. |
Summary of Significant Accounting Policies (Tables) |
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Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||
Inventory, Major Classes, Policy [Policy Text Block] |
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Summary of Significant Accounting Policies Equity Incentive Awards (Tables) |
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Cash and Cash Equivalents and Investments (Tables) |
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Cash and Cash Equivalents and Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash, Cash Equivalents and Short-term Investments [Table Text Block] |
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Fair Value Measurements (Tables) |
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, by Balance Sheet Grouping [Table Text Block] |
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] |
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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Summary of Significant Accounting Policies [Abstract] | ||||
XERMELO Intangible Assets Finite Lived | $ 24,700 | |||
Amortization of Intangible Assets | $ 400 | 1,000 | ||
Deferred tax benefit | $ 0 | $ 0 | $ (8,652) | $ 0 |
Summary of Significant Accounting Policies Inventory (Details) $ in Thousands |
Sep. 30, 2017
USD ($)
|
---|---|
Inventory [Line Items] | |
Inventory, Raw Materials, Gross | $ 734 |
Inventory, Work in Process, Gross | 41 |
Inventory, Finished Goods, Gross | 1,374 |
Inventory, Gross | $ 2,149 |
Summary of Significant Accounting Policies Stock-based Compensation Summary (Details 2) |
9 Months Ended |
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Sep. 30, 2017
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share Based Compensation Arrangement By Share Based Payment Award Stock Bonus And Restricted Stock Grants In Period | shares | 10,248 |
Share Based Compensation Arrangement By Share Based Payment Award Stock Bonus And Restricted Stock Grants In Period Weighted Average Grant Date Fair Value | $ / shares | $ 15.61 |
Recent Accounting Pronouncements (Details) $ in Millions |
Jan. 01, 2017
USD ($)
|
---|---|
Recent Accounting Pronouncements [Abstract] | |
Accumulated Excess Tax Benefits Recognized as Deferred Tax Assets | $ 6.1 |
Adjustment to Accumulated Deficit | $ 2.0 |
Cash and Cash Equivalents and Investments (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
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Cash and Cash Equivalents | ||
Fair Value | ||
Amortized Cost | $ 83,293 | $ 46,600 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Estimated Fair Value | 83,293 | 46,600 |
U.S. Treasury Securities | ||
Fair Value | ||
Amortized Cost | 90,533 | 227,911 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (57) | (107) |
Estimated Fair Value | 90,476 | 227,805 |
Corporate Debt Securities | ||
Fair Value | ||
Amortized Cost | 23,054 | 72,188 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (6) | (90) |
Estimated Fair Value | 23,048 | 72,099 |
Total Short-term Investments | ||
Fair Value | ||
Amortized Cost | 113,587 | 300,099 |
Gross Unrealized Gains | 0 | 2 |
Gross Unrealized Losses | (63) | (197) |
Estimated Fair Value | 113,524 | 299,904 |
Total Cash and Cash Equivalents and Investments | ||
Fair Value | ||
Amortized Cost | 196,880 | 346,699 |
Gross Unrealized Gains | 0 | 2 |
Gross Unrealized Losses | (63) | (197) |
Estimated Fair Value | $ 196,817 | $ 346,504 |
Cash and Cash Equivalents and Investments (Details 2) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
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Schedule of Investments [Line Items] | ||
Realized Investment Gains (Losses) | $ (7,000) | $ 0 |
Fair Value Measurements (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value | ||
Cash and Cash Equivalents | $ 83,293 | $ 46,600 |
Short-term Investments | 113,524 | 299,904 |
Total Cash and Cash Equivalents and Investments | 196,817 | 346,504 |
Accrued Liabilities | 18,912 | |
Total Liabilities | 18,912 | |
Fair Value, Level 1 | ||
Fair Value | ||
Cash and Cash Equivalents | 83,293 | 45,093 |
Short-term Investments | 90,476 | 227,805 |
Total Cash and Cash Equivalents and Investments | 173,769 | 272,898 |
Accrued Liabilities | 0 | |
Total Liabilities | 0 | |
Fair Value, Level 2 | ||
Fair Value | ||
Cash and Cash Equivalents | 0 | 1,507 |
Short-term Investments | 23,048 | 72,099 |
Total Cash and Cash Equivalents and Investments | 23,048 | 73,606 |
Accrued Liabilities | 0 | |
Total Liabilities | 0 | |
Fair Value, Level 3 | ||
Fair Value | ||
Cash and Cash Equivalents | 0 | 0 |
Short-term Investments | 0 | 0 |
Total Cash and Cash Equivalents and Investments | $ 0 | 0 |
Accrued Liabilities | 18,912 | |
Total Liabilities | $ 18,912 |
Fair Value Measurements (Details 2) - USD ($) $ in Thousands |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Gain (Loss) Included in Earnings | $ 2,101 | $ (703) | ||
Fair Value, Measurement with Unobservable Inputs Reconciliations, Recurring Basis, Liability Value | 0 | 18,912 | $ 18,912 | $ 22,815 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Settlements | $ (21,013) | $ (3,200) |
Debt Obligations (Details) $ / shares in Units, $ in Millions |
1 Months Ended | ||
---|---|---|---|
Nov. 30, 2014
USD ($)
|
Apr. 30, 2004
USD ($)
|
Sep. 30, 2017
USD ($)
$ / shares
|
|
Debt Instrument [Line Items] | |||
Proceeds from Convertible Debt | $ 87.5 | ||
Convertible Debt Instrument Interest Rate Stated Percentage | 5.25% | ||
Debt Instrument, Convertible, Conversion Ratio | 118.4553 | ||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 8.442 | ||
Debt Issuance Cost | $ 3.4 | ||
Unamortized Debt Issuance Expense | $ 2.0 | ||
Debt Instrument, Fair Value Disclosure | 141.6 | ||
Buildings Collateral | 59.2 | ||
Land Collateral | $ 2.7 | ||
Mortgage Loans on Real Estate, New Mortgage Loans | $ 34.0 | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.23% | ||
Mortgage Loans on Real Estate, Carrying Amount of Mortgages | $ 14.7 |
Commitments and Contingencies (Details) $ in Millions |
Sep. 30, 2017
USD ($)
|
---|---|
Operating Leased Assets [Line Items] | |
Guarantor Obligations, Maximum Exposure, Undiscounted | $ 3.3 |
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