Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2014

Summary Of Significant Accounting Policies [Abstract]

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires that management 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 amount of revenue earned and expenses incurred during the reporting period. Actual results could differ from those estimates.

Revenue Recognition And Deferred Program Fee Revenue

Revenue Recognition and Deferred Program Fee Revenue

Revenue is recognized when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed or determinable, and collection is reasonably assured.

We have recognized program fee revenue, collaboration revenue and milestone revenue under the Collaboration Agreement and License Agreement with Pfizer, or the Pfizer Agreements. Program fee revenue was derived from upfront payments from Pfizer. Through the end of the third quarter of 2013, these payments were recognized from receipt ratably over our estimate of the development period under the Pfizer Agreements. In October 2013, we and Pfizer amended the Pfizer Agreements, we no longer had any substantive responsibilities for development activities under the Pfizer Agreements and, during the fourth quarter of 2013, we recognized all remaining deferred program fee revenue as program fee revenue.

Collaboration revenues from reimbursement of development expenses was generally recognized when Pfizer completed its review of the expenses invoiced to them.

We recognized milestone payments from Pfizer as revenue when we achieved the underlying developmental milestone as the milestone payments were not dependent upon any other future activities or achievement of any other future milestones and the achievement of each of the developmental milestones were substantively at risk and contingent at the effective date of the collaboration. Substantial effort was involved in achieving each of the developmental milestones. These milestones represented the culmination of discrete earnings processes and the amount of each milestone payment was reasonable in relation with the level of effort associated with the achievement of the milestone. Each milestone payment was non-refundable and non-creditable when made. Research and development services provided under the Pfizer Agreements were priced at fair value based upon the reimbursement of expenses incurred pursuant to the Pfizer Agreements.

Cash, Cash Equivalents And Concentration Of Credit Risk

Cash, Cash Equivalents and Concentration of Credit Risk

We consider all highly liquid financial instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are maintained at two financial institutions and in money market funds. We believe the financial risks associated with these instruments are minimal. We have not incurred material losses from our investments in these securities.

Marketable Securities And Fair Value Measurements

Marketable Securities and Fair Value Measurements

We invest in interest-bearing marketable securities, generally consisting of corporate and government securities. We may elect to sell these investments before they mature. Therefore, we hold these investments as “available for sale” and include these investments in our balance sheets as current assets, even though the contractual maturity of a particular investment may be beyond one year. We report our marketable securities at fair value, which may include unrealized gains and losses. Our unrealized gains and losses on investments are recorded as a separate component of stockholders’ equity as accumulated other comprehensive income or loss. We recognize all realized gains and losses on our available-for-sale securities in interest income in the accompanying statement of operations on a specific identification basis. Our marketable securities are maintained at one financial institution and are governed by our investment policy as approved by our Board of Directors.

To date we have not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value. We would recognize an impairment charge when the decline in the estimated fair value of a marketable security below the amortized cost is determined to be other-than-temporary. We consider various factors in determining whether to recognize an impairment charge, including the duration of time and the severity to which the fair value has been less than our amortized cost, any adverse changes in the investees’ financial condition and our intent to sell or whether it is more likely than not that we would be required to sell the marketable security before its anticipated recovery.

We measure our cash equivalents and marketable securitiesat fair value on a recurring basis and have significant observable inputs where there are identical or comparable assets in the market to use in establishing our fair value measurements. We use significant observable inputs that include but are not limited to benchmark yields, reported trades, broker/dealer quotes and issuer spreads. We consider these inputs to be Level 2 inputs. Generally, the types of instruments we invest in are not traded on a market such as the NASDAQ Global Market, which we would consider to be Level 1 inputs. We do not have any investments that would require inputs considered to be Level 3. We use the bid price to establish fair value.

Business Segments

Business Segments

We report segment information based on how we internally evaluate the operating performance of our business units, or segments. Our operations are confined to one business segment: the development of novel drugs.

Stock-Based Compensation

Stock-based Compensation

We recognize non-cash expense in the statement of operations for the fair value of all share-based payments, including grants of employee stock options and other share based awards. For stock options, we use the Black-Scholes option valuation model and the single-option award approach and straight-line attribution method. Using this approach, the compensation expense is amortized on a straight-line basis over the vesting period of each respective stock option, generally four years. 

We have granted share-based awards that vest upon achievement of certain performance criteria, or Performance Awards. The value of these awards is the product of the number of shares of our common stock to be issued under the award multiplied by the fair market value of a share of our common stock on the date of grant. These awards include future performance conditions. We estimate an implicit service period for achieving these performance conditions. Performance Awards vest and common stock is issued on achieving performance conditions. We recognize non-cash stock-based compensation expense for Performance Awards when we conclude that achieving a performance condition is probable. We periodically review and update as appropriate our estimates of the implicit service periods and the likelihood of achieving the performance conditions.

Net Loss Per Share

Net Loss per Share

Basic net loss per share is computed on the basis of the weighted-average number of common shares outstanding for the reporting period. Diluted net loss per share is computed on the basis of the weighted-average number of common shares outstanding plus dilutive potential common shares outstanding using the treasury-stock method. Potential dilutive common shares consist of outstanding stock options and warrants. The numerators and denominators in the calculation of basic and diluted net loss per share were as follows (in thousands):

	Years ended December 31,
	2014		2013		2012
Numerator:
Net income (loss)	$	(12,386)	$	31,544	$	(3,446)
Denominator:
Weighted-average shares used to compute basic net income (loss) per share		45,269		45,007		44,753
Effect of dilutive securities - Dilution from employee stock plans		—		201		—
Weighted-average shares used to compute diluted net income (loss) per share		45,269		45,208	—	44,753
Net income (loss) per share - Basic	$	(0.27)	$	0.70	$	(0.08)
Net income (loss) per share - Diluted	$	(0.27)	$	0.70	$	(0.08)

We excluded weighted options outstanding to purchase common stock of10.6 million for 2014, 13.5 million for 2013 and 13.2 million for 2012 from the calculation of diluted net loss per share because the effect of including these shares in this calculation would be anti-dilutive.

Income Taxes

Income Taxes

We make estimates and judgments in determining the need for a provision for income taxes, including the estimation of our taxable income or loss for each full fiscal year.We have accumulated significant deferred tax assets. Deferred income taxes reflect the tax effects of net operating loss and tax credit carryovers and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings, if any. We are uncertain about the timing and amount of any future earnings. Accordingly, we offset these net deferred tax assets with a valuation allowance. We may in the future determine that our deferred tax assets will likely be realized, in which case we will reduce our valuation allowance in the quarter in which such determination is made. If the valuation allowance is reduced, we may recognize a benefit from income taxes in our statement of operations in that period. We classify interest and penalties recognized related to uncertain tax positions as interest expense.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

We reviewed recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of these pronouncements to have a material impact on our financial position, results of operations or cash flows.