10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-35993

OncoMed Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	38-3572512
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
800 Chesapeake Drive Redwood City, California	94063
(Address of Principal Executive Offices)	(Zip Code)

(650) 995-8200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of July 31, 2014, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 29,760,879.

ONCOMED PHARMACEUTICALS, INC.

TABLE OF CONTENTS

	Page No.
PART I. FINANCIAL INFORMATION		3
Item 1. Condensed Financial Statements (unaudited):		3
Condensed Balance Sheets as of June 30, 2014 and December 31, 2013		3
Condensed Statements of Operations for the three and six months ended June 30, 2014 and 2013		4
Condensed Statements of Comprehensive Loss for the three and six months ended June 30, 2014 and 2013		5
Condensed Statements of Cash Flows for the six months ended June 30, 2014 and 2013		6
Notes to Condensed Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3. Quantitative and Qualitative Disclosures About Market Risk		23
Item 4. Controls and Procedures		24
PART II. OTHER INFORMATION		25
Item 1. Legal Proceedings		25
Item 1A. Risk Factors		25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		26
Item 3. Defaults Upon Senior Securities		26
Item 4. Mine Safety Disclosures		26
Item 5. Other Information		26
Item 6. Exhibits		26
Signatures		27
Exhibit Index		28

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ONCOMED PHARMACEUTICALS, INC.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

	June 30, 2014			December 31, 2013
	(Unaudited)			(Note 2)
Assets
Current assets:
Cash and cash equivalents	$	23,379		$	208,931
Short-term investments		242,969			107,263
Receivables – related parties		23			23
Accounts receivable		48			—
Prepaid and other current assets		2,784			2,527
Total current assets		269,203			318,744
Property and equipment, net		5,168			4,641
Other assets		9,933			10,300
Total assets	$	284,304		$	333,685
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,033		$	5,706
Income tax payable		—			10,758
Accrued liabilities		12,062			9,860
Current portion of deferred revenue		34,625			35,059
Current portion of deferred rent		651			624
Liability for shares issued with repurchase rights		10			10
Total current liabilities		50,381			62,017
Deferred revenue, less current portion		137,275			148,871
Deferred rent, less current portion		2,809			3,146
Non-current income tax payable		1,528			1,515
Liability for shares issued with repurchase rights, less current portion		8			14
Total liabilities		192,001			215,563
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding at June 30, 2014 and December 31, 2013		—			—
Common stock, $0.001 par value; 145,000,000 shares authorized at June 30, 2014 and December 31, 2013; 29,738,391 shares and 29,397,964 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively		30			29
Additional paid-in capital		296,178			292,505
Accumulated other comprehensive income (loss)		(11	)		14
Accumulated deficit		(203,894	)		(174,426	)
Total stockholders’ equity		92,303			118,122
Total liabilities and stockholders’ equity	$	284,304		$	333,685

See accompanying notes.

3

ONCOMED PHARMACEUTICALS, INC.

Condensed Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenue:
Collaboration revenue	$	6,015		$	2,439		$	12,030		$	4,878
Collaboration revenue - related party		—			493			—			985
Total revenue		6,015			2,932			12,030			5,863
Operating expenses:
Research and development		18,167			10,475			34,876			20,051
General and administrative		3,440			1,952			6,653			3,936
Total operating expenses		21,607			12,427			41,529			23,987
Loss from operations		(15,592	)		(9,495	)		(29,499	)		(18,124	)
Interest and other income (expense), net		(5	)		(149	)		31			(118	)
Net loss	$	(15,597	)	$	(9,644	)	$	(29,468	)	$	(18,242	)
Net loss per common share, basic and diluted	$	(0.53	)	$	(8.83	)	$	(1.00	)	$	(16.77	)
Shares used to compute net loss per common share, basic and diluted		29,601,010			1,091,782			29,522,556			1,087,863

See accompanying notes.

4

ONCOMED PHARMACEUTICALS, INC.

Condensed Statements of Comprehensive Loss

(Unaudited)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Net loss	$	(15,597	)	$	(9,644	)	$	(29,468	)	$	(18,242	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities, net of tax		18			(5	)		(25	)		(1	)
Total comprehensive loss	$	(15,579	)	$	(9,649	)		$ (29,493)			$ (18,243)

See accompanying notes.

5

ONCOMED PHARMACEUTICALS, INC.

Condensed Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2014			2013
Operating activities
Net loss	$	(29,468	)	$	(18,242	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		685			701
Gain on disposal of equipment		(63	)		—
Stock-based compensation		2,197			490
Revaluation of convertible preferred stock warrant liability		—			146
Prepaid convertible preferred stock warrant expense		—			1
Amortization of discount on short-term investments		(29	)		(27	)
Changes in operating assets and liabilities:
Receivables – related parties		—			4,000
Accounts receivable		(48	)		—
Prepaid and other current assets		(257	)		(101	)
Other assets		367			(718	)
Accounts payable		(2,660	)		(38	)
Accrued liabilities		2,202			2,211
Deferred revenue		(12,030	)		2,137
Deferred rent		(310	)		(254	)
Income tax payable		(10,758	)		—
Net cash used in operating activities		(50,172	)		(9,694	)
Investing activities
Purchases of property and equipment		(1,147	)		(123	)
Purchases of short-term investments		(282,975	)		(25,290	)
Maturities of short-term investments		147,271			35,000
Net cash (used in) provided by investing activities		(136,851	)		9,587
Financing activities
Proceeds from issuance of common stock from exercise of options		903			17
Proceeds from issuance of common stock under employee stock purchase plan		568			—
Net cash provided by financing activities		1,471			17
Net (decrease) increase in cash and cash equivalents		(185,552	)		(90	)
Cash and cash equivalents at beginning of period		208,931			16,263
Cash and cash equivalents at end of period	$	23,379		$	16,173

See accompanying notes.

6

ONCOMED PHARMACEUTICALS, INC.

Notes to the Unaudited Interim Condensed Financial Statements

1. Organization

OncoMed Pharmaceuticals, Inc. (“OncoMed” or the “Company”) is a clinical development-stage biotechnology company focused on discovering and developing first-in-class protein therapeutics targeting cancer stem cells (“CSCs”). The Company was originally incorporated in July 2004 in Delaware. The Company’s operations are based in Redwood City, California and it operates in one segment.

The Company has five anti-CSC product candidates in clinical development. Additionally, other product candidates are in preclinical development with Investigational New Drug (“IND”) filings planned for as early as late 2014 or 2015. The first candidate, demcizumab, has completed a single-agent Phase Ia safety and dose escalation trial and is currently in Phase Ib combination therapy trials in patients with non-small cell lung cancer (with carboplatin and pemetrexed) and pancreatic cancer (with gemcitabine and Abraxane^®) and a Phase Ib/II trial combining demcizumab with paclitaxel in ovarian cancer. The second candidate, tarextumab (anti-Notch2/3, OMP-59R5), completed a Phase Ia safety and dose escalation trial and is in the Phase II portion of a Phase Ib/II trial in pancreatic cancer (with gemcitabine and Abraxane^®) (see Note 8. Subsequent Events) and in a second Phase Ib/II trial in small cell lung cancer (with etoposide and platinum chemotherapy). The third candidate, vantictumab (OMP-18R5), is in a single-agent Phase Ia trial and three separate Phase Ib combination trials, one trial each in patients with breast cancer (with paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and non-small cell lung cancer (with docetaxel). The fourth candidate, ipafricept (Fzd8-Fc, OMP-54F28), is in a single-agent Phase Ia safety and dose escalation trial in solid tumor malignancies, and is currently in three separate Phase Ib combination trials, one trial each in patients with ovarian cancer (with carboplatin and paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and hepatocellular carcinoma (with sorafenib). The Company’s Phase I clinical trials for both vantictumab and ipafricept have been placed on partial clinical hold by the U.S. Food and Drug Administration (“FDA”) following a voluntary halt of the trials by the Company. The fifth candidate, anti-Notch1 (OMP-52M51), is in two single-agent Phase Ia safety and dose escalation trials in hematologic and solid tumor malignancies.

Initial Public Offering

On July 17, 2013, the Company’s registration statement on Form S-1 (File No. 333-181331) relating to the initial public offering (the “IPO”) of its common stock was declared effective by the SEC. The IPO closed on July 23, 2013 at which time the Company sold 5,520,000 shares of its common stock, which included 720,000 shares of common stock purchased by the underwriters upon the full exercise of their option to purchase additional shares of common stock to cover over-allotments. The Company received net cash proceeds of $82.7 million from the IPO, net of underwriting discounts and commissions and expenses paid by the Company.

On July 23, 2013, prior to the closing of the IPO, all outstanding shares of convertible preferred stock converted into 21,180,280 shares of common stock with the related carrying value of $182.8 million reclassified to common stock and additional paid-in capital. In addition, all convertible preferred stock warrants were also thereby converted into common stock warrants. Additionally, all shares of Class B common stock were converted into Class A common stock, and the Class A common stock was redesignated “common stock”.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other interim period or for any other future year. The balance sheet as of December 31, 2013 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

7

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 18, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income (loss). The cost of available-for-sale securities sold is based on the specific-identification method.

Revenue Recognition

The Company generates substantially all its revenue from collaborative research and development agreements with pharmaceutical companies. The terms of the agreements may include nonrefundable upfront payments, milestone payments, other contingent payments and royalties on any product sales derived from collaborations. These multiple element arrangements are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting.

The determination of stand-alone value is generally based on whether any deliverable has stand-alone value to the customer. The Company determines how to allocate arrangement consideration to identified units of accounting based on the selling price hierarchy provided under the relevant guidance. The selling price used for each unit of accounting is based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available or estimated selling price if neither vendor-specific nor third-party evidence is available. Management may be required to exercise considerable judgment in determining whether a deliverable is a separate unit of accounting and in estimating the selling prices of identified units of accounting for new agreements.

Typically, the Company has not granted licenses to collaborators at the beginning of its arrangements and thus there are no delivered items separate from the research and development services provided. As such, upfront payments are recorded as deferred revenue in the balance sheet and are recognized as collaboration revenue over the estimated period of performance that is consistent with the terms of the research and development obligations contained in the collaboration agreement. The Company regularly reviews the estimated period of performance based on the progress made under each arrangement.

Payments that are contingent upon achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. Milestones are defined as an event that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Other contingent payments received for which payment is contingent solely on the results of a collaborative partner’s performance (bonus payments) are not accounted for using the milestone method. Such bonus payments will be recognized as revenue when collectability is reasonably assured. Payments related to options to license the Company’s program candidates are considered substantive if, at the inception of the arrangement, the Company is at risk as to whether the collaboration partner will choose to exercise the option. Factors that the Company considers in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. For arrangements under which an option is considered substantive, the Company does not consider the item underlying the option to be a deliverable at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration, assuming the option is not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option is priced at a significant and incremental discount, the Company would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amount would be included in allocable arrangement consideration.

8

Customer Concentration

Customers whose collaborative research and development revenue accounted for 10% or more of total revenues were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
GlaxoSmithKline LLC (“GSK”)	*	17%	*	17%
Bayer Pharma AG (“Bayer”)	41%	83%	41%	83%
Celgene Corporation (“Celgene”)	54%	—	54%	—

* Less than 10%.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of convertible preferred stock, common stock subject to repurchase, stock options and warrants are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Recent Adopted Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued final guidance that a performance target that affects vesting of a share-based payment and that could be achieved after the requisite service period is a performance condition under Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost for such an award would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the effective date. The Company does not believe the adoption of this guidance will have a material impact on its financial statement.

In May 2014, the FASB and the International Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606)—Revenue from Contracts with Customers (“ASU 2014-09”). This ASU affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. It also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company for annual periods beginning after December 15, 2016, including interim periods within that period. Early adoption is not permitted under U.S. GAAP. The Company is currently evaluating the impact of adoption on its financial statements.

9

3. Cash Equivalents and Short-Term Investments

The fair value of securities, not including cash, at June 30, 2014 was as follows (in thousands):

	June 30, 2014
	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
Money market funds	$	8,282	$	—	$	—		$	8,282
U.S. treasury bills		242,980		33		(44	)		242,969
Total available-for-sale securities	$	251,262	$	33	$	(44	)	$	251,251
Classified as:
Cash equivalents								$	8,282
Short-term investments									242,969
Total cash equivalents and investments								$	251,251

As of June 30, 2014, the Company had a total of $266.3 million in cash, cash equivalents, and short-term investments, which includes $15.0 million in cash and $251.3 million in cash equivalents and short-term investments.

The fair value of securities, not including cash, at December 31, 2013 was as follows (in thousands):

	December 31, 2013
	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		267,242		14		—		267,256
Total available-for-sale securities	$	275,222	$	14	$	—	$	275,236
Classified as:
Cash equivalents							$	167,973
Short-term investments								107,263
Total cash equivalents and investments							$	275,236

All available-for-sale securities held as of June 30, 2014 and December 31, 2013 had contractual maturities of less than one year. There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

4. Fair Value Measurements

The Company records its financial assets and liabilities at fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable and accounts payable, approximate their fair value due to their short maturities. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

• Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

10

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	8,282	$	—	$	—	$	8,282
U.S. treasury bills		—		242,969		—		242,969
Total	$	8,282	$	242,969	$	—	$	251,251
	December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		—		267,256		—		267,256
Total	$	7,980	$	267,256	$	—	$	275,236

Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies U.S. Treasury securities as Level 2. There were no transfers between Level 1 and Level 2 during the periods presented.

5. Collaborations

The Company has recognized the following revenues from its collaboration agreements with Celgene, GSK and Bayer during the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
GSK: Recognition of upfront payments	$	312	$	493	$	624	$	985
Bayer: Recognition of upfront payments		2,439		2,439		4,878		4,878
Celgene: Recognition of upfront payments		3,264		—		6,528		—
Total collaboration related revenue	$	6,015	$	2,932	$	12,030	$	5,863

GSK Strategic Alliance

In October 2012, the Company received a $3.0 million payment from GSK upon the initiation of the Phase Ib portion of the tarextumab (anti-Notch2/3, OMP-59R5) program which was considered as an advance payment on a future substantive milestone. In June 2013, the Company also received an $8.0 million advance payment from GSK pursuant to the terms of its tarextumab program. The total of $11.0 million has been recorded as deferred revenue and will be recognized as collaboration revenue upon the achievement of the underlying substantive milestone. See Note 8. Subsequent Events.

As of June 30, 2014, the Company was eligible to receive in its collaboration with GSK up to $81.0 million in future development milestone payments prior to the completion of certain Phase II proof-of-concept (“POC”) clinical trials. These remaining potential development milestones include up to $5.0 million for the advancement into specified clinical testing related to the anti-Notch1 (OMP-52M51) program, up to $16.0 million for the start of certain Phase II clinical trials, including a $5.0 million bonus payment, and up to $60.0 million if GSK exercises its options for the anti-Notch1 and tarextumab programs, including a $10.0 million bonus payment. GSK has the option to license the anti-Notch1 program as early as the end of Phase Ia or both programs at Phase II POC, and will be responsible for all further development and commercialization following such option exercise. If GSK successfully develops and commercializes both candidates for more than one indication, the Company could receive contingent consideration payments of up to $309.0 million for the achievement of regulatory events and up to $280.0 million upon the achievement of certain levels of worldwide net sales, for a total of $670.0 million of potential future payments. In addition, the Company can earn royalty payments on all future collaboration product sales, if any. As all contingent consideration is based solely on the performance of GSK, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with GSK.

11

As of December 31, 2013, GSK was no longer considered a related party due to an equity placement from Celgene pursuant to the collaboration agreement the Company entered into with Celgene in December 2013 that reduced GSK’s ownership of the Company’s voting common stock to below 10% of the Company’s total outstanding stock. Previously, GSK was deemed a related party by ownership of more than 10% of the voting common stock of the Company. Accordingly, related party transactions were reported as receivable—related party in the Company’s balance sheets and collaboration revenue—related party in the Company’s statements of operations as of June 30, 2013.

Bayer Strategic Alliance

As of June 30, 2014, the Company was eligible to receive up to $10.0 million in future development milestone payments in its collaboration with Bayer for the Company’s development of biologic product candidates, prior to the point that Bayer exercises its options. The Company is eligible to receive up to $55.0 million if Bayer exercises its options for biologic product candidates. Bayer will be responsible for all further development and commercialization following the exercise of an option for a product candidate. The Company is eligible to receive up to $24.0 million in development milestone payments for the small molecule candidates. If Bayer successfully develops and commercializes all of the product candidates for more than one indication, the Company could receive contingent consideration payments of up to $185.0 million for the achievement of regulatory events (up to $135.0 million for biologics and $50.0 million for small molecules) and up to $1.0 billion upon the achievement of specified future product sales (up to $862.5 million for biologics and $140.0 million for small molecules). As all contingent consideration is based solely on the performance of Bayer, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with Bayer.

Celgene Strategic Alliance

In December 2013, the Company entered into a Master Research and Collaboration Agreement (the “Agreement”) with Celgene pursuant to which the Company and Celgene will collaborate on research and development programs directed to the discovery and development of novel biologic therapeutic programs to target CSCs, and, if Celgene exercises an option to do so, the discovery, development and commercialization of novel small molecule therapeutic programs to target CSCs. Pursuant to the biologic therapeutic programs, the Company will conduct further development of demcizumab (OMP-21M18), anti-DLL4/anti-VEGF bispecific antibody (OMP-305B83), biologic therapeutics directed to targets in the RSPO-LGR signaling pathway, and biologic therapeutics directed to targets in an undisclosed pathway. Celgene has options to obtain exclusive licenses to develop further and commercialize biologic therapeutics in specified programs, which may be exercised during time periods specified in the agreement through completion of certain clinical trials, provided that such option exercise occurs within the contractual option period of 12 years (“Option Period”). The Company at its option may enter into co-commercialization and co-development agreements for five of the six biologic programs. During the Option Period, the Company will provide research and development services and the resultant data to Celgene for analysis in order for Celgene to determine whether or not to exercise its options.

Pursuant to the Agreement, the Company leads the discovery and development of biologic therapeutic products prior to Celgene’s exercise of its option. With respect to biologic therapeutics targeting the RSPO-LGR signaling pathway and the undisclosed pathway, prior to Celgene’s exercise of its option for a given program, Celgene is required to designate each program for which it wishes to retain the right to exercise its option, based on data generated by the Company, for up to a maximum of four programs. The Company is entitled to receive certain fees for each program that Celgene designates. Celgene has the right to designate programs until December 2, 2017, with an option to extend for another two years upon payment of an extension fee. Following such designation(s), Celgene will have the right to exercise its option for each such program within the Option Period.

With respect to biologic therapeutic programs, with the exception of one program targeting either the RSPO-LGR signaling pathway or the undisclosed pathway, and any program for which the Company elects not to exercise its co-development and co-commercialization right, following Celgene’s exercise of its option, the Company and Celgene will enter into an agreed form of co-development and co-commercialization agreement for such program. The Company will have the right to co-develop and to co-commercialize products arising out of such program in the United States, and Celgene will have the exclusive right to develop and commercialize products arising out of such program outside of the United States. The Company’s involvement in co-commercialization will include participation in specified promotion activities by means of a dedicated sales force of up to half of the overall sales force for the applicable program products, as well as marketing and other commercial activities, with Celgene recording all product sales. The Company will also bear a one-third share of all development costs, with Celgene bearing the remaining two-thirds. However, for one program targeting either the RSPO-LGR signaling pathway or the undisclosed pathway, and any program for which the Company elects not to co-develop and co-commercialize products arising from such program, the Company and Celgene will instead enter into an agreed form of a license agreement, pursuant to which Celgene retains all rights to develop further and commercialize biologic therapeutic products arising from such program on a worldwide basis, with certain support for development from the Company. The Company may elect not to co-develop and co-commercialize any products arising under such programs at any time, either prior to, or following Celgene’s option exercise, with the exception of a defined period of time near commercial launch of a product under a program. If the Company opts out of its co-development and co-commercialization rights with respect to a program, Celgene will have the exclusive right to develop and commercialize products arising out of such program, at Celgene’s expense.

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With respect to small molecule therapeutics targeting an undisclosed pathway, following Celgene’s exercise of its option, the Company will collaborate with Celgene on the discovery of and research on small molecule therapeutics, but Celgene will be solely responsible for development and commercialization of such therapeutics.

Under the terms of the Agreement, the Company received an upfront cash payment of $155.0 million from Celgene. In addition, Celgene purchased 1,470,588 shares of the Company’s common stock at a price of $15.13 per share, resulting in gross proceeds of $22.2 million. The price paid by Celgene for the common stock represented a premium over the closing price of the Company’s common stock on the date of the Agreement. The Company accounted for the $1.7 million premium as additional consideration under the Agreement and the common stock was recorded at its fair market value of $20.5 million. The Company is also eligible to receive option fees upon Celgene’s exercise of the option for each biologic therapeutic program. The collaboration also includes milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The payments for option exercise, program designation and achievement of development, regulatory and commercial milestones may total up to (1) $791.0 million for products in the demcizumab program, including a payment upon the achievement of certain pre-determined safety criteria in Phase II clinical trials with respect to demcizumab, (2) $505.0 million for products in the anti-DLL4/anti-VEGF bispecific program, (3) up to $442.8 million for each of the four products achieving regulatory approval that are directed to targets in each of the RSPO-LGR signaling pathway and the undisclosed pathway programs for which Celgene exercises its option, and (4) $107.0 million for products in the small molecule therapeutic program.

For programs in which the Company is co-developing and co-commercializing biologic therapeutic products in the United States, the Company is also entitled to share 50% of all product profits and losses in the United States. For such programs outside the United States, the Company is eligible to receive tiered royalties equal to a percentage of net product sales outside of the United States. If the Company elects not to co-develop or co-commercialize biologic therapeutic products or does not have the right to do so for a given program, Celgene is required to pay the Company tiered royalties equal to a percentage of net product sales worldwide, with such royalties being increased where the Company had the right to co-develop and co-commercialize such biologic therapeutic products under such program but elected not to do so. The Company is responsible for funding all research and development activities for biologic therapeutics under the collaboration prior to Celgene’s exercise of the option for such program.

In addition to the development and regulatory milestone payments the Company will be entitled to receive if Celgene exercises its option for the small molecule program, the Company may also receive royalties equal to a percentage of worldwide net sales of small molecule products in the low- to mid-single digits.

The Agreement will terminate upon the expiration of all of Celgene’s payment obligations under all license or co-development and co-commercialization agreements entered into with respect to programs following Celgene’s exercise of an option for a given program, or if Celgene fails to exercise any of its options within the Option Period. The Agreement will also terminate, on a program-by-program basis, on the expiration of the option term, if Celgene fails to exercise its option for such program. The Company may also terminate the Agreement with respect to one or more programs in the event that Celgene challenges the licensed patents with respect to such program.

If Celgene does not exercise its option with respect to a biologic therapeutic program within the Option Period, the Company retains worldwide rights to such program(s), except that if Celgene exercises its option to obtain a license for either the demcizumab program or the anti-DLL4/anti-VEGF bispecific program, then for so long as such license is in effect, the Company cannot develop or commercialize products under the other of such two programs. In addition, under certain termination circumstances, the Company would also have worldwide rights to the terminated biologic therapeutic programs.

The Company’s deliverables under the arrangement with Celgene are research and development services, including the obligation that the Company provides the resultant data to Celgene, which are accounted for as a single unit of accounting. The Company has determined that the options to license programs are substantive options. Additionally, as a result of the uncertain outcome of the discovery, research and development activities, the Company is at risk with regard to whether Celgene will exercise the options. Accordingly, the options are not considered deliverables at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration. The Company has identified the initial arrangement consideration to be approximately $156.7 million which will be recognized on a straight-line basis over the estimated period of performance of 12 years. Due to the uncertain timeline associated with the deliverables at the outset of the Agreement, the Company determined it will use 12 years, which is the maximum period under the Agreement for Celgene to exercise its options. The Company will reevaluate the estimated performance period at each reporting period.

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As of June 30, 2014, the Company was eligible to receive in its collaboration with Celgene up to $90.0 million in future development milestones across all programs under the collaboration, prior to the point that Celgene exercises its options. The Company is also eligible to receive up to $240.0 million of contingent consideration if Celgene exercises all its options for the biologic and small molecule therapeutic programs. Celgene will be responsible for all further development and commercialization following the exercise of the options for specified programs. If Celgene successfully develops and commercializes all of the product candidates, the Company could receive additional contingent consideration of up to $2.8 billion for the achievement of regulatory events (up to $2.7 billion for biologics and $95.0 million for small molecules). As all contingent consideration is based solely on the performance of Celgene, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the Agreement.

For additional information about the Company’s collaborations with GSK, Bayer and Celgene, including the upfront payments received under those collaborations, see Note 10 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with SEC on March 18, 2014.

6. Equity Plans

Equity Incentive Award and Stock Incentive Plans

As of June 30, 2014, a total of 1,768,645 shares of common stock have been authorized under the 2013 Equity Incentive Award Plan (the “2013 Plan”), including the additional 1,175,918 shares of common stock that became available for future issuance under the 2013 Plan as of January 1, 2014 as a result of an annual automatic increase provision in the 2013 Plan. As of June 30, 2014, a total of 940,548 shares are subject to options outstanding under the 2013 Plan. There are 2,161,301 shares subject to options outstanding under 2004 Stock Incentive Plan (the “2004 Plan”) as of June 30, 2014, which will become available for issuance under the 2013 Plan to the extent the options are forfeited or lapse unexercised without issuance of such shares under the 2004 Plan.

The following table summarizes activity under 2004 Plan and 2013 Plan, including grants to nonemployees and restricted stock units (“RSUs”) granted:

(In thousands)	Shares Available for Grant of Options and Awards			Options and Awards Outstanding
Balances at December 31, 2013		117			2,930
Additional shares authorized		1,176			—
Options granted		(202	)		202
Options exercised		—			(299	)
Options cancelled		25			(25	)
RSUs granted		(294	)		294
Balances at June 30, 2014		822			3,102

The weighted-average grant-date estimated fair value of options and RSUs granted during the six months ended June 30, 2014 was $17.96 per share and $31.03 per share, respectively.

Liability for Shares with Repurchase Rights

At June 30, 2014 and December 31, 2013, there were 4,036 and 5,088 shares of common stock, respectively, subject to the Company’s right of repurchase at price of $4.56 per share. At June 30, 2014 and December 31, 2013, the Company recorded $18,000 and $23,000, respectively, as liabilities associated with shares issued with repurchase rights.

Employee Stock Purchase Plan

As of June 30, 2014, a total of 593,979 shares of common stock have been authorized and 553,229 shares of common stock are available for future issuance under the Company’s Employee Stock Purchase Plan (the “ESPP”). This authorized number includes the additional 293,979 shares of common stock that became available for future issuance under the ESPP as of January 1, 2014 as a result of an annual automatic increase provision in the ESPP. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

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During the six months ended June 30, 2014, the Company issued 40,750 shares under the ESPP. The Company used the following assumptions to estimate the fair value of the ESPP offered for the six months ended June 30, 2014: expected term of 0.5 years, weighted-average volatility from 65.7% to 115.4%, risk-free interest rate from 0.05% to 0.08% and expected dividend yield of zero.

Restricted Stock Units

In March 2014, the Company awarded 293,980 RSUs under the 2013 Plan. Each vested RSU represents the right to receive one share of common stock. The fair value of the RSU awards was calculated based on the NASDAQ quoted stock price on the date of the grant with the expense being recognized over the vesting period. The RSUs are generally scheduled to vest at the end of three years at March 31, 2017. However, the vesting will be accelerated to 25% of the awarded RSUs upon the payment by Celgene of a designated milestone payment related to Phase II clinical trials of demcizumab. The stock-based compensation expense for these RSUs is being amortized on the straight-line basis over the three-year vesting period. The company continues to assess at each reporting date whether achievement of any performance condition is probable and would begin recognizing compensation costs based on the accelerated vesting if and when achievement of the performance condition becomes probable. There were no RSUs awarded during the three months ended June 30, 2014. The Company has recognized the stock-based compensation expense of $745,000 and $803,000 related to these RSUs for the three and six months ended June 30, 2014, respectively.

Stock-Based Compensation

The following table presents stock-based compensation expense recognized for stock options, RSUs and the ESPP in the Company’s statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Research and development	$	977	$	134	$	1,388	$	274
General and administrative		530		131		809		216
Total	$	1,507	$	265	$	2,197	$	490

As of June 30, 2014, the Company had $8.0 million and $8.3 million of unrecognized compensation expense related to unvested stock options and RSUs, respectively, which are expected to be recognized over an estimated weighted-average period of 2.67 years and 2.75 years, respectively.

The estimated grant date fair value of employee stock options was calculated using the Black-Scholes valuation model, based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Weighted-average volatility		69.45	%		—	%		69.65	%		68.5	%
Weighted-average expected term (years)		6.2			—			6.2			6.2
Risk-free interest rate		2.22	%		—	%		2.23	%		1.40	%
Expected dividend yield		—			—			—			—

7. Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	June 30,
	2014		2013
Convertible preferred stock		—		21,180,280
Options to purchase common stock		2,807,869		2,544,101
RSUs		293,980		—
Warrants to purchase convertible preferred stock		—		38,210
		3,101,849		23,762,591

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8. Subsequent Events

In July 2014, the Company began dosing patients in the randomized, placebo-controlled Phase II portion of its clinical trial of tarextumab (anti-Notch2/3, OMP-59R5) in pancreatic cancer. As such, the Company recognized $11.0 million of milestone revenue, which had been previously deferred, related to first patient enrollment in the Phase II portion of its tarextumab clinical trial under its agreement with GSK.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our condensed financial statements (unaudited) and related notes included elsewhere in this report. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements, include, but are not limited to, the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; our ability to advance product candidates into, and successfully complete, clinical trials; our receipt of future milestone payments and/or royalties, and the expected timing of such payments; our collaborators’ exercise of their license options; the commercialization of our product candidates; the implementation of our business model, strategic plans for our business, product candidates and technology; the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; estimates of our expenses, future revenues, capital requirements and our needs for additional financing; the timing or likelihood of regulatory filings and approvals; our ability to maintain and establish collaborations or obtain additional government grant funding; our use of proceeds from our IPO; our financial performance; and developments relating to our competitors and our industry. These statements reflect our current views with respect to future events or our future financial performance, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 or described elsewhere in this Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. Unless the context requires otherwise, in this Quarterly Report on Form 10-Q, the terms “OncoMed,” “Company,” “OncoMed Pharmaceuticals,” “we,” “us” and “our” refer to OncoMed Pharmaceuticals, Inc., a Delaware corporation, unless otherwise noted.

Overview

OncoMed is a clinical development-stage biopharmaceutical company focused on discovering and developing first-in-class protein therapeutics targeting CSCs. Our approach has been to target CSCs, also known as tumor-initiating cells. Common cancer drugs target bulk tumor cells but have limited impact on CSCs, thereby providing a path for recurrence of the tumor. We utilize our proprietary technologies to identify and validate multiple potential targets critical to CSC self-renewal and differentiation. These targets are in pathways implicated in cancer biology and stem cell biology, including the Notch, Wnt, RSPO-LGR and other fundamental CSC pathways. We believe our product candidates are quite distinct from current generations of chemotherapies and targeted therapies, and have the potential to significantly impact cancer treatment and the clinical outcome of patients with cancer. All of our product candidates were discovered internally in our own research laboratories.

We have five anti-CSC product candidates in clinical development. Additionally, other product candidates are in preclinical development with IND filings planned for as early as late 2014 or 2015. The first candidate, demcizumab, has completed a single-agent Phase Ia safety and dose escalation trial and is currently in Phase Ib combination therapy trials in patients with non-small cell lung cancer (with carboplatin and pemetrexed) and pancreatic cancer (with gemcitabine and Abraxane^®) and a Phase Ib/II trial combining demcizumab with paclitaxel in ovarian cancer. The second candidate, tarextumab (anti-Notch2/3, OMP-59R5), completed a Phase Ia safety and dose escalation trial and is in the Phase II portion of a Phase Ib/II trial in pancreatic cancer (with gemcitabine and Abraxane^®) and in a second Phase Ib/II trial in small cell lung cancer (with etoposide and platinum chemotherapy). The third candidate, vantictumab (OMP-18R5), is in a single-agent Phase Ia trial and three separate Phase Ib combination trials, one trial each in patients with breast cancer (with paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and non-small cell lung cancer (with docetaxel). The fourth candidate, ipafricept (Fzd8-Fc, OMP-54F28), is in a single-agent Phase Ia safety and dose escalation trial in solid tumor malignancies, and is currently in three separate Phase Ib combination trials, one trial each in patients with ovarian cancer (with carboplatin and paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and hepatocellular carcinoma (with sorafenib). The fifth candidate, anti-Notch1 (OMP-52M51), is in two single-agent Phase Ia safety and dose escalation trials in hematologic and solid tumor malignancies. Clinical trials for all five product candidates are ongoing, with the intent of gathering additional data required to proceed to later stage clinical trials and product approval. The Phase I clinical trials for both vantictumab and ipafricept, however, have been placed on partial clinical hold by the U.S. Food and Drug Administration (“FDA”) following a voluntary halt of the trials by the Company. The Company currently expects to resume enrollment and dosing of new patients in its Phase 1b vantictumab and ipafricept clinical trials after revised protocols and amendments have been submitted to and concurred with by the FDA and the study sites’ institutional review boards (“IRBs”).

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Financial Operations Overview

Revenue

We have not generated any revenue from product sales. Our revenue to date has been primarily derived from upfront payments and development milestones received from GSK, Bayer and Celgene. We recognize revenue from upfront payments ratably over the term of our estimated period of performance under the agreements. In addition to receiving upfront payments, we may also be entitled to milestone and other contingent payments upon achieving predefined objectives or the exercise of options for specified programs by our strategic partners. Such payments are recorded as revenue when we achieve the underlying milestone if there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved.

The following table summarizes our revenue for the three and six months ended June 30, 2014 and 2013, which is related to the recognition of upfront payments received under our various collaboration arrangements (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
GSK: Recognition of upfront payments	$	312	$	493	$	624	$	985
Bayer: Recognition of upfront payments		2,439		2,439		4,878		4,878
Celgene: Recognition of upfront payments		3,264		—		6,528		—
Total collaboration related revenue	$	6,015	$	2,932	$	12,030	$	5,863

We expect that any revenue we generate will fluctuate from period to period as a result of the timing and amount of milestones and other payments from our collaborations with GSK, Bayer and Celgene or any new collaboration we may enter into, and any new potential government grants that we may receive in the future. See Note 8 to Condensed Financial Statements, Subsequent Events.

Research and Development

Research and development expenses represent costs incurred to conduct research such as the discovery and development of clinical candidates for GSK, Bayer and Celgene as well as discovery and development of our proprietary un-partnered product candidates. We expense all research and development costs as they are incurred. Our research and development expenses consist of employee salaries and related benefits, including stock-based compensation, third-party contract costs relating to research, manufacturing, preclinical studies, clinical trial activities, laboratory consumables, and allocated facility costs.

At any point in time, we typically have various early stage research and drug discovery projects. Our internal resources, employees and infrastructure are not directly tied to any one research or drug discovery project and are typically deployed across multiple projects. As such, we do not maintain information regarding these costs incurred for these early stage research and drug discovery programs on a project-specific basis.

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The following table (in thousands) summarizes our research and development expenses for the three and six months ended June 30, 2014 and 2013. The internal costs include personnel, facility costs, laboratory consumables and discovery and research related activities associated with our pipeline. The external program costs reflect external costs attributable to our clinical development candidates and preclinical candidates selected for further development. Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities.

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Internal Costs:
Cancer biology, pathology and toxicology	$	3,567	$	2,696	$	6,856	$	5,346
Molecular and cellular biology		1,836		1,534		3,461		3,161
Process development and manufacturing		1,340		1,060		2,661		2,126
Product development		2,049		1,150		3,655		2,254
Subtotal internal costs		8,792		6,440		16,633		12,887
External Program Costs:
Manufacturing		3,287		1,016		6,797		1,649
Clinical		4,674		2,551		8,856		4,483
Translational medicine		311		438		960		736
Toxicology		1,103		30		1,630		296
Subtotal external program costs		9,375		4,035		18,243		7,164
Total research and development expense	$	18,167	$	10,475	$	34,876	$	20,051

Our research and development expenses have increased as we have progressed our product candidates, and we expect that these expenses may increase with continued pipeline advancement., and conduct our development activities under our agreements with GSK, Bayer and Celgene The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. We or our partners may never succeed in achieving marketing approval for any of our product candidates. The probability of success of each product candidate may be affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability. For the biologic programs covered under our strategic alliances with GSK, Bayer and Celgene, we are responsible for development of each product candidate prior to the exercise of GSK’s, Bayer’s or Celgene’s option to exclusively license such product candidate. GSK and Bayer may exercise such an option on a product-by-product basis, and Celgene may exercise such option on a program-by-program basis, in each case, during certain time periods, which for GSK, Bayer and Celgene are through the end of certain Phase I or Phase II trials, depending on the applicable product candidate or program. If GSK exercises its option for a product candidate, all further development obligations for such product candidate are assumed by GSK. If Bayer exercises its option for a product candidate, all development obligations for such product candidate after such product candidate reaches a defined early development stage are assumed by Bayer. With respect to biologic therapeutic programs, if Celgene exercises its option for a given program, we will have the option to co-develop and co-commercialize up to five of the six such product candidates in the United States. If we do so, we will be responsible for a one-third share of the global development costs of such product candidates, with Celgene bearing the remaining two-thirds of such costs, and we will be entitled to participate in the commercialization activities for such product candidates in the United States, and to share 50% of all profits and losses arising from U.S. sales of such product candidates. Otherwise, we may enter into a license agreement with Celgene for such product candidate whereupon Celgene would be responsible for all further development costs. With respect to the small molecule therapeutic program under our agreement with Celgene, if Celgene exercises its option to further develop and commercialize small molecule therapeutics directed to targets in an undisclosed pathway, all further development obligations with respect to such program will be assumed by Celgene.

Most of our product development programs are at an early stage; therefore, the successful development of our product candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each product candidate and are difficult to predict. Given the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of current or future clinical trials of our product candidates or if and to what extent we will generate revenues from the commercialization and sale of any of our product candidates. We anticipate that we and our strategic alliance partners will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each product candidate, as well as an ongoing assessment as to each product candidate’s commercial potential. We may need to raise additional capital or may seek additional strategic alliances in the future in order to complete the development and commercialization of our product candidates.

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General and Administrative

Our general and administrative expenses consist primarily of personnel costs, allocated facilities costs and other expenses for outside professional services, including legal, human resource, audit, tax and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. We expect to incur additional expenses as a result of being a public company following the completion of our IPO in July 2013, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. In addition, we have incurred and expect to continue to incur increased expenses related to additional insurance, investor relations and other increases related to needs for additional human resources and professional services associated with being a public company.

Interest and Other Income (Expense), Net

Interest income consists primarily of interest received on our cash, cash equivalents and short-term investments balances.

Other income (expense) primarily includes gains and losses from the change in value of our investment balances.

For the six months ended June 30, 2013, other income (expense) included gains and losses from the remeasurement of our liabilities related to our convertible preferred stock warrants. The outstanding preferred stock warrants were converted to common stock warrants upon the completion of the IPO in July 2013 and were no longer subject to remeasurement following this time. There were no warrants outstanding during the six months ended June 30, 2014.

Critical Accounting Polices and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

There have been no significant and material changes in our critical accounting policies during the three and six months ended June 30, 2014, as compared to those disclosed in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

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Results of Operations

Comparison of the Three Months Ended June 30, 2014 and 2013

	Three Months Ended June 30,						Dollar Change
(In thousands)	2014			2013
Revenue:
Collaboration revenue	$	6,015		$	2,439		$	3,576
Collaboration revenue–related party		—			493			(493	)
Total revenue		6,015			2,932			3,083
Operating expenses:
Research and development		18,167			10,475			7,692
General and administrative		3,440			1,952			1,488
Total operating expenses		21,607			12,427			9,180
Loss from operations		(15,592	)		(9,495	)		(6,097	)
Interest and other income (expense), net		(5	)		(149	)		144
Net loss	$	(15,597	)	$	(9,644	)	$	(5,953	)

Revenue

Total revenue for the three months ended June 30, 2014 was $6.0 million, an increase of $3.1 million, or 105%, compared to total revenue of $2.9 million for the three months ended June 30, 2013. This increase is primarily due to the recognized revenue from the amortization of the upfront payments received in 2013 under the Celgene collaboration agreement.

Research and Development

Research and development expenses were $18.2 million for the three months ended June 30, 2014, an increase of $7.7 million, or 73%, compared to research and development expenses of $10.5 million for the three months ended June 30, 2013. The increase was comprised of a $5.3 million increase in our external program costs and a $2.4 million increase in our internal program cost.

The increase in our external program costs of $5.3 million was primarily due to an increase of $2.1 million in clinical costs resulting from higher patient enrollment for various programs, an increase of $2.3 million in manufacturing costs primarily due to the increased production of anti-RSPO3 (OMP-131R10), ipafricept (Fzd8-Fc, OMP-54F28), anti-DLL4/anti-VEGF bispecific antibody (OMP-305B83), tarextumab (anti-Notch 2/3, OMP-59R5) and demcizumab (OMP-21M18), and an increase of $0.9 million in various toxicology studies. We expect that our external program costs may increase in future periods as we continue to enroll patients in various programs and initiate new clinical trials.

The increase in our internal costs of $2.4 million was primarily due to an increase of $1.7 million in personnel-related costs including non-cash stock-based compensation expense, and an increase of $0.5 million in contracted services and lab-related expenses.

General and Administrative

General and administrative expenses were $3.4 million for the three months ended June 30, 2014, an increase of $1.4 million, or 76%, compared to general and administrative expenses of $2.0 million for the three months ended June 30, 2013. The increase is primarily due to an increase of employee costs of $0.7 million related to increased headcount, non-cash stock-based compensation expense, higher consulting fees from third-party vendors of $0.5 million associated with public company operations, higher legal fees and insurance costs of $0.2 million.

Interest and Other Income (Expense), Net

Interest and other income (expense), net was $(5,000) for the three months ended June 30, 2014, a decrease of expense of $144,000, compared to interest and other income (expense), net of $(149,000) for the three months ended June 30, 2013. The decrease in expense was primarily due to the conversion of our preferred stock warrants to common stock warrants following the completion of the IPO in July 2013 that were no longer subject to liability remeasurement.

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Comparison of the Six Months Ended June 30, 2014 and 2013

	Six Months Ended June 30,						Dollar Change
(In thousands)	2014			2013
Revenue:
Collaboration revenue	$	12,030		$	4,878		$	7,152
Collaboration revenue—related party		—			985			(985	)
Total revenue		12,030			5,863			6,167
Operating expenses:
Research and development		34,876			20,051			14,825
General and administrative		6,653			3,936			2,717
Total operating expenses		41,529			23,987			17,542
Loss from operations		(29,499	)		(18,124	)		(11,375	)
Interest and other income (expense), net		31			(118	)		149
Net loss	$	(29,468	)	$	(18,242	)	$	(11,226	)

Revenue

Total revenue for the six months ended June 30, 2014 was $12.0 million, an increase of $6.1 million, or 105%, compared to total revenue of $5.9 million for the six months ended June 30, 2013. This increase is primarily due to the recognized revenue from the amortization of the upfront payments received in 2013 under the Celgene collaboration agreement.

Research and Development

Research and development expenses were $34.9 million for the six months ended June 30, 2014, an increase of $14.8 million, or 74%, compared to research and development expenses of $20.1 million for the six months ended June 30, 2013. The increase was comprised of an $11.1 million increase in our external program costs and a $3.7 million increase in our internal program cost.

The increase in our external program costs of $11.1 million was primarily due to an increase of $4.4 million in clinical costs resulting from higher patient enrollment for various programs, an increase of $5.1 million in manufacturing costs primarily due to the increased production of anti-RSPO3 (OMP-131R10), anti-DLL4/anti-VEGF bispecific antibody (OMP-305B83), tarextumab (anti-Notch 2/3, OMP-59R5), ipafricept (Fzd8-Fc, OMP-54F28), and demcizumab (OMP-21M18) and an increase of $1.3 million in various program toxicology studies. We expect that our external program costs may increase in future periods as we continue to enroll patients in various programs and initiate new clinical trials.

The increase in our internal costs of $3.7 million was primarily due to an increase of $2.7 million in personnel-related costs including non-cash stock-based compensation expense, and an increase of $1.0 million in contract services and lab-related expenses.

General and Administrative

General and administrative expenses were $6.7 million for the six months ended June 30, 2014, an increase of $2.8 million, or 69%, compared to general and administrative expenses of $3.9 million for the six months ended June 30, 2013. The increase is primarily due to an increase of employee costs of $1.1 million related to increased headcount including non-cash stock-based compensation expense, higher legal fees of $0.4 million, higher consulting fees from third-party vendors of $0.9 million associated with public company operations and higher insurance costs of $0.3 million.

Interest and Other Income (Expense), Net

Interest and other income (expense), net was $31,000 for the six months ended June 30, 2014, a change of $149,000, compared to interest and other income (expense), net of $(118,000) for the six months ended June 30, 2013. The change was primarily due to the conversion of our outstanding preferred stock warrants to common stock warrants upon the completion of the IPO in July 2013 and we were no longer subject to remeasurement following the IPO.

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Liquidity and Capital Resources

As of June 30, 2014, we had cash, cash equivalents, and short term investments totaling $266.3 million. In connection with our IPO that closed in July 2013, we received cash proceeds of $82.7 million, net of underwriters’ discounts and commissions and expenses paid by us. In December 2013, we received total cash proceeds of $177.2 million as the result of the Celgene collaboration agreement, including the sale of common stock to Celgene.

Our primary uses of cash are to fund operating expenses, primarily related to research and development product candidate expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

We believe that our existing cash, cash equivalents and short-term investments as of June 30, 2014 will be sufficient to meet our anticipated cash requirements at least through 2016, even without taking into account potential future milestone payments to us. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

• the achievement of milestones and/or exercise of options under our agreements with GSK, Bayer and Celgene;

• the initiation, progress, timing and completion of preclinical studies and clinical trials for our product candidates and potential product candidates;

• the number and characteristics of product candidates that we pursue;

• the progress, costs and results of our clinical trials;

• the outcome, timing and cost of regulatory approvals;

• delays that may be caused by changing regulatory requirements;

• funding we may receive under any new collaborations we may enter into or new government grants we may be awarded in the future;

• the costs and timing of hiring new employees to support our continued growth; and

• the costs and timing of procuring clinical supplies of our product candidates.

The following table summarizes our cash flows for the periods indicated (in thousands):

	Six Months Ended June 30,
	2014			2013
Cash (used in) operating activities	$	(50,172	)	$	(9,694	)
Cash (used in) provided by investing activities		(136,851	)		9,587
Cash provided by financing activities		1,471			17

Cash Flows from Operating Activities

Cash used in operating activities for the six months ended June 30, 2014 was $50.2 million. Our net loss of $29.5 million for the six months ended June 30, 2014 was offset by non-cash charges of $0.7 million for depreciation and amortization, and $2.2 million for stock-based compensation. The change in net operating assets of $23.5 million was primarily due to the decrease in income tax payable of $10.8 million upon payment of federal income tax that resulted mainly from the receipt of the Celgene upfront payment in December 2013, a decrease in deferred revenue of $12.0 million from the amortization of upfront payments from collaboration partners and the decrease of $2.7 million in accounts payable due to the timing of our vendor payments.

Cash used in operating activities for the six months ended June 30, 2013 was $9.7 million. The net loss of $18.2 million was offset by non-cash charges of $0.7 million for depreciation and amortization, $0.5 million for stock-based compensation and $0.2 million for the revaluation of the convertible preferred stock warrant liability. The change in net operating assets of $7.2 million was due to the decrease in accounts receivable of $4.0 million due to the collection of the related party receivable from GSK and the net increase in accounts payable and accrued liabilities of $2.2 million as a result of the timing of our payments. Deferred revenue increased by $2.1 million due to the receipt of an $8.0 million advance payment from GSK related to the initiation of the Phase Ib clinical trial in the second indication of our tarextumab (anti-Notch2/3, OMP-59R5) program, partially offset by the amortization of upfront and milestone payments from the GSK and Bayer arrangements in the amount of $5.9 million. Other assets increased by $0.7 million due to the capitalization of costs related to the IPO.

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Cash Flows from Investing Activities

Cash used in investing activities of $136.9 million for the six months ended June 30, 2014 was primarily due to purchases of short-term investments of $283.0 million and our acquisition of property and equipment of $1.2 million, offset by maturities of short-term investments of $147.3 million.

Cash provided by investing activities for the six months ended June 30, 2013 was comprised of maturities of short-term investments of $35.0 million, offset by our acquisition of property and equipment of $0.1 million and purchases of short-term investments of $25.3 million.

Cash flows from Financing Activities

Cash provided by financing activities of $1.5 million for the six months ended June 30, 2014 was due to the proceeds of $0.9 million from the issuance of common stock upon the exercise of stock option and $0.6 million from the purchases of common stock under our ESPP.

Cash provided by financing activities for the six months ended June 30, 2013 was due to the Company’s receipt of proceeds of $17,000 from the issuance of common stock upon the exercise of stock options.

Off-Balance Sheet Arrangements

As of June 30, 2014, we did not have any off-balance sheet arrangements or any holdings in variable interest entities.

Recent Adopted Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued final guidance that a performance target that affects vesting of a share-based payment and that could be achieved after the requisite service period is a performance condition under Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost for such an award would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the effective date. We do not believe the adoption of this guidance will have a material impact on its financial statement.

In May 2014, the FASB and the International Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606)—Revenue from Contracts with Customers (“ASU 2014-09”). This ASU affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. It also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us for annual periods beginning after December 15, 2016, including interim periods within that period. Early adoption is not permitted under U.S. GAAP. We are currently evaluating the impact of adoption on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities.

Interest Rate Sensitivity

We had cash, cash equivalents and short-term investments of $266.3 million as of June 30, 2014, which consist of bank deposits, money market funds and U.S. Treasury Bills. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant. We had no outstanding debt as of June 30, 2014.

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We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements.

Foreign Currency Exchange Rate Sensitivity

We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars, particularly in Euro and British Sterling. Due to the uncertain timing of expected payments in foreign currencies, we do not utilize any forward foreign exchange contracts. All foreign transactions settle on the applicable spot exchange basis at the time such payments are made.

An adverse movement in foreign exchange rates could have a material effect on payments we make to foreign suppliers. The impact of an adverse change in foreign exchange rates may be offset in the event we receive a milestone payment from a foreign partner. A hypothetical 10% change in foreign exchange rates during any of the preceding periods presented would not have a material impact on our financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2014, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2014, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the quarter ended June 30, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any material litigation or other material legal proceedings.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Item 1A—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and in our other public filings with the SEC. The risks described in our 2013 Annual Report on Form 10-K and in our other public filings with the SEC are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

There have been no material changes to our risk factors from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, except as described in the updated risk factor provided below.

If we are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we are required to conduct studies on the long-term effects associated with the use of our product candidates, our ability to commercialize our product candidates could be adversely affected or delayed.

Our clinical trials may be suspended, delayed, or terminated at any time for a number of safety-related reasons. For example, we may voluntarily suspend, delay, or terminate our clinical trials if at any time we believe that our product candidates present an unacceptable safety risk to the clinical trial patients. In addition, IRBs or regulatory agencies may order the temporary discontinuation or termination of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, including if they present an unacceptable safety risk to patients. Administering any product candidate to humans may produce undesirable side effects. The existence of undesirable side effects resulting from our product candidates could cause us or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our product candidates and could result in the FDA or other regulatory agencies denying further development or approval of our product candidates for any or all targeted indications. This, in turn, could affect whether GSK, Bayer and/or Celgene exercise their development options under our strategic collaborations and could prevent us from commercializing our product candidates. Further, our programs modulate novel classes of targets. As a result, we may experience unforeseen adverse side effects with our existing and future product candidates, including demcizumab (OMP-21M18).

The pharmacokinetic, pharmacodynamic, and safety profile of preclinical studies may not be indicative of results in any clinical trial. As of the date of this Quarterly Report on Form 10-Q, five of our current product candidates have been tested in cancer patients. We have observed adverse events in clinical trials for all five of our product candidates. We currently believe these adverse events are manageable. Nevertheless, such adverse events may cause challenges in development, approval and/or commercialization.

For example, following the occurrence of certain bone-related adverse events, OncoMed voluntarily halted enrollment and dosing in its ongoing Phase 1 clinical trials of its vantictumab (OMP-18R5) and ipafricept (Fzd8-Fc, OMP-54F28) programs until revised protocols and risk mitigation plans have been submitted to and concurred with by the FDA and the study sites’ IRBs. In view of our voluntary halt of these programs, the FDA subsequently placed these programs on partial clinical hold. Although we believe our revised protocols and risk mitigation plans will be satisfactory to the FDA and IRBs to allow re-initiation of enrollment in our vantictumab and ipafricept clinical trials, we cannot assure you that this will be the case. Failure can occur at any stage of the drug development process, and we cannot assure you that vantictumab, ipafricept or any of our product candidates will reach the point where they are able to be successfully commercialized.

The toxicity profile of demcizumab has been shown to include cardiopulmonary events, including hypertension that was generally manageable. In certain patients treated with demcizumab, pulmonary hypertension and/or heart failure have been observed, resulting in the implementation of a risk mitigation strategy including limiting the duration of therapy in our Phase Ib trials so as to optimize the therapeutic index, to maximize efficacy while managing tolerability, of the product candidate and minimize potential cardiopulmonary toxicity. The most common treatment-related adverse events experienced by patients treated with demcizumab include fatigue, vomiting, hypertension and nausea. The most common treatment-related adverse events experienced by patients treated with tarextumab (anti-Notch2/3, OMP-59R5) include diarrhea, fatigue and nausea. The most common treatment-related adverse events experienced by patients treated with anti-Notch1 (OMP-52M51) include diarrhea, nausea, fatigue and rash. The toxicity profile of vantictumab has been shown to include certain bone effects, including changes in bone turnover markers, resulting in the implementation of a bone risk mitigation plan involving monitoring, prophylactic supplements and administration of zoledronic acid, if indicated, in our vantictumab trials. The most common treatment-related adverse events experienced by patients treated with vantictumab include fatigue and nausea. The most common treatment-related adverse events experienced by patients treated with ipafricept include decreased appetite, muscle spasms, nausea, and dysgeusia (altered taste sensation). The toxicity profile of ipafricept has also been shown to include certain bone effects, including changes in bone turnover markers, and a bone risk mitigation plan that involves monitoring, prophylactic supplements and administration of zoledronic acid, if indicated, has been implemented in our ipafricept trials.

25

Further treatment of patients in the ongoing trials or subsequent trials of any of our product candidates could reveal significant harmful side effects. We have not conducted complete studies on the long-term effects associated with the use of all of our product candidates. Studies of these long-term effects may be required for regulatory approval and such requirement would delay our introduction of our product candidates, including those under our collaborations with GSK, Bayer, and/or Celgene into the market. These studies could also be required at any time after regulatory approval of any of our product candidates. Absence of long-term data may also limit the approved uses of our products, if any, to short-term use. Some or all of our product candidates may prove to be unsafe for human use, which would materially harm our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

Not applicable

(b)

On July 23, 2013, we closed our IPO, in which we sold an aggregate of 5,520,000 shares of common stock at a price to the public of $17.00 per share. The aggregate offering price for shares sold in the offering was $93.9 million. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-181331), which was declared effective by the SEC on July 17, 2013.

There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus. We invested the funds received in short-term, interest-bearing investment-grade securities and government securities.

(c)

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

(a)

Not applicable

(b)

Not applicable.

ITEM 6. EXHIBITS

See the Exhibit Index on the page immediately following the signature page to this Quarterly Report on Form 10-Q for a list of the exhibits filed as part of this Quarterly Report, which Exhibit Index is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	OncoMed Pharmaceuticals, Inc.
Date: August 7, 2014	By:	/s/ Sunil Patel
		Sunil Patel Chief Financial Officer, Senior Vice President, Corporate Development and Finance (principal financial and accounting officer)

27

EXHIBIT INDEX

Listed and indexed below are all Exhibits filed as part of this report.

Exhibit No.	Description of Exhibit
3.1	Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K on July 23, 2013 and incorporated herein by reference).
3.2	Amended and Restated Bylaws (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K on July 23, 2013 and incorporated herein by reference).
4.1	Form of Common Stock Certificate (filed as Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-181331), effective July 17, 2013, and incorporated herein by reference).
4.2(A)	Amended and Restated Investor Rights Agreement, dated October 7, 2008, by and among the Registrant and certain stockholders (filed as Exhibit 4.4(A) to the Registrant’s Registration Statement on Form S-1 (File No. 333-181331), effective July 17, 2013, and incorporated herein by reference).
4.2(B)	Amendment and Consent, dated September 16, 2010, by and among the Registrant and certain stockholders (filed as Exhibit 4.4(B) to the Registrant’s Registration Statement on Form S-1 (File No. 333-181331), effective July 17, 2013, and incorporated herein by reference).
4.3	Registration Rights Agreement, dated as of December 2, 2013, by and between the Registrant and Celgene Corporation (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K on December 3, 2013 and incorporated herein by reference).
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
101*	The following materials from Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, formatted in eXtensible Business Reporting Language (XBRL) includes: (i) Condensed Balance Sheets at June 30, 2014 (unaudited) and December 31, 2013, (ii) Condensed Statements of Operations and Comprehensive Loss (unaudited) for the three and six months ended June 30, 2014 and 2013, (iii) Condensed Statements of Cash Flows (unaudited) for the six months ended June 30, 2014 and 2013, and (iv) Notes to the Condensed Financial Statements.
*	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

REQUIRED UNDER RULE 13A-14(A) AND 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Paul J. Hastings, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of OncoMed 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 officer(s) 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)) 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) 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

(c) 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 officer 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.

Date: August 7, 2014

/s/ Paul J. Hastings

Paul J. Hastings

Chairman and Chief Executive Officer

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

REQUIRED UNDER RULE 13A-14(A) AND 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Sunil Patel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of OncoMed 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 officer(s) 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)) 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) 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

(c) 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 officer 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.

Date: August 7, 2014

/s/ Sunil Patel

Sunil Patel

Chief Financial Officer, Senior Vice President, Corporate Development and Finance

(principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of OncoMed Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended June 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), Paul J. Hastings, Chairman and Chief Executive Officer of the Company, and Sunil Patel, Chief Financial Officer, Senior Vice President, Corporate Development and Finance, of the Company, respectively, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 7, 2014

/s/ Paul J. Hastings

Paul J. Hastings

Chairman and Chief Executive Officer

(principal executive officer)

/s/ Sunil Patel

Sunil Patel

Chief Financial Officer, Senior Vice President, Corporate Development and Finance

(principal financial and accounting officer)

XML

Subsequent Events - Additional Information (Detail) (GSK [Member], Subsequent Event [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2014
GSK [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Milestone revenue recognized	$ 11.0

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Collaborations - Celgene Strategic Alliance - Additional Information (Detail) (Celgene [Member], USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2014 Program
Related Party Transaction [Line Items]
Collaboration and Option Agreement date	December 2013
Contractual option exercised period of clinical trials	12 years
Number of biologic programs	6
Number of biological program for which company can enter into co-commercialization and co-development agreements	5
Collaboration agreement extension period	2 years
Upfront cash payment received	$ 155.0
Issuance of common stock in connection with research and collaboration agreement	1,470,588
Common stock price per share	$ 15.13
Proceeds from issuance of common stock	22.2
Premium on closing price of common stock value	1.7
Common stock, fair market value	20.5
Profits and losses sharing percentage	50.00%
Initial arrangement consideration	156.7
Estimated revenue recognition period	12 years
Future development milestone payments	90.0
Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Additional contingent consideration for regulatory events	2,800.0
Demcizumab Program [Member]
Related Party Transaction [Line Items]
Regulatory and commercial milestones payments	791.0
Bispecific Antibody Program [Member]
Related Party Transaction [Line Items]
Regulatory and commercial milestones payments	505.0
Undisclosed Pathway Programs [Member]
Related Party Transaction [Line Items]
Regulatory and commercial milestones payments	442.8
Small Molecules [Member]
Related Party Transaction [Line Items]
Regulatory and commercial milestones payments	107.0
Small Molecules [Member] | Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Additional contingent consideration for regulatory events	95.0
Biologic and Small Molecule Therapeutic Programs [Member]
Related Party Transaction [Line Items]
Future development milestone payments	240.0
Biologic Product [Member] | Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Additional contingent consideration for regulatory events	$ 2,700.0

XML

Summary of Significant Accounting Policies - Schedule of Collaborative Research and Development Revenue (Parenthetical) (Detail) (Minimum [Member], Customer Concentration [Member], Revenue [Member])	6 Months Ended
	Jun. 30, 2014
Minimum [Member] | Customer Concentration [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage of revenue represented by major customers	10.00%

XML

Equity Plans - Assumptions Used for Determining Fair Value of Stock Options Using Black-Scholes Valuation Model (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted-average volatility	69.45%		69.65%	68.50%
Weighted-average expected term (years)	6 years 2 months 12 days		6 years 2 months 12 days	6 years 2 months 12 days
Risk-free interest rate	2.22%		2.23%	1.40%
Expected dividend yield

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Cash Equivalents and Short-Term Investments

6 Months Ended

Jun. 30, 2014

Cash And Cash Equivalents [Abstract]

Cash Equivalents and Short-Term Investments

3. Cash Equivalents and Short-Term Investments

The fair value of securities, not including cash, at June 30, 2014 was as follows (in thousands):

	June 30, 2014
	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
Money market funds	$	8,282	$	—	$	—		$	8,282
U.S. treasury bills		242,980		33		(44	)		242,969
Total available-for-sale securities	$	251,262	$	33	$	(44	)	$	251,251
Classified as:
Cash equivalents								$	8,282
Short-term investments									242,969
Total cash equivalents and investments								$	251,251

As of June 30, 2014, the Company had a total of $266.3 million in cash, cash equivalents, and short-term investments, which includes $15.0 million in cash and $251.3 million in cash equivalents and short-term investments.

The fair value of securities, not including cash, at December 31, 2013 was as follows (in thousands):

	December 31, 2013
	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		267,242		14		—		267,256
Total available-for-sale securities	$	275,222	$	14	$	—	$	275,236
Classified as:
Cash equivalents							$	167,973
Short-term investments								107,263
Total cash equivalents and investments							$	275,236

All available-for-sale securities held as of June 30, 2014 and December 31, 2013 had contractual maturities of less than one year. There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

XML

Fair Value Measurements - Additional Information (Detail) (USD $)	Jun. 30, 2014
Fair Value Disclosures [Abstract]
Transfers between Level 1 and Level 2	$ 0

XML

Fair Value Measurements - Summary of Company's Financial Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Assets:
Assets fair value disclosure	$ 251,251	$ 275,236
Money Market Funds [Member]
Assets:
Assets fair value disclosure	8,282	7,980
U.S. Treasury Bills [Member]
Assets:
Assets fair value disclosure	242,969	267,256
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Assets:
Assets fair value disclosure	8,282	7,980
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Assets:
Assets fair value disclosure	242,969	267,256
Fair Value, Measurements, Recurring [Member] | Money Market Funds [Member] | Level 1 [Member]
Assets:
Assets fair value disclosure	8,282	7,980
Fair Value, Measurements, Recurring [Member] | U.S. Treasury Bills [Member] | Level 2 [Member]
Assets:
Assets fair value disclosure	$ 242,969	$ 267,256

XML

Collaborations - Company Recognized Revenues from Collaboration Agreements (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue	$ 6,015	$ 2,439	$ 12,030	$ 4,878
Total revenue	6,015	2,932	12,030	5,863
Collaborative Arrangement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Total revenue	6,015	2,932	12,030	5,863
Collaborative Arrangement [Member] | GSK [Member] | Recognition of Upfront Payments [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue	312	493	624	985
Collaborative Arrangement [Member] | Bayer [Member] | Recognition of Upfront Payments [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue	2,439	2,439	4,878	4,878
Collaborative Arrangement [Member] | Celgene [Member] | Recognition of Upfront Payments [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration revenue	$ 3,264		$ 6,528

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Collaborations - GSK Strategic Alliance - Additional Information (Detail) (GSK [Member], USD $) In Millions, unless otherwise specified	6 Months Ended					6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Oct. 31, 2012	Dec. 31, 2013 Maximum [Member]	Dec. 31, 2013 Minimum [Member]	Jun. 30, 2014 Anti-Notch 1 [Member]	Jun. 30, 2014 Tarextumab Anti-Notch 2/3, OMP-59R5 [Member]
Related Party Transaction [Line Items]
Deferred revenue	$ 11.0	$ 8.0	$ 3.0
Development milestone payments	81.0
Remaining potential development milestones	5.0
Remaining potential development milestone payment						16.0
Bonus payment						5.0	10.0
Milestones on completion of exercise options							60.0
Contingent consideration payments	309.0
Contingent consideration payments for achievement of worldwide net sales	280.0
Potential future payments	$ 670.0
Deemed ownership percentage of related party				10.00%	10.00%

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other interim period or for any other future year. The balance sheet as of December 31, 2013 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 18, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income (loss). The cost of available-for-sale securities sold is based on the specific-identification method.

Revenue Recognition

The Company generates substantially all its revenue from collaborative research and development agreements with pharmaceutical companies. The terms of the agreements may include nonrefundable upfront payments, milestone payments, other contingent payments and royalties on any product sales derived from collaborations. These multiple element arrangements are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting.

The determination of stand-alone value is generally based on whether any deliverable has stand-alone value to the customer. The Company determines how to allocate arrangement consideration to identified units of accounting based on the selling price hierarchy provided under the relevant guidance. The selling price used for each unit of accounting is based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available or estimated selling price if neither vendor-specific nor third-party evidence is available. Management may be required to exercise considerable judgment in determining whether a deliverable is a separate unit of accounting and in estimating the selling prices of identified units of accounting for new agreements.

Typically, the Company has not granted licenses to collaborators at the beginning of its arrangements and thus there are no delivered items separate from the research and development services provided. As such, upfront payments are recorded as deferred revenue in the balance sheet and are recognized as collaboration revenue over the estimated period of performance that is consistent with the terms of the research and development obligations contained in the collaboration agreement. The Company regularly reviews the estimated period of performance based on the progress made under each arrangement.

Payments that are contingent upon achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. Milestones are defined as an event that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Other contingent payments received for which payment is contingent solely on the results of a collaborative partner’s performance (bonus payments) are not accounted for using the milestone method. Such bonus payments will be recognized as revenue when collectability is reasonably assured. Payments related to options to license the Company’s program candidates are considered substantive if, at the inception of the arrangement, the Company is at risk as to whether the collaboration partner will choose to exercise the option. Factors that the Company considers in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. For arrangements under which an option is considered substantive, the Company does not consider the item underlying the option to be a deliverable at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration, assuming the option is not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option is priced at a significant and incremental discount, the Company would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amount would be included in allocable arrangement consideration.

Customer Concentration

Customers whose collaborative research and development revenue accounted for 10% or more of total revenues were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
GlaxoSmithKline LLC (“GSK”)	*	17%	*	17%
Bayer Pharma AG (“Bayer”)	41%	83%	41%	83%
Celgene Corporation (“Celgene”)	54%	—	54%	—

* Less than 10%.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of convertible preferred stock, common stock subject to repurchase, stock options and warrants are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Recent Adopted Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued final guidance that a performance target that affects vesting of a share-based payment and that could be achieved after the requisite service period is a performance condition under Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost for such an award would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the effective date. The Company does not believe the adoption of this guidance will have a material impact on its financial statement.

In May 2014, the FASB and the International Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606)—Revenue from Contracts with Customers (“ASU 2014-09”). This ASU affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. It also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company for annual periods beginning after December 15, 2016, including interim periods within that period. Early adoption is not permitted under U.S. GAAP. The Company is currently evaluating the impact of adoption on its financial statements.

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Collaborations - Bayer Strategic Alliance - Additional Information (Detail) (Bayer [Member], USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Related Party Transaction [Line Items]
Future development milestone payments	$ 10.0
Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	185.0
Achievement of Specified Future Product Sales [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	1,000.0
Biologic Product [Member]
Related Party Transaction [Line Items]
Future development milestone payments	55.0
Biologic Product [Member] | Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	135.0
Biologic Product [Member] | Achievement of Specified Future Product Sales [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	862.5
Small Molecules [Member]
Related Party Transaction [Line Items]
Future development milestone payments	24.0
Small Molecules [Member] | Achievement of Regulatory Events [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	50.0
Small Molecules [Member] | Achievement of Specified Future Product Sales [Member]
Related Party Transaction [Line Items]
Contingent consideration payments for regulatory events	$ 140.0

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Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 23,379	$ 208,931
Short-term investments	242,969	107,263
Receivables - related parties	23	23
Accounts receivable	48
Prepaid and other current assets	2,784	2,527
Total current assets	269,203	318,744
Property and equipment, net	5,168	4,641
Other assets	9,933	10,300
Total assets	284,304	333,685
Current liabilities:
Accounts payable	3,033	5,706
Income tax payable		10,758
Accrued liabilities	12,062	9,860
Current portion of deferred revenue	34,625	35,059
Current portion of deferred rent	651	624
Liability for shares issued with repurchase rights	10	10
Total current liabilities	50,381	62,017
Deferred revenue, less current portion	137,275	148,871
Deferred rent, less current portion	2,809	3,146
Non-current income tax payable	1,528	1,515
Liability for shares issued with repurchase rights, less current portion	8	14
Total liabilities	192,001	215,563
Commitments and contingencies
Stockholders' equity:
Preferred stock, value	0	0
Common stock value	30	29
Additional paid-in capital	296,178	292,505
Accumulated other comprehensive income (loss)	(11)	14
Accumulated deficit	(203,894)	(174,426)
Total stockholders' equity	92,303	118,122
Total liabilities and stockholders' equity	$ 284,304	$ 333,685

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Condensed Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating activities
Net loss	$ (29,468)	$ (18,242)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	685	701
Gain on disposal of equipment	(63)
Stock-based compensation	2,197	490
Revaluation of convertible preferred stock warrant liability		146
Prepaid convertible preferred stock warrant expense		1
Amortization of discount on short-term investments	(29)	(27)
Changes in operating assets and liabilities:
Receivables - related parties		4,000
Accounts receivable	(48)
Prepaid and other current assets	(257)	(101)
Other assets	367	(718)
Accounts payable	(2,660)	(38)
Accrued liabilities	2,202	2,211
Deferred revenue	(12,030)	2,137
Deferred rent	(310)	(254)
Income tax payable	(10,758)
Net cash used in operating activities	(50,172)	(9,694)
Investing activities
Purchases of property and equipment	(1,147)	(123)
Purchases of short-term investments	(282,975)	(25,290)
Maturities of short-term investments	147,271	35,000
Net cash (used in) provided by investing activities	(136,851)	9,587
Financing activities
Proceeds from issuance of common stock from exercise of options	903	17
Proceeds from issuance of common stock under employee stock purchase plan	568
Net cash provided by financing activities	1,471	17
Net (decrease) increase in cash and cash equivalents	(185,552)	(90)
Cash and cash equivalents at beginning of period	208,931	16,263
Cash and cash equivalents at end of period	$ 23,379	$ 16,173

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Equity Plans - Summary of Activity under 2004 Plan and 2013 Stock Plan (Detail) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Shares Available for Grant of Options and Awards, Beginning Balance	117
Shares Available for Grant of Options and Awards, Additional Options authorized	1,176
Shares Available for Grant of Options and Awards, Options granted	(202)
Shares Available for Grant of Options and Awards, Options exercised
Shares Available for Grant of Options and Awards, Options cancelled	25
Shares Available for Grant of Options and Awards, RSUs granted	(294)
Shares Available for Grant of Options and Awards, Ending Balance	822
Options and Awards Outstanding, Beginning Balance	2,930
Options and Awards Outstanding, Additional Options authorized
Options and Awards Outstanding, Options granted	202
Options and Awards Outstanding, Options exercised	(299)
Options and Awards Outstanding, Options cancelled	(25)
Options and Awards Outstanding, RSUs granted	294
Options and Awards Outstanding, Ending Balance	3,102

XML

Organization - Additional Information (Detail) (USD $)	6 Months Ended		0 Months Ended		0 Months Ended
	Jun. 30, 2014 Segment	Dec. 31, 2013	Jul. 23, 2013 Initial Public Offering [Member]	Jul. 23, 2013 Initial Public Offering [Member]	Jul. 23, 2013 Initial Public Offering [Member] Underwriters [Member]
Class of Stock [Line Items]
Number of operating segment	1
Incorporation date	Jul. 31, 2004
Initial Public Offering effective date	Jul. 17, 2013
Initial Public Offering closure date	Jul. 23, 2013
Common stock, shares issued			5,520,000		720,000
Cash proceeds from IPO, net of underwriting discounts and commissions and expenses			$ 82,700,000
Conversion of preferred stock into common stock, shares				21,180,280
Conversion of preferred stock into common stock, carrying value	$ 0	$ 0		$ 182,800,000

XML

Equity Plans - Schedule of Stock-Based Compensation Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	$ 1,507	$ 265	$ 2,197	$ 490
Research and Development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	977	134	1,388	274
General and Administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation	$ 530	$ 131	$ 809	$ 216

XML

Summary of Significant Accounting Policies - Schedule of Collaborative Research and Development Revenue (Detail) (Revenue [Member], Customer Concentration [Member])	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
GSK [Member]
Concentration Risk [Line Items]
Collaborative research and development revenue, Percentage		17.00%		17.00%
Bayer [Member]
Concentration Risk [Line Items]
Collaborative research and development revenue, Percentage	41.00%	83.00%	41.00%	83.00%
Celgene [Member]
Concentration Risk [Line Items]
Collaborative research and development revenue, Percentage	54.00%		54.00%

XML

Organization

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Organization

1. Organization

OncoMed Pharmaceuticals, Inc. (“OncoMed” or the “Company”) is a clinical development-stage biotechnology company focused on discovering and developing first-in-class protein therapeutics targeting cancer stem cells (“CSCs”). The Company was originally incorporated in July 2004 in Delaware. The Company’s operations are based in Redwood City, California and it operates in one segment.

The Company has five anti-CSC product candidates in clinical development. Additionally, other product candidates are in preclinical development with Investigational New Drug (“IND”) filings planned for as early as late 2014 or 2015. The first candidate, demcizumab, has completed a single-agent Phase Ia safety and dose escalation trial and is currently in Phase Ib combination therapy trials in patients with non-small cell lung cancer (with carboplatin and pemetrexed) and pancreatic cancer (with gemcitabine and Abraxane^®) and a Phase Ib/II trial combining demcizumab with paclitaxel in ovarian cancer. The second candidate, tarextumab (anti-Notch2/3, OMP-59R5), completed a Phase Ia safety and dose escalation trial and is in the Phase II portion of a Phase Ib/II trial in pancreatic cancer (with gemcitabine and Abraxane^®) (see Note 8. Subsequent Events) and in a second Phase Ib/II trial in small cell lung cancer (with etoposide and platinum chemotherapy). The third candidate, vantictumab (OMP-18R5), is in a single-agent Phase Ia trial and three separate Phase Ib combination trials, one trial each in patients with breast cancer (with paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and non-small cell lung cancer (with docetaxel). The fourth candidate, ipafricept (Fzd8-Fc, OMP-54F28), is in a single-agent Phase Ia safety and dose escalation trial in solid tumor malignancies, and is currently in three separate Phase Ib combination trials, one trial each in patients with ovarian cancer (with carboplatin and paclitaxel), pancreatic cancer (with gemcitabine and Abraxane^®) and hepatocellular carcinoma (with sorafenib). The Company’s Phase I clinical trials for both vantictumab and ipafricept have been placed on partial clinical hold by the U.S. Food and Drug Administration (“FDA”) following a voluntary halt of the trials by the Company. The fifth candidate, anti-Notch1 (OMP-52M51), is in two single-agent Phase Ia safety and dose escalation trials in hematologic and solid tumor malignancies.

Initial Public Offering

On July 17, 2013, the Company’s registration statement on Form S-1 (File No. 333-181331) relating to the initial public offering (the “IPO”) of its common stock was declared effective by the SEC. The IPO closed on July 23, 2013 at which time the Company sold 5,520,000 shares of its common stock, which included 720,000 shares of common stock purchased by the underwriters upon the full exercise of their option to purchase additional shares of common stock to cover over-allotments. The Company received net cash proceeds of $82.7 million from the IPO, net of underwriting discounts and commissions and expenses paid by the Company.

On July 23, 2013, prior to the closing of the IPO, all outstanding shares of convertible preferred stock converted into 21,180,280 shares of common stock with the related carrying value of $182.8 million reclassified to common stock and additional paid-in capital. In addition, all convertible preferred stock warrants were also thereby converted into common stock warrants. Additionally, all shares of Class B common stock were converted into Class A common stock, and the Class A common stock was redesignated “common stock”.

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Condensed Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	145,000,000	145,000,000
Common stock, shares issued	29,738,391	29,397,964
Common stock, shares outstanding	29,738,391	29,397,964

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Cash Equivalents and Short-Term Investments (Tables)

6 Months Ended

Jun. 30, 2014

Cash And Cash Equivalents [Abstract]

Schedule of Fair Value of Securities, Not Including Cash

The fair value of securities, not including cash, at June 30, 2014 was as follows (in thousands):

	June 30, 2014
	Amortized Cost		Gross Unrealized					Fair Value
			Gains		Losses
Money market funds	$	8,282	$	—	$	—		$	8,282
U.S. treasury bills		242,980		33		(44	)		242,969
Total available-for-sale securities	$	251,262	$	33	$	(44	)	$	251,251
Classified as:
Cash equivalents								$	8,282
Short-term investments									242,969
Total cash equivalents and investments								$	251,251

As of June 30, 2014, the Company had a total of $266.3 million in cash, cash equivalents, and short-term investments, which includes $15.0 million in cash and $251.3 million in cash equivalents and short-term investments.

The fair value of securities, not including cash, at December 31, 2013 was as follows (in thousands):

	December 31, 2013
	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		267,242		14		—		267,256
Total available-for-sale securities	$	275,222	$	14	$	—	$	275,236
Classified as:
Cash equivalents							$	167,973
Short-term investments								107,263
Total cash equivalents and investments							$	275,236

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	OMED
Entity Registrant Name	OncoMed Pharmaceuticals Inc
Entity Central Index Key	0001302573
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		29,760,879

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Summary of Company's Financial Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	8,282	$	—	$	—	$	8,282
U.S. treasury bills		—		242,969		—		242,969
Total	$	8,282	$	242,969	$	—	$	251,251
	December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		—		267,256		—		267,256
Total	$	7,980	$	267,256	$	—	$	275,236

XML

Condensed Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenue:
Collaboration revenue	$ 6,015	$ 2,439	$ 12,030	$ 4,878
Collaboration revenue - related party		493		985
Total revenue	6,015	2,932	12,030	5,863
Operating expenses:
Research and development	18,167	10,475	34,876	20,051
General and administrative	3,440	1,952	6,653	3,936
Total operating expenses	21,607	12,427	41,529	23,987
Loss from operations	(15,592)	(9,495)	(29,499)	(18,124)
Interest and other income (expense), net	(5)	(149)	31	(118)
Net loss	$ (15,597)	$ (9,644)	$ (29,468)	$ (18,242)
Net loss per common share, basic and diluted	$ (0.53)	$ (8.83)	$ (1.00)	$ (16.77)
Shares used to compute net loss per common share, basic and diluted	29,601,010	1,091,782	29,522,556	1,087,863

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Equity Plans

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity Plans

6. Equity Plans

Equity Incentive Award and Stock Incentive Plans

As of June 30, 2014, a total of 1,768,645 shares of common stock have been authorized under the 2013 Equity Incentive Award Plan (the “2013 Plan”), including the additional 1,175,918 shares of common stock that became available for future issuance under the 2013 Plan as of January 1, 2014 as a result of an annual automatic increase provision in the 2013 Plan. As of June 30, 2014, a total of 940,548 shares are subject to options outstanding under the 2013 Plan. There are 2,161,301 shares subject to options outstanding under 2004 Stock Incentive Plan (the “2004 Plan”) as of June 30, 2014, which will become available for issuance under the 2013 Plan to the extent the options are forfeited or lapse unexercised without issuance of such shares under the 2004 Plan.

The following table summarizes activity under 2004 Plan and 2013 Plan, including grants to nonemployees and restricted stock units (“RSUs”) granted:

(In thousands)	Shares Available for Grant of Options and Awards			Options and Awards Outstanding
Balances at December 31, 2013		117			2,930
Additional shares authorized		1,176			—
Options granted		(202	)		202
Options exercised		—			(299	)
Options cancelled		25			(25	)
RSUs granted		(294	)		294
Balances at June 30, 2014		822			3,102

The weighted-average grant-date estimated fair value of options and RSUs granted during the six months ended June 30, 2014 was $17.96 per share and $31.03 per share, respectively.

Liability for Shares with Repurchase Rights

At June 30, 2014 and December 31, 2013, there were 4,036 and 5,088 shares of common stock, respectively, subject to the Company’s right of repurchase at price of $4.56 per share. At June 30, 2014 and December 31, 2013, the Company recorded $18,000 and $23,000, respectively, as liabilities associated with shares issued with repurchase rights.

Employee Stock Purchase Plan

As of June 30, 2014, a total of 593,979 shares of common stock have been authorized and 553,229 shares of common stock are available for future issuance under the Company’s Employee Stock Purchase Plan (the “ESPP”). This authorized number includes the additional 293,979 shares of common stock that became available for future issuance under the ESPP as of January 1, 2014 as a result of an annual automatic increase provision in the ESPP. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

During the six months ended June 30, 2014, the Company issued 40,750 shares under the ESPP. The Company used the following assumptions to estimate the fair value of the ESPP offered for the six months ended June 30, 2014: expected term of 0.5 years, weighted-average volatility from 65.7% to 115.4%, risk-free interest rate from 0.05% to 0.08% and expected dividend yield of zero.

Restricted Stock Units

In March 2014, the Company awarded 293,980 RSUs under the 2013 Plan. Each vested RSU represents the right to receive one share of common stock. The fair value of the RSU awards was calculated based on the NASDAQ quoted stock price on the date of the grant with the expense being recognized over the vesting period. The RSUs are generally scheduled to vest at the end of three years at March 31, 2017. However, the vesting will be accelerated to 25% of the awarded RSUs upon the payment by Celgene of a designated milestone payment related to Phase II clinical trials of demcizumab. The stock-based compensation expense for these RSUs is being amortized on the straight-line basis over the three-year vesting period. The company continues to assess at each reporting date whether achievement of any performance condition is probable and would begin recognizing compensation costs based on the accelerated vesting if and when achievement of the performance condition becomes probable. There were no RSUs awarded during the three months ended June 30, 2014. The Company has recognized the stock-based compensation expense of $745,000 and $803,000 related to these RSUs for the three and six months ended June 30, 2014, respectively.

Stock-Based Compensation

The following table presents stock-based compensation expense recognized for stock options, RSUs and the ESPP in the Company’s statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Research and development	$	977	$	134	$	1,388	$	274
General and administrative		530		131		809		216
Total	$	1,507	$	265	$	2,197	$	490

As of June 30, 2014, the Company had $8.0 million and $8.3 million of unrecognized compensation expense related to unvested stock options and RSUs, respectively, which are expected to be recognized over an estimated weighted-average period of 2.67 years and 2.75 years, respectively.

The estimated grant date fair value of employee stock options was calculated using the Black-Scholes valuation model, based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Weighted-average volatility		69.45	%		—	%		69.65	%		68.5	%
Weighted-average expected term (years)		6.2			—			6.2			6.2
Risk-free interest rate		2.22	%		—	%		2.23	%		1.40	%
Expected dividend yield		—			—			—			—

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Collaborations

6 Months Ended

Jun. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaborations

5. Collaborations

The Company has recognized the following revenues from its collaboration agreements with Celgene, GSK and Bayer during the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
GSK: Recognition of upfront payments	$	312	$	493	$	624	$	985
Bayer: Recognition of upfront payments		2,439		2,439		4,878		4,878
Celgene: Recognition of upfront payments		3,264		—		6,528		—
Total collaboration related revenue	$	6,015	$	2,932	$	12,030	$	5,863

GSK Strategic Alliance

In October 2012, the Company received a $3.0 million payment from GSK upon the initiation of the Phase Ib portion of the tarextumab (anti-Notch2/3, OMP-59R5) program which was considered as an advance payment on a future substantive milestone. In June 2013, the Company also received an $8.0 million advance payment from GSK pursuant to the terms of its tarextumab program. The total of $11.0 million has been recorded as deferred revenue and will be recognized as collaboration revenue upon the achievement of the underlying substantive milestone. See Note 8. Subsequent Events.

As of June 30, 2014, the Company was eligible to receive in its collaboration with GSK up to $81.0 million in future development milestone payments prior to the completion of certain Phase II proof-of-concept (“POC”) clinical trials. These remaining potential development milestones include up to $5.0 million for the advancement into specified clinical testing related to the anti-Notch1 (OMP-52M51) program, up to $16.0 million for the start of certain Phase II clinical trials, including a $5.0 million bonus payment, and up to $60.0 million if GSK exercises its options for the anti-Notch1 and tarextumab programs, including a $10.0 million bonus payment. GSK has the option to license the anti-Notch1 program as early as the end of Phase Ia or both programs at Phase II POC, and will be responsible for all further development and commercialization following such option exercise. If GSK successfully develops and commercializes both candidates for more than one indication, the Company could receive contingent consideration payments of up to $309.0 million for the achievement of regulatory events and up to $280.0 million upon the achievement of certain levels of worldwide net sales, for a total of $670.0 million of potential future payments. In addition, the Company can earn royalty payments on all future collaboration product sales, if any. As all contingent consideration is based solely on the performance of GSK, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with GSK.

As of December 31, 2013, GSK was no longer considered a related party due to an equity placement from Celgene pursuant to the collaboration agreement the Company entered into with Celgene in December 2013 that reduced GSK’s ownership of the Company’s voting common stock to below 10% of the Company’s total outstanding stock. Previously, GSK was deemed a related party by ownership of more than 10% of the voting common stock of the Company. Accordingly, related party transactions were reported as receivable—related party in the Company’s balance sheets and collaboration revenue—related party in the Company’s statements of operations as of June 30, 2013.

Bayer Strategic Alliance

As of June 30, 2014, the Company was eligible to receive up to $10.0 million in future development milestone payments in its collaboration with Bayer for the Company’s development of biologic product candidates, prior to the point that Bayer exercises its options. The Company is eligible to receive up to $55.0 million if Bayer exercises its options for biologic product candidates. Bayer will be responsible for all further development and commercialization following the exercise of an option for a product candidate. The Company is eligible to receive up to $24.0 million in development milestone payments for the small molecule candidates. If Bayer successfully develops and commercializes all of the product candidates for more than one indication, the Company could receive contingent consideration payments of up to $185.0 million for the achievement of regulatory events (up to $135.0 million for biologics and $50.0 million for small molecules) and up to $1.0 billion upon the achievement of specified future product sales (up to $862.5 million for biologics and $140.0 million for small molecules). As all contingent consideration is based solely on the performance of Bayer, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with Bayer.

Celgene Strategic Alliance

In December 2013, the Company entered into a Master Research and Collaboration Agreement (the “Agreement”) with Celgene pursuant to which the Company and Celgene will collaborate on research and development programs directed to the discovery and development of novel biologic therapeutic programs to target CSCs, and, if Celgene exercises an option to do so, the discovery, development and commercialization of novel small molecule therapeutic programs to target CSCs. Pursuant to the biologic therapeutic programs, the Company will conduct further development of demcizumab (OMP-21M18), anti-DLL4/anti-VEGF bispecific antibody (OMP-305B83), biologic therapeutics directed to targets in the RSPO-LGR signaling pathway, and biologic therapeutics directed to targets in an undisclosed pathway. Celgene has options to obtain exclusive licenses to develop further and commercialize biologic therapeutics in specified programs, which may be exercised during time periods specified in the agreement through completion of certain clinical trials, provided that such option exercise occurs within the contractual option period of 12 years (“Option Period”). The Company at its option may enter into co-commercialization and co-development agreements for five of the six biologic programs. During the Option Period, the Company will provide research and development services and the resultant data to Celgene for analysis in order for Celgene to determine whether or not to exercise its options.

Pursuant to the Agreement, the Company leads the discovery and development of biologic therapeutic products prior to Celgene’s exercise of its option. With respect to biologic therapeutics targeting the RSPO-LGR signaling pathway and the undisclosed pathway, prior to Celgene’s exercise of its option for a given program, Celgene is required to designate each program for which it wishes to retain the right to exercise its option, based on data generated by the Company, for up to a maximum of four programs. The Company is entitled to receive certain fees for each program that Celgene designates. Celgene has the right to designate programs until December 2, 2017, with an option to extend for another two years upon payment of an extension fee. Following such designation(s), Celgene will have the right to exercise its option for each such program within the Option Period.

With respect to biologic therapeutic programs, with the exception of one program targeting either the RSPO-LGR signaling pathway or the undisclosed pathway, and any program for which the Company elects not to exercise its co-development and co-commercialization right, following Celgene’s exercise of its option, the Company and Celgene will enter into an agreed form of co-development and co-commercialization agreement for such program. The Company will have the right to co-develop and to co-commercialize products arising out of such program in the United States, and Celgene will have the exclusive right to develop and commercialize products arising out of such program outside of the United States. The Company’s involvement in co-commercialization will include participation in specified promotion activities by means of a dedicated sales force of up to half of the overall sales force for the applicable program products, as well as marketing and other commercial activities, with Celgene recording all product sales. The Company will also bear a one-third share of all development costs, with Celgene bearing the remaining two-thirds. However, for one program targeting either the RSPO-LGR signaling pathway or the undisclosed pathway, and any program for which the Company elects not to co-develop and co-commercialize products arising from such program, the Company and Celgene will instead enter into an agreed form of a license agreement, pursuant to which Celgene retains all rights to develop further and commercialize biologic therapeutic products arising from such program on a worldwide basis, with certain support for development from the Company. The Company may elect not to co-develop and co-commercialize any products arising under such programs at any time, either prior to, or following Celgene’s option exercise, with the exception of a defined period of time near commercial launch of a product under a program. If the Company opts out of its co-development and co-commercialization rights with respect to a program, Celgene will have the exclusive right to develop and commercialize products arising out of such program, at Celgene’s expense.

With respect to small molecule therapeutics targeting an undisclosed pathway, following Celgene’s exercise of its option, the Company will collaborate with Celgene on the discovery of and research on small molecule therapeutics, but Celgene will be solely responsible for development and commercialization of such therapeutics.

Under the terms of the Agreement, the Company received an upfront cash payment of $155.0 million from Celgene. In addition, Celgene purchased 1,470,588 shares of the Company’s common stock at a price of $15.13 per share, resulting in gross proceeds of $22.2 million. The price paid by Celgene for the common stock represented a premium over the closing price of the Company’s common stock on the date of the Agreement. The Company accounted for the $1.7 million premium as additional consideration under the Agreement and the common stock was recorded at its fair market value of $20.5 million. The Company is also eligible to receive option fees upon Celgene’s exercise of the option for each biologic therapeutic program. The collaboration also includes milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The payments for option exercise, program designation and achievement of development, regulatory and commercial milestones may total up to (1) $791.0 million for products in the demcizumab program, including a payment upon the achievement of certain pre-determined safety criteria in Phase II clinical trials with respect to demcizumab, (2) $505.0 million for products in the anti-DLL4/anti-VEGF bispecific program, (3) up to $442.8 million for each of the four products achieving regulatory approval that are directed to targets in each of the RSPO-LGR signaling pathway and the undisclosed pathway programs for which Celgene exercises its option, and (4) $107.0 million for products in the small molecule therapeutic program.

For programs in which the Company is co-developing and co-commercializing biologic therapeutic products in the United States, the Company is also entitled to share 50% of all product profits and losses in the United States. For such programs outside the United States, the Company is eligible to receive tiered royalties equal to a percentage of net product sales outside of the United States. If the Company elects not to co-develop or co-commercialize biologic therapeutic products or does not have the right to do so for a given program, Celgene is required to pay the Company tiered royalties equal to a percentage of net product sales worldwide, with such royalties being increased where the Company had the right to co-develop and co-commercialize such biologic therapeutic products under such program but elected not to do so. The Company is responsible for funding all research and development activities for biologic therapeutics under the collaboration prior to Celgene’s exercise of the option for such program.

In addition to the development and regulatory milestone payments the Company will be entitled to receive if Celgene exercises its option for the small molecule program, the Company may also receive royalties equal to a percentage of worldwide net sales of small molecule products in the low- to mid-single digits.

The Agreement will terminate upon the expiration of all of Celgene’s payment obligations under all license or co-development and co-commercialization agreements entered into with respect to programs following Celgene’s exercise of an option for a given program, or if Celgene fails to exercise any of its options within the Option Period. The Agreement will also terminate, on a program-by-program basis, on the expiration of the option term, if Celgene fails to exercise its option for such program. The Company may also terminate the Agreement with respect to one or more programs in the event that Celgene challenges the licensed patents with respect to such program.

If Celgene does not exercise its option with respect to a biologic therapeutic program within the Option Period, the Company retains worldwide rights to such program(s), except that if Celgene exercises its option to obtain a license for either the demcizumab program or the anti-DLL4/anti-VEGF bispecific program, then for so long as such license is in effect, the Company cannot develop or commercialize products under the other of such two programs. In addition, under certain termination circumstances, the Company would also have worldwide rights to the terminated biologic therapeutic programs.

The Company’s deliverables under the arrangement with Celgene are research and development services, including the obligation that the Company provides the resultant data to Celgene, which are accounted for as a single unit of accounting. The Company has determined that the options to license programs are substantive options. Additionally, as a result of the uncertain outcome of the discovery, research and development activities, the Company is at risk with regard to whether Celgene will exercise the options. Accordingly, the options are not considered deliverables at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration. The Company has identified the initial arrangement consideration to be approximately $156.7 million which will be recognized on a straight-line basis over the estimated period of performance of 12 years. Due to the uncertain timeline associated with the deliverables at the outset of the Agreement, the Company determined it will use 12 years, which is the maximum period under the Agreement for Celgene to exercise its options. The Company will reevaluate the estimated performance period at each reporting period.

As of June 30, 2014, the Company was eligible to receive in its collaboration with Celgene up to $90.0 million in future development milestones across all programs under the collaboration, prior to the point that Celgene exercises its options. The Company is also eligible to receive up to $240.0 million of contingent consideration if Celgene exercises all its options for the biologic and small molecule therapeutic programs. Celgene will be responsible for all further development and commercialization following the exercise of the options for specified programs. If Celgene successfully develops and commercializes all of the product candidates, the Company could receive additional contingent consideration of up to $2.8 billion for the achievement of regulatory events (up to $2.7 billion for biologics and $95.0 million for small molecules). As all contingent consideration is based solely on the performance of Celgene, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the Agreement.

For additional information about the Company’s collaborations with GSK, Bayer and Celgene, including the upfront payments received under those collaborations, see Note 10 to the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with SEC on March 18, 2014.

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Summary of Significant Accounting Policies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2014
Revenue [Member] | Customer Concentration [Member] | Minimum [Member]
Schedule of Available-for-sale Securities [Line Items]
Concentration risk percentage of revenue represented by major customers	10.00%
Cash and Cash Equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Short-term investments maturities, maximum	90 days
Short-Term Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Short-term investments maturities, maximum	365 days
Short-term investments maturities, minimum	90 days

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Collaborations (Tables)

6 Months Ended

Jun. 30, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Company Recognized Revenues from Collaboration Agreements

The Company has recognized the following revenues from its collaboration agreements with Celgene, GSK and Bayer during the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
GSK: Recognition of upfront payments	$	312	$	493	$	624	$	985
Bayer: Recognition of upfront payments		2,439		2,439		4,878		4,878
Celgene: Recognition of upfront payments		3,264		—		6,528		—
Total collaboration related revenue	$	6,015	$	2,932	$	12,030	$	5,863

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, that are necessary for a fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the year ending December 31, 2014 or for any other interim period or for any other future year. The balance sheet as of December 31, 2013 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 18, 2014.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income (loss). The cost of available-for-sale securities sold is based on the specific-identification method.

Revenue Recognition

Revenue Recognition

The Company generates substantially all its revenue from collaborative research and development agreements with pharmaceutical companies. The terms of the agreements may include nonrefundable upfront payments, milestone payments, other contingent payments and royalties on any product sales derived from collaborations. These multiple element arrangements are analyzed to determine whether the deliverables can be separated or whether they must be accounted for as a single unit of accounting.

The determination of stand-alone value is generally based on whether any deliverable has stand-alone value to the customer. The Company determines how to allocate arrangement consideration to identified units of accounting based on the selling price hierarchy provided under the relevant guidance. The selling price used for each unit of accounting is based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available or estimated selling price if neither vendor-specific nor third-party evidence is available. Management may be required to exercise considerable judgment in determining whether a deliverable is a separate unit of accounting and in estimating the selling prices of identified units of accounting for new agreements.

Typically, the Company has not granted licenses to collaborators at the beginning of its arrangements and thus there are no delivered items separate from the research and development services provided. As such, upfront payments are recorded as deferred revenue in the balance sheet and are recognized as collaboration revenue over the estimated period of performance that is consistent with the terms of the research and development obligations contained in the collaboration agreement. The Company regularly reviews the estimated period of performance based on the progress made under each arrangement.

Payments that are contingent upon achievement of a substantive milestone are recognized in their entirety in the period in which the milestone is achieved. Milestones are defined as an event that can only be achieved based on the Company’s performance and there is substantive uncertainty about whether the event will be achieved at the inception of the arrangement. Events that are contingent only on the passage of time or only on counterparty performance are not considered milestones. Further, the amounts received must relate solely to prior performance, be reasonable relative to all of the deliverables and payment terms within the agreement and commensurate with the Company’s performance to achieve the milestone after commencement of the agreement. Other contingent payments received for which payment is contingent solely on the results of a collaborative partner’s performance (bonus payments) are not accounted for using the milestone method. Such bonus payments will be recognized as revenue when collectability is reasonably assured. Payments related to options to license the Company’s program candidates are considered substantive if, at the inception of the arrangement, the Company is at risk as to whether the collaboration partner will choose to exercise the option. Factors that the Company considers in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. For arrangements under which an option is considered substantive, the Company does not consider the item underlying the option to be a deliverable at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration, assuming the option is not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option is priced at a significant and incremental discount, the Company would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amount would be included in allocable arrangement consideration.

Customer Concentration

Customer Concentration

Customers whose collaborative research and development revenue accounted for 10% or more of total revenues were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
GlaxoSmithKline LLC (“GSK”)	*	17%	*	17%
Bayer Pharma AG (“Bayer”)	41%	83%	41%	83%
Celgene Corporation (“Celgene”)	54%	—	54%	—

* Less than 10%.

Net Loss per Common Share

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of convertible preferred stock, common stock subject to repurchase, stock options and warrants are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Recent Adopted Accounting Pronouncements

Recent Adopted Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued final guidance that a performance target that affects vesting of a share-based payment and that could be achieved after the requisite service period is a performance condition under Accounting Standards Codification (“ASC”) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost for such an award would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for all entities for annual periods beginning after December 15, 2015 and interim periods within those annual periods. The guidance should be applied on a prospective basis to awards that are granted or modified on or after the effective date. The Company does not believe the adoption of this guidance will have a material impact on its financial statement.

In May 2014, the FASB and the International Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2014-09 (Topic 606)—Revenue from Contracts with Customers (“ASU 2014-09”). This ASU affects any entity that either enters into contracts with customers to transfer goods and services or enters into contracts for the transfer of nonfinancial assets. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. It also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company for annual periods beginning after December 15, 2016, including interim periods within that period. Early adoption is not permitted under U.S. GAAP. The Company is currently evaluating the impact of adoption on its financial statements.

Fair Value Measurement Policy

The Company records its financial assets and liabilities at fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable and accounts payable, approximate their fair value due to their short maturities. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

• Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair Value of Financial Instruments Policy

Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies U.S. Treasury securities as Level 2. There were no transfers between Level 1 and Level 2 during the periods presented.

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Net Loss per Common Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Net Loss per Common Share

7. Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	June 30,
	2014		2013
Convertible preferred stock		—		21,180,280
Options to purchase common stock		2,807,869		2,544,101
RSUs		293,980		—
Warrants to purchase convertible preferred stock		—		38,210
		3,101,849		23,762,591

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Subsequent Events

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

8. Subsequent Events

In July 2014, the Company began dosing patients in the randomized, placebo-controlled Phase II portion of its clinical trial of tarextumab (anti-Notch2/3, OMP-59R5) in pancreatic cancer. As such, the Company recognized $11.0 million of milestone revenue, which had been previously deferred, related to first patient enrollment in the Phase II portion of its tarextumab clinical trial under its agreement with GSK.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Schedule of Collaborative Research and Development Revenue

Customers whose collaborative research and development revenue accounted for 10% or more of total revenues were as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2014	2013	2014	2013
GlaxoSmithKline LLC (“GSK”)	*	17%	*	17%
Bayer Pharma AG (“Bayer”)	41%	83%	41%	83%
Celgene Corporation (“Celgene”)	54%	—	54%	—

* Less than 10%.

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Equity Plans - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended				6 Months Ended		6 Months Ended			1 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 2013 Equity Incentive Award Plan [Member]	Jun. 30, 2014 2004 Stock Incentive Plan [Member]	Jan. 02, 2014 2004 Stock Incentive Plan [Member]	Jun. 30, 2014 Employees Stock Purchase Plan [Member]	Jan. 02, 2014 Employees Stock Purchase Plan [Member]	Jun. 30, 2014 Employees Stock Purchase Plan [Member] Minimum [Member]	Jun. 30, 2014 Employees Stock Purchase Plan [Member] Maximum [Member]	Jun. 30, 2014 Unvested Stock Options [Member]	Mar. 31, 2014 Restricted Stock Units [Member]	Jun. 30, 2014 Restricted Stock Units [Member]	Jun. 30, 2014 Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock shares authorized						1,768,645			593,979
Common stock subject to options outstanding						940,548	2,161,301
Common stock available for future issuance under plan								1,175,918	553,229	293,979
Weighted-average grant-date fair value, granted			$ 17.96													$ 31.03
Repurchase of common stock outstanding	4,036		4,036		5,088
Repurchase prices of common stock			$ 4.56		$ 4.56
Liability for shares issued with repurchase rights	$ 18,000		$ 18,000		$ 23,000
Common stock purchased at discount through payroll deductions									15.00%
Shares purchased lower of the fair market value									85.00%
Employee stock purchase plan, offering period									6 months
Common stock issued to employees under ESPP									40,750
Estimated fair value expected term	6 years 2 months 12 days		6 years 2 months 12 days	6 years 2 months 12 days					6 months
Estimated fair value weighted-average volatility rate	69.45%		69.65%	68.50%							65.70%	115.40%
Estimated fair value risk-free interest rate	2.22%		2.23%	1.40%							0.05%	0.08%
Estimated fair value expected dividend yield									0.00%
Restricted stock units awarded			294,000											293,980	0
Restricted stock units vesting period														3 years
Restricted stock units vesting date																Mar. 31, 2017
Restricted stock units vesting, percentage																25.00%
Amortization of stock based compensation expense on straight-line basis																3 years
Stock-based compensation expense	1,507,000	265,000	2,197,000	490,000											745,000	803,000
Unrecognized compensation expense													$ 8,000,000		$ 8,300,000	$ 8,300,000
Estimated weighted-average period													2 years 8 months 1 day			2 years 9 months

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Net Loss per Common Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Outstanding Common Stock Equivalents Excluded from Computation of Diluted Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	June 30,
	2014		2013
Convertible preferred stock		—		21,180,280
Options to purchase common stock		2,807,869		2,544,101
RSUs		293,980		—
Warrants to purchase convertible preferred stock		—		38,210
		3,101,849		23,762,591

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Cash Equivalents and Short-Term Investments - Schedule of Fair Value of Securities, Not Including Cash (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Option, Quantitative Disclosures [Line Items]
Amortized Cost	$ 251,262	$ 275,222
Gross Unrealized Gains	33	14
Gross Unrealized Losses	(44)
Fair Value	251,251	275,236
Cash equivalents	8,282	167,973
Short-term investments	242,969	107,263
Total cash equivalents and investments	251,251	275,236
Money Market Funds [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Amortized Cost	8,282	7,980
Fair Value	8,282	7,980
U.S. Treasury Bills [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Amortized Cost	242,980	267,242
Gross Unrealized Gains	33	14
Gross Unrealized Losses	(44)
Fair Value	$ 242,969	$ 267,256

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Condensed Statements of Comprehensive Loss (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Statement Of Comprehensive Loss [Abstract]
Net loss	$ (15,597)	$ (9,644)	$ (29,468)	$ (18,242)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities, net of tax	18	(5)	(25)	(1)
Total comprehensive loss	$ (15,579)	$ (9,649)	$ (29,493)	$ (18,243)

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Fair Value Measurements

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company records its financial assets and liabilities at fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable and accounts payable, approximate their fair value due to their short maturities. The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

• Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows (in thousands):

	June 30, 2014
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	8,282	$	—	$	—	$	8,282
U.S. treasury bills		—		242,969		—		242,969
Total	$	8,282	$	242,969	$	—	$	251,251
	December 31, 2013
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	7,980	$	—	$	—	$	7,980
U.S. treasury bills		—		267,256		—		267,256
Total	$	7,980	$	267,256	$	—	$	275,236

Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies U.S. Treasury securities as Level 2. There were no transfers between Level 1 and Level 2 during the periods presented.

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Cash Equivalents and Short-Term Investments - Additional Information (Detail) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Total cash, cash equivalents, and short-term investments	$ 266,300,000
Cash	15,000,000
Cash equivalents and short-term investments	251,251,000	275,236,000
Realized gains or losses on available-for-sale securities	$ 0	$ 0
Maximum [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, contractual maturity period	1 year	1 year

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Net Loss per Common Share - Outstanding Common Stock Equivalents Excluded from Computation of Diluted Net Loss per Common Share (Detail)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	3,101,849	23,762,591
Options to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	2,807,869	2,544,101
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	293,980
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents		21,180,280
Convertible Preferred Stock [Member] | Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents		38,210

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Equity Plans (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Activity under 2004 Plan and 2013 Stock Plan

The following table summarizes activity under 2004 Plan and 2013 Plan, including grants to nonemployees and restricted stock units (“RSUs”) granted:

(In thousands)	Shares Available for Grant of Options and Awards			Options and Awards Outstanding
Balances at December 31, 2013		117			2,930
Additional shares authorized		1,176			—
Options granted		(202	)		202
Options exercised		—			(299	)
Options cancelled		25			(25	)
RSUs granted		(294	)		294
Balances at June 30, 2014		822			3,102

Schedule of Stock-Based Compensation Expense

The following table presents stock-based compensation expense recognized for stock options, RSUs and the ESPP in the Company’s statements of operations (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Research and development	$	977	$	134	$	1,388	$	274
General and administrative		530		131		809		216
Total	$	1,507	$	265	$	2,197	$	490

Assumptions Used for Determining Fair Value of Stock Options Using Black-Scholes Valuation Model

The estimated grant date fair value of employee stock options was calculated using the Black-Scholes valuation model, based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Weighted-average volatility		69.45	%		—	%		69.65	%		68.5	%
Weighted-average expected term (years)		6.2			—			6.2			6.2
Risk-free interest rate		2.22	%		—	%		2.23	%		1.40	%
Expected dividend yield		—			—			—			—