California | 33-0361285 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
Title of each class | Name of each exchange on which registered | |
Common Stock, Par Value $0.0001 per share | The Nasdaq Capital Market |
Large accelerated filer | o | Accelerated filer | x | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
• | our ability to successfully commercialize, market and achieve market acceptance of GIAPREZATM (angiotensin II), formerly known as LJPC-501, and other product candidates, including our positioning relative to competing products; |
• | our ability to meet the demand for GIAPREZA in a timely manner; |
• | any limitations or unfavorable warning or cautionary language that the U.S. Food and Drug Administration (FDA) may ultimately impose on the label for GIAPREZA; |
• | potential market sizes for our products, including the market for the treatment of septic or other distributive shock; |
• | the anticipated treatment of future data by the FDA, European Medicines Agency (EMA) or other regulatory authorities, including whether such data will be sufficient for approval of GIAPREZA in the EMA or for approval of LJPC-401 by either the FDA or the EMA; |
• | the cost of producing and selling GIAPREZA; |
• | unforeseen safety issues from the administration of product and product candidates in patients; |
• | the timing, costs, conduct and outcome of preclinical studies and clinical trials; |
• | the success of future development activities for LJPC-401; |
• | the risk that our clinical trials with our product candidates may not be successful in evaluating their safety and tolerability or providing evidence of efficacy; |
• | the successful and timely completion of clinical trials; |
• | our plans and timing with respect to seeking regulatory approvals and uncertainties regarding the regulatory process; |
• | the availability of funds and resources to pursue our research and development projects, including clinical trials with our product candidates; |
• | uncertainties associated with obtaining and enforcing patents and the availability of regulatory exclusivity; |
• | the potential commercialization of any of our product candidates that receive regulatory approval; |
• | the uncertainty of obtaining raw materials or finished products supplies from third parties (some of which may be single sourced) and other related supply and manufacturing difficulties, interruptions and delays; |
• | our estimates for future performance; |
• | our ability to hire and retain our key employees; |
• | our estimates regarding our capital requirements and our needs for, and ability to obtain, additional financing; |
• | the expected duration over which the Company’s cash balances will fund its operations; and |
• | those risk factors identified in this Annual Report on Form 10-K under the heading “Risk Factors” and in other filings the Company periodically makes with the SEC. |
United States | Foreign | |||||||||||
Description | Issued | Pending | Expiration | Issued | Pending | Expiration | ||||||
GIAPREZA | 3 | 10 | 2029 - 2038 | — | 42 | 2034 - 2037 | ||||||
LJPC-401 | 2 | 8 | 2022 - 2038 | 5 | 6 | 2022 - 2037 | ||||||
Other | 7 | 18 | 2022 - 2038 | 7 | 25 | 2022 - 2037 |
• | preclinical studies; |
• | submission in the U.S. of an IND for clinical trials conducted in the U.S.; |
• | adequate and well-controlled human clinical trials to establish safety and efficacy of the product; |
• | review of an NDA in the U.S.; and |
• | inspection of the facilities used in the manufacturing of the drug to assess compliance with the FDA’s current cGMP regulations. |
• | changing Medicare reimbursement methodologies; |
• | fluctuating decisions on which drugs to include in formularies; |
• | revising drug rebate calculations under the Medicaid program or requiring that new or additional rebates be provided to Medicare, Medicaid, other federal or state healthcare programs; and |
• | reforming drug importation laws. |
• | the perception of physicians and other members of the healthcare community of the safety and efficacy and cost-competitiveness relative to that of competing products; |
• | our ability to maintain successful sales, marketing and educational programs for certain physicians and other healthcare providers; |
• | our ability to raise patient and physician awareness; |
• | the cost-effectiveness of our product; |
• | acceptance by institutional formulary committees; |
• | patient and physician satisfaction with our product; |
• | the size of the potential market for our product; |
• | our ability to obtain adequate reimbursement from government and third-party payors; |
• | unfavorable publicity concerning our product or similar products; |
• | the introduction, availability and acceptance of competing treatments; |
• | adverse event information relating to our product or similar classes of drugs; |
• | product liability litigation alleging injuries relating to the product or similar classes of drugs; |
• | our ability to maintain and defend our patents for GIAPREZA; |
• | our ability to have GIAPREZA manufactured at a commercial production level successfully and on a timely basis; |
• | the availability of raw materials; |
• | our ability to access third parties to manufacture and distribute our product on acceptable terms or at all; |
• | regulatory developments related to the manufacture or continued use of our product; |
• | any post-approval study requirements and the results thereof; |
• | the extent and effectiveness of sales and marketing and distribution support for our product; |
• | our competitors’ activities, including decisions as to the timing of competing product launches, generic entrants, pricing and discounting; and |
• | any other material adverse developments with respect to the potential commercialization of our product. |
• | successfully completing research and nonclinical and clinical development of our product candidates; |
• | obtaining regulatory and marketing approvals for product candidates for which we complete clinical trials; |
• | launching and commercializing product candidates for which we obtain regulatory and marketing approval, either directly or with a collaborator or distributor; |
• | obtaining market acceptance of our product candidates as viable treatment options; |
• | addressing any competing technological and market developments; |
• | identifying, assessing, acquiring or developing new product candidates; |
• | negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; |
• | maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and |
• | attracting, hiring and retaining qualified personnel. |
• | we do not have sufficient financial resources; |
• | supplies of drug product are not sufficient to treat the patients in the studies; |
• | patients do not enroll in the studies at the rate we expect; |
• | the product candidates are not effective; |
• | patients experience negative side effects or other safety concerns are raised during treatment; |
• | the trials are not conducted in accordance with applicable clinical practices; |
• | there is political unrest at foreign clinical sites; or |
• | there are natural disasters at any of our clinical sites. |
• | we may become involved in time-consuming and expensive litigation, even if the claim is without merit; |
• | we may become liable for substantial damages for past infringement if a court decides that our technology infringes a competitor’s patent; |
• | a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms, if at all, or which may require us to pay substantial royalties or grant cross licenses to our patents; and |
• | we may have to redesign our product candidates or technology so that they do not infringe patent rights of others, which may not be possible or commercially feasible. |
• | regulatory authorities may withdraw approvals of such product; |
• | regulatory authorities may require additional warnings on the label; |
• | we may be required to create a Risk Evaluation and Mitigation Strategy (REMS) plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements to assure safe use; |
• | we could be sued and held liable for harm caused to patients; and |
• | our reputation may suffer. |
• | issue warning letters; |
• | impose civil or criminal penalties; |
• | suspend or withdraw regulatory approval; |
• | suspend any of our ongoing clinical trials; |
• | refuse to approve pending applications or supplements to approved applications submitted by us; |
• | impose restrictions on our operations, including closing our contract manufacturers’ facilities; or |
• | seize or detain products, or require a product recall. |
• | our research or business development methodology or search criteria and process may be unsuccessful in identifying potential product candidates; |
• | we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates; |
• | our product candidates may not succeed in preclinical or clinical testing; |
• | our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval; |
• | competitors may develop alternatives that render our product candidates obsolete or less attractive; |
• | product candidates we develop may be covered by third parties’ patents or other exclusive rights; |
• | the market for a product candidate may change during our program so that such a product may become unreasonable to continue to develop; |
• | a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and |
• | a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors. |
• | the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs; |
• | federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; |
• | HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; |
• | HIPAA, as amended by the federal Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information; |
• | the federal physician sunshine requirements under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (Health Care Reform Laws) require manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians, other healthcare providers, and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and |
• | state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. |
• | an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; |
• | an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program; |
• | expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance; |
• | a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices; |
• | extension of manufacturers’ Medicaid rebate liability; |
• | expansion of eligibility criteria for Medicaid programs; |
• | new requirements to report financial arrangements with physicians and teaching hospitals; |
• | a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and |
• | a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research. |
• | significant conversions of preferred stock into common stock and sales of those shares of common stock; |
• | results from our preclinical studies and clinical trials; |
• | limited financial resources; |
• | announcements regarding financings, mergers or other strategic transactions; |
• | future sales of significant amounts of our capital stock by us or our shareholders; |
• | developments in patent or other proprietary rights; |
• | developments concerning potential agreements with collaborators; and |
• | general market conditions and comments by securities analysts. |
Prices | |||||||
High | Low | ||||||
Year Ended December 31, 2017 | |||||||
First Quarter | $ | 39.28 | $ | 16.71 | |||
Second Quarter | $ | 36.73 | $ | 25.01 | |||
Third Quarter | $ | 37.97 | $ | 27.54 | |||
Fourth Quarter | $ | 36.99 | $ | 22.68 | |||
Year Ended December 31, 2016 | |||||||
First Quarter | $ | 26.44 | $ | 12.68 | |||
Second Quarter | $ | 23.80 | $ | 14.24 | |||
Third Quarter | $ | 28.20 | $ | 15.55 | |||
Fourth Quarter | $ | 24.54 | $ | 14.63 |
Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||
Total revenue | $ | — | $ | 616 | $ | 1,057 | $ | — | $ | — | |||||||||
Loss from operations | $ | (115,427 | ) | $ | (78,372 | ) | $ | (41,969 | ) | $ | (21,340 | ) | $ | (17,941 | ) | ||||
Net loss | $ | (114,803 | ) | $ | (78,185 | ) | $ | (41,912 | ) | $ | (21,313 | ) | $ | (17,935 | ) | ||||
Net loss attributable to common shareholders | $ | (114,803 | ) | $ | (78,185 | ) | $ | (41,912 | ) | $ | (21,313 | ) | $ | (18,736 | ) | ||||
Basic and diluted net loss per share | $ | (5.41 | ) | $ | (4.54 | ) | $ | (2.68 | ) | $ | (2.00 | ) | $ | (12.16 | ) | ||||
Weighted-average common shares outstanding - basic and diluted | 21,215 | 17,228 | 15,651 | 10,667 | 1,540 |
December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(in thousands) | |||||||||||||||||||
Cash and cash equivalents | $ | 90,915 | $ | 65,726 | $ | 126,467 | $ | 48,555 | $ | 8,629 | |||||||||
Working capital | $ | 75,510 | $ | 57,673 | $ | 122,725 | $ | 48,177 | $ | 7,615 | |||||||||
Total assets | $ | 119,539 | $ | 70,795 | $ | 129,347 | $ | 50,536 | $ | 8,747 | |||||||||
Total current liabilities | $ | 18,552 | $ | 9,758 | $ | 4,820 | $ | 2,080 | $ | 1,094 | |||||||||
Accumulated deficit | $ | (721,514 | ) | $ | (606,711 | ) | $ | (528,526 | ) | $ | (486,614 | ) | $ | (465,301 | ) | ||||
Total shareholders’ equity | $ | 88,202 | $ | 61,037 | $ | 124,527 | $ | 48,456 | $ | 7,653 |
• | Business Overview. This section provides a general description of our business and significant events and transactions that we believe are important in understanding our financial condition and results of operations. |
• | Critical Accounting Policies and Estimates. This section provides a description of our significant accounting policies, including the critical accounting policies and estimates, which are summarized in Note 2 to the accompanying consolidated financial statements included in Item 15 of this Annual Report on Form 10-K. |
• | Results of Operations. This section provides an analysis of our results of operations presented in the accompanying consolidated statements of operations by comparing the results for the year ended December 31, 2017 to the results for the year ended December 31, 2016 and for the year ended December 31, 2016 to the results for the year ended December 31, 2015. |
• | Liquidity and Capital Resources. This section provides an analysis of our historical cash flows, as well as our future capital requirements. |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Contract revenue - related party | $ | — | $ | 616 | $ | 1,057 | |||||
Research and development expense | (84,575 | ) | (62,288 | ) | (29,092 | ) | |||||
General and administrative expense | (30,852 | ) | (16,700 | ) | (13,934 | ) | |||||
Other income, net | 624 | 187 | 57 | ||||||||
Net loss attributable to common shareholders | $ | (114,803 | ) | $ | (78,185 | ) | $ | (41,912 | ) |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Clinical development costs | $ | 34,420 | $ | 32,798 | $ | 13,074 | |||||
Personnel and related costs | 26,735 | 13,570 | 6,630 | ||||||||
Share-based compensation expense | 11,980 | 5,657 | 4,084 | ||||||||
In-licensing and technology purchase costs | 2,097 | 847 | 754 | ||||||||
Other research and development costs | 9,343 | 9,416 | 4,550 | ||||||||
Total research and development expense | $ | 84,575 | $ | 62,288 | $ | 29,092 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Personnel and related costs | $ | 9,367 | $ | 4,020 | $ | 2,458 | |||||
Share-based compensation expense | 9,815 | 8,889 | 8,988 | ||||||||
Other pre-commercialization activities | 5,033 | — | — | ||||||||
Other general and administrative | 6,637 | 3,791 | 2,488 | ||||||||
Total general and administrative expense | $ | 30,852 | $ | 16,700 | $ | 13,934 |
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total | Less Than 1 Year | 1 - 3 Years | 3 - 5 Years | More Than 5 Years | |||||||||||||||
License agreements | $ | 795 | $ | 142 | $ | 295 | $ | 305 | $ | 53 | ||||||||||
Leases | 41,231 | 1,945 | 8,021 | 8,510 | 22,755 | |||||||||||||||
Purchase obligations | 3,855 | 1,092 | 1,842 | 921 | — | |||||||||||||||
Total | $ | 45,881 | $ | 3,179 | $ | 10,158 | $ | 9,736 | $ | 22,808 |
1. | The following financial statements of La Jolla Pharmaceutical Company are filed as part of this report under Item 8 — Financial Statements and Supplementary Data: |
2. | Financial Statement Schedules. |
3. | Exhibits. |
8-K | 9/25/2013 | |||||||
10-K | 2/25/2016 | |||||||
8-K | 4/10/2015 | |||||||
10-K | 2/25/2016 | |||||||
10-K | 2/23/2017 | |||||||
X | ||||||||
X | ||||||||
X | ||||||||
X | ||||||||
X | ||||||||
X | ||||||||
X | ||||||||
101.INS | XBRL Instance Document | X | ||||||
101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X |
* | This exhibit is a management contract or compensatory plan or arrangement. |
† | Confidential treatment has been requested with respect to certain portions of the exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission. |
La Jolla Pharmaceutical Company | ||
Date: | February 22, 2018 | /s/ George F. Tidmarsh |
George F. Tidmarsh, M.D., Ph.D. | ||
President, Chief Executive Officer and Secretary | ||
(Principal Executive Officer) |
Signature | Title | Date | |||
/s/ George F. Tidmarsh | Director, President, Chief Executive Officer and Secretary (Principal Executive Officer) | February 22, 2018 | |||
George F. Tidmarsh, M.D., Ph.D. | |||||
/s/ Dennis M. Mulroy | Chief Financial Officer (Principal Financial and Accounting Officer) | February 22, 2018 | |||
Dennis M. Mulroy | |||||
/s/ Kevin C. Tang | Chairman of the Board and Director | February 22, 2018 | |||
Kevin C. Tang | |||||
/s/ Laura L. Douglass | Director | February 22, 2018 | |||
Laura L. Douglass | |||||
/s/ Craig A. Johnson | Director | February 22, 2018 | |||
Craig A. Johnson | |||||
/s/ Robert H. Rosen | |||||
Director | February 22, 2018 | ||||
Robert H. Rosen |
December 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 90,915 | $ | 65,726 | |||
Restricted cash, current portion | — | 200 | |||||
Prepaid expenses and other current assets | 3,147 | 1,505 | |||||
Total current assets | 94,062 | 67,431 | |||||
Property and equipment, net | 24,568 | 3,145 | |||||
Restricted cash, less current portion | 909 | — | |||||
Other assets | — | 219 | |||||
Total assets | $ | 119,539 | $ | 70,795 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 11,484 | $ | 6,652 | |||
Accrued clinical and other expenses | 703 | 905 | |||||
Accrued payroll and related expenses | 4,995 | 2,077 | |||||
Deferred rent, current portion | 1,370 | 124 | |||||
Total current liabilities | 18,552 | 9,758 | |||||
Deferred rent, less current portion | 12,785 | — | |||||
Total liabilities | 31,337 | 9,758 | |||||
Commitments and contingencies (Note 9) | |||||||
Shareholders’ equity: | |||||||
Common Stock, $0.0001 par value; 100,000,000 shares authorized, 22,167,529 and 18,261,557 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 2 | 2 | |||||
Series C-12 Convertible Preferred Stock, $0.0001 par value; 11,000 shares authorized, 3,906 shares issued and outstanding at December 31, 2017 and December 31, 2016, and a liquidation preference of $3,906 at December 31, 2017 and 2016 | 3,906 | 3,906 | |||||
Series F Convertible Preferred Stock, $0.0001 par value; 10,000 shares authorized, 2,737 shares issued and outstanding at December 31, 2017 and December 31, 2016, and a liquidation preference of $2,737 at December 31, 2017 and 2016 | 2,737 | 2,737 | |||||
Additional paid-in capital | 803,071 | 661,103 | |||||
Accumulated deficit | (721,514 | ) | (606,711 | ) | |||
Total shareholders’ equity | 88,202 | 61,037 | |||||
Total liabilities and shareholders’ equity | $ | 119,539 | $ | 70,795 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Revenue | |||||||||||
Contract revenue - related party | $ | — | $ | 616 | $ | 1,057 | |||||
Total revenue | — | 616 | 1,057 | ||||||||
Operating expenses | |||||||||||
Research and development | 84,575 | 62,288 | 29,092 | ||||||||
General and administrative | 30,852 | 16,700 | 13,934 | ||||||||
Total operating expenses | 115,427 | 78,988 | 43,026 | ||||||||
Loss from operations | (115,427 | ) | (78,372 | ) | (41,969 | ) | |||||
Other income, net | 624 | 187 | 57 | ||||||||
Net loss | (114,803 | ) | (78,185 | ) | (41,912 | ) | |||||
Net loss attributable to common shareholders | $ | (114,803 | ) | $ | (78,185 | ) | $ | (41,912 | ) | ||
Basic and diluted net loss per share | $ | (5.41 | ) | $ | (4.54 | ) | $ | (2.68 | ) | ||
Weighted-average common shares outstanding - basic and diluted | 21,215 | 17,228 | 15,651 |
Series C-12 Convertible Preferred Stock | Series F Convertible Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
Balance at December 31, 2014 | 4 | $ | 3,917 | 3 | $ | 2,798 | 15,226 | $ | 2 | $ | 528,353 | $ | (486,614 | ) | $ | 48,456 | |||||||||||||||||
Issuance of common stock for September 2015 financing | — | — | — | — | 2,933 | — | 104,596 | — | 104,596 | ||||||||||||||||||||||||
Conversion of Series F Convertible Preferred Stock into common stock | — | — | — | (61 | ) | 17 | — | 61 | — | — | |||||||||||||||||||||||
Conversion of Series C-12 Convertible Preferred Stock into common stock | — | (11 | ) | — | — | 19 | — | 11 | — | — | |||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | 11,551 | — | 11,551 | ||||||||||||||||||||||||
Third party share-based compensation expense | — | — | — | — | — | — | 1,521 | — | 1,521 | ||||||||||||||||||||||||
Exercise of stock options for common stock | — | — | — | — | 45 | — | 315 | — | 315 | ||||||||||||||||||||||||
Issuance of restricted stock awards | — | — | — | — | 4 | — | — | — | — | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (41,912 | ) | (41,912 | ) | ||||||||||||||||||||||
Balance at December 31, 2015 | 4 | 3,906 | 3 | 2,737 | 18,244 | 2 | 646,408 | (528,526 | ) | 124,527 | |||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | 14,349 | — | 14,349 | ||||||||||||||||||||||||
Third party share-based compensation expense | — | — | — | — | — | — | 197 | — | 197 | ||||||||||||||||||||||||
Exercise of stock options for common stock | — | — | — | — | 17 | — | 149 | — | 149 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (78,185 | ) | (78,185 | ) | ||||||||||||||||||||||
Balance at December 31, 2016 | 4 | 3,906 | 3 | 2,737 | 18,261 | 2 | 661,103 | (606,711 | ) | 61,037 | |||||||||||||||||||||||
Issuance of common stock for March 2017 financing | — | — | — | — | 3,731 | — | 117,480 | — | 117,480 | ||||||||||||||||||||||||
Share-based compensation expense | — | — | — | — | — | — | 20,776 | — | 20,776 | ||||||||||||||||||||||||
Third party share-based compensation expense | — | — | — | — | — | — | 1,019 | — | 1,019 | ||||||||||||||||||||||||
Exercise of stock options for common stock | — | — | — | — | 175 | — | 2,693 | — | 2,693 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (114,803 | ) | (114,803 | ) | ||||||||||||||||||||||
Balance at December 31, 2017 | 4 | $ | 3,906 | 3 | $ | 2,737 | 22,167 | $ | 2 | $ | 803,071 | $ | (721,514 | ) | $ | 88,202 |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Operating activities | |||||||||||
Net loss | $ | (114,803 | ) | $ | (78,185 | ) | $ | (41,912 | ) | ||
Adjustments to reconcile net loss to net cash used for operating activities: | |||||||||||
Share-based compensation expense | 20,776 | 14,349 | 11,551 | ||||||||
Third party share-based compensation expense | 1,019 | 197 | 1,521 | ||||||||
Depreciation expense | 1,268 | 730 | 347 | ||||||||
Loss on disposal of property and equipment | 199 | 75 | 16 | ||||||||
Changes in operating assets and liabilities: | |||||||||||
Restricted cash, current portion | 200 | 37 | (200 | ) | |||||||
Prepaid expenses and other current assets | (1,642 | ) | (664 | ) | 824 | ||||||
Other assets | 219 | (149 | ) | (70 | ) | ||||||
Accounts payable | 4,832 | 3,600 | 2,322 | ||||||||
Accrued clinical and other expenses | (202 | ) | 227 | (248 | ) | ||||||
Accrued payroll and related expenses | 2,918 | 987 | 666 | ||||||||
Deferred rent | 335 | 124 | — | ||||||||
Net cash used for operating activities | (84,881 | ) | (58,672 | ) | (25,183 | ) | |||||
Investing activities | |||||||||||
Purchase of property and equipment | (9,194 | ) | (2,218 | ) | (1,816 | ) | |||||
Net cash used for investing activities | (9,194 | ) | (2,218 | ) | (1,816 | ) | |||||
Financing activities | |||||||||||
Net proceeds from the issuance of common stock | 117,480 | — | 104,596 | ||||||||
Net proceeds from the exercise of stock options for common stock | 2,693 | 149 | 315 | ||||||||
Restricted cash, long term | (909 | ) | — | — | |||||||
Net cash provided by financing activities | 119,264 | 149 | 104,911 | ||||||||
Net increase (decrease) in cash and cash equivalents | 25,189 | (60,741 | ) | 77,912 | |||||||
Cash and cash equivalents at beginning of period | 65,726 | 126,467 | 48,555 | ||||||||
Cash and cash equivalents at end of period | $ | 90,915 | $ | 65,726 | $ | 126,467 | |||||
Supplemental disclosure of cash flow information | |||||||||||
Non-cash investing and financing activity: | |||||||||||
Capitalized landlord funded tenant improvements | $ | 13,696 | $ | — | $ | — | |||||
Conversion of Series C-12 Convertible Preferred Stock into common stock | $ | — | $ | — | $ | 11 | |||||
Conversion of Series F Convertible Preferred Stock into common stock | $ | — | $ | — | $ | 61 |
December 31, | |||||||
2017 | 2016 | ||||||
Lab equipment | $ | 7,812 | $ | 2,610 | |||
Furniture and fixtures | 2,282 | 389 | |||||
Computer hardware | 1,238 | 457 | |||||
Software | 619 | 309 | |||||
Leasehold improvements | 14,852 | 464 | |||||
Total property and equipment, gross | 26,803 | 4,229 | |||||
Accumulated depreciation and amortization | (2,235 | ) | (1,084 | ) | |||
Total property and equipment, net | $ | 24,568 | $ | 3,145 |
December 31, | |||||||
2017 | 2016 | ||||||
Accrued clinical trials | $ | 577 | $ | 828 | |||
Accrued other | 126 | 77 | |||||
Total accrued clinical and other expenses | $ | 703 | $ | 905 |
Outstanding Stock Options and 2013 Equity Plans | ||||||||||||
Shares Underlying Stock Options | Weighted- Average Exercise Price per Share | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||
Outstanding at December 31, 2014 | 618,900 | $ | 9.54 | |||||||||
Granted | 1,769,785 | $ | 25.89 | |||||||||
Exercised | (51,814 | ) | $ | 10.81 | ||||||||
Forfeited | (18,186 | ) | $ | 7.80 | ||||||||
Outstanding at December 31, 2015 | 2,318,685 | $ | 22.01 | |||||||||
Granted | 483,200 | $ | 17.83 | |||||||||
Exercised | (17,548 | ) | $ | 8.52 | ||||||||
Forfeited | (156,875 | ) | $ | 26.35 | ||||||||
Outstanding at December 31, 2016 | 2,627,462 | $ | 21.07 | |||||||||
Granted | 3,704,725 | $ | 25.94 | |||||||||
Exercised | (174,628 | ) | $ | 15.42 | ||||||||
Forfeited | (120,257 | ) | $ | 22.82 | ||||||||
Outstanding at December 31, 2017 | 6,037,302 | $ | 24.19 | 8.76 years | $ | 49,399,882 | ||||||
Vested and expected to vest at December 31, 2017 | 6,037,302 | $ | 24.19 | 8.76 years | $ | 49,399,882 | ||||||
Exercisable at December 31, 2017 | 1,536,369 | $ | 20.94 | 7.36 years | $ | 17,799,721 |
Number of Shares | Weighted- Average Grant Date Fair Market Value | |||||
Unvested at December 31, 2014 | 1,279,007 | $ | 12.86 | |||
Granted | 4,000 | $ | 23.12 | |||
Vested | (210,108 | ) | $ | 12.41 | ||
Unvested at December 31, 2015 | 1,072,899 | $ | 13.00 | |||
Vested | (530,219 | ) | $ | 12.78 | ||
Unvested at December 31, 2016 | 542,680 | $ | 13.22 | |||
Vested | (542,680 | ) | $ | 13.22 | ||
Unvested at December 31, 2017 | — | — |
Year Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Volatility | 139 | % | 143 | % | 149 | % | ||
Expected life (years) | 6.12 | 5.80 | 5.28 | |||||
Risk-free interest rate | 2.1 | % | 1.4 | % | 1.5 | % | ||
Dividend yield | — | — | — |
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Research and development: | |||||||||||
Stock options | $ | 11,904 | $ | 5,599 | $ | 2,428 | |||||
Restricted stock | — | 30 | 1,600 | ||||||||
Warrants | 76 | 28 | 56 | ||||||||
Research and development share-based compensation expense | 11,980 | 5,657 | 4,084 | ||||||||
General and administrative: | |||||||||||
Stock options | 8,837 | 6,539 | 3,693 | ||||||||
Restricted stock | 409 | 2,161 | 4,265 | ||||||||
Warrants | 569 | 189 | 1,030 | ||||||||
General and administrative share-based compensation expense | 9,815 | 8,889 | 8,988 | ||||||||
Total share-based compensation expense included in expenses | $ | 21,795 | $ | 14,546 | $ | 13,072 |
December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Deferred tax assets: | |||||||||||
Capitalized research and development and other | $ | 7,379 | $ | 9,380 | $ | 33,894 | |||||
Valuation allowance | (7,379 | ) | (9,380 | ) | (33,894 | ) | |||||
Net deferred tax assets | $ | — | $ | — | $ | — |
December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Income tax benefit at statutory federal rate | $ | (39,033 | ) | $ | (26,583 | ) | $ | (14,250 | ) | ||
Research and development credits | (2,691 | ) | (1,240 | ) | 1,128 | ||||||
Foreign rate differential | 1,249 | — | — | ||||||||
Expired tax attributes | 2,228 | (5 | ) | 31 | |||||||
Impact of the 2017 Tax Act | 71,199 | — | — | ||||||||
Stock-based compensation | 2,253 | — | — | ||||||||
Change in valuation allowance | (35,246 | ) | 25,091 | 12,042 | |||||||
Other permanent differences | 41 | 2,737 | 1,049 | ||||||||
Provision for income taxes | $ | — | $ | — | $ | — |
2018 | $ | 1,945 | |
2019 | 3,951 | ||
2020 | 4,070 | ||
2021 | 4,192 | ||
2022 | 4,318 | ||
Thereafter | 22,755 | ||
Total future minimum lease payments | $ | 41,231 |
2018 | $ | 142 | |
2019 | 147 | ||
2020 | 148 | ||
2021 | 147 | ||
2022 | 158 | ||
Thereafter | 53 | ||
Total future minimum license payments | $ | 795 |
2018 | $ | 1,092 | |
2019 | 921 | ||
2020 | 921 | ||
2021 | 921 | ||
Total future minimum manufacturing and supply agreement payments | $ | 3,855 |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
2017 | |||||||||||||||
Total revenue | $ | — | $ | — | $ | — | $ | — | |||||||
Loss from operations | $ | (23,268 | ) | $ | (26,830 | ) | $ | (26,483 | ) | $ | (38,846 | ) | |||
Net loss | $ | (23,240 | ) | $ | (26,729 | ) | $ | (26,288 | ) | $ | (38,546 | ) | |||
Basic and diluted net loss per share | $ | (1.26 | ) | $ | (1.21 | ) | $ | (1.19 | ) | $ | (1.74 | ) | |||
Weighted-average common shares outstanding - basic and diluted | 18,410 | 22,123 | 22,125 | 22,151 | |||||||||||
2016 | |||||||||||||||
Total revenue | $ | 234 | $ | 253 | $ | 44 | $ | 85 | |||||||
Loss from operations | $ | (16,534 | ) | $ | (15,617 | ) | $ | (21,297 | ) | $ | (24,924 | ) | |||
Net loss | $ | (16,481 | ) | $ | (15,566 | ) | $ | (21,251 | ) | $ | (24,887 | ) | |||
Basic and diluted net loss per share | $ | (0.96 | ) | $ | (0.90 | ) | $ | (1.23 | ) | $ | (1.44 | ) | |||
Weighted-average common shares outstanding - basic and diluted | 17,210 | 17,211 | 17,211 | 17,280 |
1st Indication: [***] | COMPLETION DATE |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
2nd Indication | |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
[***] | [***] |
All Additional Indications | |
[***] | [***] |
Regulatory Milestones | PAYMENT |
1st Indication: [***] | |
[***] | $[***] |
[***] | $[***] |
[***] | $[***] |
Each Other Indication | |
[***] | $[***] |
[***] | $[***] |
[***] | $[***] |
Patent Milestone | |
[***] | $[***] |
PERIOD | MINIMUM ROYALTY |
First 4 Quarters after First Commercial Sale For clarity, minimum royalty obligations do not commence unless and until issuance of patent with a Valid Claim covering a Licensed Product in United States, Europe, Japan or China. | $[***] |
Next 4 Quarters | $[***] |
Next 4 Quarters | $[***] |
Next 4 Quarters | $[***] |
All Quarters thereafter | $[***] |
Until the following anniversary of the Original Effective Date | SUBLICENSE FEE |
[***] anniversary | [***]% |
[***] anniversary | [***]% |
[***] and thereafter | [***]% |
By Check: |
The George Washington University c/o Technology Commercialization Office 2033 K Street, NW, Suite 750 Washington, DC 20052 Attention: TCO Operations Coordinator |
By Electronic Transfer: |
Beneficiary Account Number: [***] Beneficiary Account Type (for ACH): Beneficiary Account Name: Beneficiary Address: [***] Bank’s Name: Branch Name: Bank’s Address: ABA # (for ACH): ABA # (for Wires): SWIFT: |
THE GEORGE WASHINGTON UNIVERSITY | La Jolla Pharmaceutical Company |
By: _________________________________ | By: _________________________________ |
Name: Louis H. Katz | Name: George F. Tidmarsh, M.D., Ph.D. |
Title: Executive Vice President & Treasurer | Title: President & Chief Executive Officer |
Date: ________________________________ | Date: ________________________________ |
Technology Commercialization Office | La Jolla Pharmaceutical Company |
The George Washington University | 4660 La Jolla Village Drive |
2033 K ST, NW, Suite 750 | Suite 1070 |
Washington DC, 20052 | San Diego, CA 92122 |
Attention: TCO Operations Coordinator | 858-207-4264 |
Attention: Chief Executive Officer | |
Required copy to: | |
The George Washington University | Required copy to: |
Office of the General Counsel | Gibson, Dunn & Crutcher, LLP |
2100 Pennsylvania Avenue NW | 555 Mission Avenue, Suite 3000 |
Washington, DC | San Francisco, CA 94015 |
Attention: General Counsel | Attn: Ryan A. Murr, Esq. |
202-994-6503 | Fax: (415) 374-8430 |
ogc@gwu.edu |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
• | [***] |
Name of Subsidiary | Jurisdiction | |
La Jolla Pharmaceutical I B.V. | Netherlands | |
La Jolla Pharmaceutical II B.V. | Netherlands | |
La Jolla Pharmaceutical III B.V. | Netherlands | |
La Jolla Pharmaceutical Australia Pty Ltd | Australia |
1. | I have reviewed this Annual Report on Form 10-K of La Jolla Pharmaceutical Company; |
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) 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: | February 22, 2018 | /s/ George F. Tidmarsh |
George F. Tidmarsh, M.D., Ph.D. | ||
President, Chief Executive Officer and Secretary | ||
(Principal Executive Officer) |
1. | I have reviewed this Annual Report on Form 10-K of La Jolla Pharmaceutical Company; |
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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) 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: | February 22, 2018 | /s/ Dennis M. Mulroy |
Dennis M. Mulroy | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
• | the Annual Report of the Registrant on Form 10-K for the year ended December 31, 2017 (the “Report), which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
• | the information contained in the Report fairly presents, in all material respects, the financial condition of the Registrant at the end of such year end and the results of operations of the Registrant for such year end. |
Date: | February 22, 2018 | /s/ George F. Tidmarsh |
George F. Tidmarsh, M.D., Ph.D. | ||
President, Chief Executive Officer and Secretary | ||
(Principal Executive Officer) | ||
/s/ Dennis M. Mulroy | ||
Dennis M. Mulroy | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 16, 2018 |
Jun. 30, 2017 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | LA JOLLA PHARMACEUTICAL CO | ||
Entity Central Index Key | 0000920465 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 512,864,000 | ||
Entity Common Stock, Shares Outstanding | 22,168,242 |
Consolidated Statements of Operations - USD ($) shares in Thousands |
12 Months Ended | ||
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Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Revenue | |||
Contract revenue - related party | $ 0 | $ 616,000 | $ 1,057,000 |
Total revenue | 0 | 616,000 | 1,057,000 |
Operating expenses | |||
Research and development | 84,575,000 | 62,288,000 | 29,092,000 |
General and administrative | 30,852,000 | 16,700,000 | 13,934,000 |
Total operating expenses | 115,427,000 | 78,988,000 | 43,026,000 |
Loss from operations | (115,427,000) | (78,372,000) | (41,969,000) |
Other income, net | 624,000 | 187,000 | 57,000 |
Net loss | (114,803,000) | (78,185,000) | (41,912,000) |
Net loss attributable to common shareholders | $ (114,803,000) | $ (78,185,000) | $ (41,912,000) |
Basic and diluted net loss per share (usd per share) | $ (5.41) | $ (4.54) | $ (2.68) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 21,215 | 17,228 | 15,651 |
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands |
Total |
Conversion of Series F Preferred Stock into Common Stock [Member] |
Conversion Of Series C-1 And D-1 Preferred Stock Into Common Stock [Member] |
Preferred Stock [Member]
Series C-1 Convertible Preferred Stock [Member]
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Preferred Stock [Member]
Series C-1 Convertible Preferred Stock [Member]
Conversion Of Series C-1 And D-1 Preferred Stock Into Common Stock [Member]
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Preferred Stock [Member]
Series F Convertible Preferred Stock [Member]
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Preferred Stock [Member]
Series F Convertible Preferred Stock [Member]
Conversion of Series F Preferred Stock into Common Stock [Member]
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Common Stock [Member] |
Common Stock [Member]
Conversion of Series F Preferred Stock into Common Stock [Member]
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Common Stock [Member]
Conversion Of Series C-1 And D-1 Preferred Stock Into Common Stock [Member]
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Common Stock [Member]
Series C-1 Convertible Preferred Stock [Member]
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Common Stock [Member]
Series F Convertible Preferred Stock [Member]
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Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Conversion of Series F Preferred Stock into Common Stock [Member]
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Additional Paid-in Capital [Member]
Conversion Of Series C-1 And D-1 Preferred Stock Into Common Stock [Member]
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Retained Earnings [Member] |
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Beginning Balance (in shares) at Dec. 31, 2014 | 4,000 | 3,000 | 15,226,000 | |||||||||||||
Beginning Balance at Dec. 31, 2014 | $ 48,456 | $ 3,917 | $ 2,798 | $ 2 | $ 528,353 | $ (486,614) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Stock issued during period (in shares) | 2,933,000 | 19,134 | 17,360 | |||||||||||||
Stock issued during period, value | 104,596 | 104,596 | ||||||||||||||
Conversion of Convertible Preferred Stock into common stock | $ 0 | $ 0 | $ (11) | $ (61) | $ 61 | $ 11 | ||||||||||
Conversion of Convertible Preferred Stock into common stock (in shares) | 17,000 | 19,000 | ||||||||||||||
Share-based compensation expense | 11,551 | 11,551 | ||||||||||||||
Third party share-based compensation expense | $ 1,521 | 1,521 | ||||||||||||||
Exercise of stock options for common stock (in shares) | 51,814 | 45,000 | ||||||||||||||
Exercise of stock options for common stock | $ 315 | 315 | ||||||||||||||
Issuance of restricted stock awards (in shares) | 4,000 | |||||||||||||||
Issuance of restricted stock awards | 0 | |||||||||||||||
Net loss | (41,912) | (41,912) | ||||||||||||||
Ending Balance (in shares) at Dec. 31, 2015 | 4,000 | 3,000 | 18,244,000 | |||||||||||||
Ending Balance at Dec. 31, 2015 | 124,527 | $ 3,906 | $ 2,737 | $ 2 | 646,408 | (528,526) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Share-based compensation expense | 14,349 | 14,349 | ||||||||||||||
Third party share-based compensation expense | $ 197 | 197 | ||||||||||||||
Exercise of stock options for common stock (in shares) | 17,548 | 17,000 | ||||||||||||||
Exercise of stock options for common stock | $ 149 | 149 | ||||||||||||||
Net loss | (78,185) | (78,185) | ||||||||||||||
Ending Balance (in shares) at Dec. 31, 2016 | 4,000 | 3,000 | 18,261,000 | |||||||||||||
Ending Balance at Dec. 31, 2016 | 61,037 | $ 3,906 | $ 2,737 | $ 2 | 661,103 | (606,711) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Stock issued during period (in shares) | 3,731,000 | |||||||||||||||
Stock issued during period, value | 117,480 | 117,480 | ||||||||||||||
Share-based compensation expense | 20,776 | 20,776 | ||||||||||||||
Third party share-based compensation expense | $ 1,019 | 1,019 | ||||||||||||||
Exercise of stock options for common stock (in shares) | 174,628 | 175,000 | ||||||||||||||
Exercise of stock options for common stock | $ 2,693 | 2,693 | ||||||||||||||
Net loss | (114,803) | (114,803) | ||||||||||||||
Ending Balance (in shares) at Dec. 31, 2017 | 4,000 | 3,000 | 22,167,000 | |||||||||||||
Ending Balance at Dec. 31, 2017 | $ 88,202 | $ 3,906 | $ 2,737 | $ 2 | $ 803,071 | $ (721,514) |
Business |
12 Months Ended |
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Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business La Jolla Pharmaceutical Company (collectively with its subsidiaries, the Company) is a biopharmaceutical company focused on the discovery, development and commercialization of innovative therapies intended to significantly improve outcomes in patients suffering from life-threatening diseases. The Company was incorporated in 1989 as a Delaware corporation and reincorporated in California in 2012. GIAPREZATM (angiotensin II), formerly known as LJPC-501, was approved by the U.S. Food and Drug Administration (FDA) on December 21, 2017 as a vasoconstrictor to increase blood pressure in adults with septic or other distributive shock. GIAPREZA is the Company’s first commercial product. LJPC-401, a clinical stage investigational product, is our proprietary formulation of synthetic human hepcidin. LJPC-401 is being developed for the potential treatment of conditions characterized by iron overload, such as hereditary hemochromatosis, beta thalassemia, sickle cell disease and myelodysplastic syndrome. As of December 31, 2017, the Company had $90.9 million in cash and cash equivalents, compared to $65.7 million in cash and cash equivalents at December 31, 2016. The Company has a history of incurring significant operating losses and negative cash flows from operations. As of December 31, 2017, the Company does not have sufficient capital to fund its planned operations during the twelve-month period subsequent to the issuance of these financial statements. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date this Annual Report on Form 10-K is filed with the U.S. Securities and Exchange Commission (SEC). The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company anticipates that it will need to raise additional capital in order to fund these future operations. The Company will seek to fund its operations through equity, debt or royalty-based financings or other sources, such as potential collaboration agreements. The Company cannot be certain that additional funding will be available to us on acceptable terms, or at all. |
Summary of Significant Accounting Policies |
12 Months Ended |
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Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ materially from those estimates. Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, shareholders’ equity or cash flows. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity from the date of purchase of less than three months to be cash equivalents. The carrying value of the Company’s money market funds is included in cash equivalents and approximates the fair value. Restricted Cash Cash is classified as restricted cash when certain funds are reserved for a specific purpose and are not available for immediate or general business use. Under the terms of the Company’s building lease, the Company has provided a standby letter of credit of $0.9 million in lieu of a security deposit during the term of such lease, subject to periodic decreases during the first 5 years of the lease. There is a requirement to maintain a $0.9 million collateral cash account pledged as security for such letter of credit. Previously under the terms of the Company’s credit card arrangements, there was a requirement to maintain a $0.2 million collateral cash account pledged as security for such credit cards. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents. The Company invests excess cash in money market accounts. This investment strategy is consistent with the Company’s policy to ensure safety of principal and maintain liquidity. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Amortization of leasehold improvements is recorded over the shorter of the lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to operating expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is included in operating expense. Lease incentives are amortized on a straight-line basis over the lease term as a reduction to rent expense. Leasehold improvements are capitalized and amortized over the shorter of the lease term or expected useful lives. Revenue Recognition The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectibility is reasonably assured. The Company has recognized revenue from payments received under a services agreement with a related party. Under the terms of this services agreement, the Company receives payments from this related party for research and development services that the Company provides at a negotiated, arms-length rate. Research and Development Expense Research and development expense includes salaries and benefits, facilities and other overhead costs, research-related manufacturing costs, contract service and clinical and preclinical-related service costs performed by clinical research organizations, research institutions and other outside service providers. Research and development expense is expensed as incurred when these expenditures relate to the Company’s research and development efforts and have no alternative future uses. In accordance with certain research and development agreements, the Company is obligated to make certain upfront payments upon execution of the agreement. Advance payments, including nonrefundable amounts, for materials or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the related services are performed. Acquisition or milestone payments that the Company makes in connection with in-licensed technology are expensed as incurred when there is uncertainty in receiving future economic benefits from the licensed technology. The Company considers the future economic benefits from the licensed technology to be uncertain until such licensed technology is incorporated into products that are approved for marketing by the FDA or when other significant risk factors are abated. For accounting purposes, management has viewed future economic benefits for all of the Company’s licensed technology to be uncertain. Clinical Trial Expenses Payments in connection with the Company’s clinical trials are often made under contracts with multiple contract research organizations that conduct and manage clinical trials on the Company’s behalf. The financial terms of these contracts are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Generally, these contracts set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. Payments under these contracts depend on factors such as the successful enrollment or treatment of patients or the completion of other clinical trial milestones. The Company amortizes prepaid clinical trial costs to expense based on estimates regarding work performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials. Expenses related to clinical trials are accrued based on estimates regarding work performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials. Other incidental costs related to patient enrollment or treatment are accrued when reasonably certain. If the contracted amounts are modified, the accruals are modified accordingly on a prospective basis. Revisions in the scope of a contract are charged to research and development expense in the period in which the facts that give rise to the revision occur. Patent Costs Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expense in the consolidated statements of operations. Share-based Compensation The Company accounts for share-based payment arrangements in accordance with Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation and ASC 505-50, Equity - Equity Based Payments to Non-Employees, which requires the recognition of compensation expense, using a fair-value based method, for all costs related to share-based payments, including stock options and restricted stock awards. These standards require companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The Company has elected to account for forfeitures as they occur. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is applied against any deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations. Net Loss Per Share Basic net loss per share is calculated based on the weighted-average number of common shares outstanding, excluding unvested restricted stock awards. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding plus common stock equivalents. Convertible preferred stock, stock options, warrants and unvested restricted stock awards are considered common stock equivalents and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Common stock equivalents are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. As of December 31, 2017, 2016 and 2015, there were common stock equivalents of 13.6 million shares, 10.7 million shares and 10.0 million shares, respectively, which were excluded from the calculation of diluted net loss per share because their effect was anti-dilutive. Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. There have been no items qualifying as other comprehensive loss, and, therefore, comprehensive loss for the periods reported was comprised solely of the Company’s net loss. Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. Management views its operations and manages its business in one operating segment. Fair Value Measurements The Company follows the provisions of ASC 820-10, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. Broadly, the ASC 820-10 framework clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1) observable inputs such as quoted prices in active markets; Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3) unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Cash equivalents consist of money market accounts with maturities of 90 days or less. Due to the high ratings and short-term nature of these funds, the Company considers the inputs to the value of all cash and cash equivalents as Level 1. The Company’s consolidated financial instruments include cash and cash equivalents, prepaid expenses, accounts payable and accrued expenses. The carrying amounts reported in the balance sheets for cash equivalents, prepaid expenses, accounts payable and accrued expenses approximate fair values because of the short-term nature of these instruments. Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-09, Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting. The new standard clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 will be effective for the Company in the first quarter of 2018. Early adoption is permitted, including adoption in an interim period for which financial statements have not yet been issued. The Company plans to adopt the ASU in the first quarter of 2018 and expects the standard to have no material impact on the Company’s financial position or results of operations. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard update clarifies the presentation of restricted cash and cash equivalents, and requires companies to include restricted cash and cash equivalents in the beginning and ending cash and cash equivalents on the statement of cash flows. Additional disclosures will be required to describe the amount and detail of the restriction by balance sheet line item. ASU 2016-18 will be effective for the Company in the first quarter of 2018. The Company plans to adopt the ASU in the first quarter of 2018, which will require inclusion of the Company’s restricted cash balances in cash and cash equivalents on the statement of cash flows with retrospective application of each prior period presented. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. ASU 2016-02 will be effective for the Company in the first quarter of 2019 and will be adopted with modified retrospective application for the Company's new 10-year lease agreement for its corporate headquarters, which commenced October 30, 2017. This lease will be recognized on the balance sheet as a lease liability with a corresponding right-of-use asset, which will require modified retrospective application back to the fourth quarter of 2017 and for all of 2018. By 2019, all of the Company’s prior existing leases will have ended. Those leases will not require modified retrospective disclosures applied within the consolidated financial statements upon adoption in 2019. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Since its initial release, the FASB has issued several amendments to the standard, which include clarification of accounting guidance related to identification of performance obligations and principal versus agent considerations. Topic 606 will be effective for the Company in the first quarter of 2018 and allows for a full retrospective or a modified retrospective adoption approach. The Company currently does not have, and has never had any, contracts that are within the scope of Topic 606 or its predecessor guidance, ASC 605 Revenue Recognition. Accordingly, there will not be any retrospective impact to the financial statements upon the adoption of Topic 606, which the Company will implement when it has contracts within its scope. The Company anticipates that initial sales subject to Topic 606 will begin in the first quarter of 2018, and that such sales will be to a limited number of customers, which are pharmaceutical specialty distributors. The Contract Revenue - Related Party reported in our results of operations for 2015 and 2016, which represents expense reimbursements from a related party, will not be impacted by the adoption of the new guidance. |
Balance Sheet Account Details |
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Balance Sheet Account Details | Balance Sheet Account Details Property and Equipment Property and equipment, net consists of the following (in thousands):
Accrued Clinical and Other Expenses Accrued clinical and other expenses consist of the following (in thousands):
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Licensed Technology |
12 Months Ended |
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Dec. 31, 2017 | |
Research and Development [Abstract] | |
Licensed Technology | Licensed Technology The George Washington University In December 2014, the Company entered into a patent license agreement with the George Washington University (GW), which the parties amended and restated on March 1, 2016. Pursuant to this license agreement, GW exclusively licensed to the Company certain intellectual property rights relating to GIAPREZA, including the exclusive rights to certain issued patents and patent applications covering GIAPREZA. Under this license agreement, the Company is obligated to use commercially reasonable efforts to develop, commercialize, market and sell GIAPREZA. The Company has paid a one-time license initiation fee, annual maintenance fees, an amendment fee and additional payments following the achievement of certain development and regulatory milestones including FDA approval. The Company may be obligated to make additional milestone payments of up to $0.5 million in the aggregate. Following the commencement of commercial sales of GIAPREZA, the Company is obligated to pay tiered royalties in the low- to mid- single digits on products covered by the licensed rights. The patents and patent applications covered by the GW license agreement expire between 2029 and 2038, and the obligation to pay royalties under this agreement extend through the last-to-expire patent covering GIAPREZA. Inserm Transfert SA In February 2014, the Company entered into a license agreement with Inserm Transfert SA (Inserm). Pursuant to this license agreement, Inserm exclusively licensed to the Company certain intellectual property rights relating to LJPC-401. Under this license agreement, the Company has paid a one-time license initiation fee, annual maintenance fees and additional payments following the achievement of certain development milestones. The Company may be obligated to make additional payments of up to $4.1 million upon the achievement of certain development milestones and regulatory approval on products covered by the licensed patent rights. Following the commencement of commercial sales of a product covered by the licensed intellectual property, the Company will be obligated to pay tiered royalties in the low- to mid- single digits on products covered by the licensed rights. The patents and patent applications covered by the Inserm license agreement expire between 2022 and 2038, and the obligation to pay royalties under this agreement extend through the last-to-expire patent covering a licensed product. Other In-Licensed Technology The Company continues to seek additional technology for potential new development programs and, as a result, has entered into various licensing agreements for intellectual property rights. In 2015, the Company formed foreign subsidiaries to acquire and in-license various early-stage technology from Indiana University Research and Technology Corporation, Vanderbilt University and the Board of Trustees of the Leland Stanford Junior University. The Company has incurred licensing and milestone fees of $1.6 million, $0.5 million and $0.8 million recorded in research and development expense in connection with its licensing agreements for the years ended December 31, 2017, 2016 and 2015, respectively. See Note 9 for future minimum licensing payment commitments. |
Contract Revenue - Related Party (Notes) |
12 Months Ended |
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Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Contract Revenue - Related Party | Contract Revenue - Related Party During the year ended December 31, 2015, the Company entered into a services agreement with a related party. Pursuant to the services agreement, the Company provides certain services to this related party, including, but not limited to, research and development and clinical study design and management for projects undertaken. In exchange for providing such services, the Company receives payments at a negotiated, arms-length rate. As a result, the consideration received by the Company for its services is considered to be no less favorable to the Company than comparable terms that the Company could obtain from an unaffiliated third party in an arms-length transaction. The services agreement may be canceled by either party upon 60-days’ written notice to the other party. The Company had no contract revenue during the year ended December 31, 2017. During the years ended December 31, 2016 and 2015, the Company recognized approximately $0.6 million and $1.1 million of contract revenue for services and costs provided under the services agreement, respectively. In addition, the Company has a non-voting profit interest in the related party, which provides the Company with the potential to receive a portion of the future distributions of profits, if any. Investment funds affiliated with the Chairman of the Company’s board of directors have a controlling interest in, and the Company’s Chief Executive Officer (CEO) has a non-voting profit interest in, the related party. |
Shareholders’ Equity |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders’ Equity | Shareholders’ Equity Common Stock 2015 Common Stock Offering In September 2015, the Company offered and sold an aggregate of 2,932,500 shares of common stock in an underwritten offering at a public offering price of $38.00 per share, with gross proceeds of approximately $111.4 million. The Company received net proceeds of approximately $104.6 million, net of approximately $6.8 million in underwriting commissions, discounts and other issuance costs. 2017 Common Stock Offering In March 2017, the Company offered and sold an aggregate of 3,731,344 shares of common stock in an underwritten public offering at a price of $33.50 per share, with gross proceeds of approximately $125.0 million. The Company received net proceeds of approximately $117.5 million, net of approximately $7.5 million in underwriting commissions, discounts and other issuance costs. Preferred Stock As of December 31, 2017, the Company is authorized to issue 8,000,000 shares of preferred stock, with a par value of $0.0001 per share, in one or more series, of which 11,000 are designated as Series C-12 Convertible Preferred Stock (Series C-12 Preferred) and 10,000 are designated as Series F Convertible Preferred Stock (Series F Preferred). During the year ended December 31, 2015, the Company issued 19,134 and 17,360 shares of common stock upon the conversion of Series C-12 Preferred and Series F Preferred, respectively. The Series C-12 Preferred is convertible into common stock at a rate of approximately 1,724 shares of common stock for each share of Series C-12 Preferred, and the Series F Preferred is convertible into common stock at a rate of approximately 286 shares of common stock for each share of Series F Preferred. As of December 31, 2017 and 2016, there were 3,906 shares of Series C-12 Preferred and 2,737 shares of Series F Preferred issued and outstanding. As such, as of December 31, 2017 and 2016, the issued and outstanding Series C-12 Preferred and Series F Preferred were convertible into 6,735,378 and 782,032 shares of common stock, respectively. The holders of preferred stock do not have voting rights, other than for general protective rights required by the California General Corporation Law. The Series C-12 Preferred and the Series F Preferred do not have dividends. The Series C-12 Preferred and the Series F Preferred have a liquidation preference in an amount equal to $1,000 per share. As of December 31, 2017 and 2016, the aggregate liquidation preference was approximately $3.9 million and $2.7 million on the Series C-12 Preferred and Series F Preferred, respectively. Share-based Compensation Expense Stock Options 2013 Equity Incentive Plan In September 2013, the Company adopted an equity compensation plan entitled the 2013 Equity Incentive Plan (2013 Equity Plan). The 2013 Equity Plan is an omnibus equity compensation plan that permits the issuance of various types of equity-based compensation awards, including stock options, restricted stock awards, stock appreciation rights and restricted stock units, as well as cash awards, to employees, directors and eligible consultants of the Company. The 2013 Equity Plan has a ten-year term and permits the issuance of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (IRC). The administrator under the plan has broad discretion to establish the terms of awards, including the size, term, exercise price and vesting conditions. Generally, grants to employees vest over four years, with 25% vesting on the one-year anniversary and the remainder vesting either quarterly or monthly thereafter; grants to non-employee directors generally vest over one year on the one-year anniversary. At the 2015, 2016 and 2017 annual meetings of shareholders, the Company’s shareholders approved and adopted an amendment to the 2013 Equity Plan to increase the number of shares of common stock authorized for issuance up to a total of 3,100,000, 4,600,000 and 8,100,000 shares, respectively. As of December 31, 2017, there were 1,875,732 shares available for future grants under the 2013 Equity Plan. Stock Option Activity The Company’s 2013 Equity Plan stock option activity for the years ended December 31, 2017, 2016 and 2015 was comprised of the following:
In April 2015, the Company made a stock option grant to the Company’s Chief Financial Officer upon his hiring to purchase 60,000 shares of common stock at an exercise price equal to the fair market value of the Company’s common stock on the grant date. This grant was awarded as an Inducement Grant outside of the 2013 Equity Plan and is included in the table above. The stock option vests and becomes exercisable with respect to 25% of the underlying shares on the first anniversary of the grant date, and then with respect to the remaining shares, on a quarterly basis over the next three years, subject to continued service during that time. As of December 31, 2017, the Company has reserved 7,853,034 shares of common stock for future issuance upon exercise of all outstanding stock options granted or to be granted under the 2013 Equity Plan, which excludes the 60,000 shares underlying the stock option discussed above that was issued in April 2015. The weighted-average grant date fair values of the stock options granted was $23.80, $15.33 and $22.56 per underlying share for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, $96.0 million of total unrecognized share-based compensation expense related to non-vested stock options remains and is expected to be recognized over a weighted-average period of approximately 3.3 years. During the year ended December 31, 2017, stock options to purchase 174,628 shares of common stock were exercised with an intrinsic value of $3.3 million. During the year ended December 31, 2016, stock options to purchase 17,548 shares of common stock were exercised with an intrinsic value of $0.1 million. During the year ended December 31, 2015, stock options to purchase 51,814 shares of common stock were exercised with an intrinsic value of $0.9 million. Restricted Stock Award Activity Restricted stock awards (RSAs) are grants that entitle the holder to acquire shares of common stock for no cash consideration or at a fixed price, which is typically nominal. The Company accounts for RSAs as issued and outstanding common stock, even though: (a) shares covered by an RSA cannot be sold, pledged or otherwise disposed of until the award vests; and (b) any unvested shares may be reacquired by the Company for the original purchase price following the awardee’s termination of service. The valuation of RSAs is based on the fair market value of the underlying shares on the grant date. In September 2013, the Company issued RSAs consisting of 1,327,048 shares to the Company’s CEO, 79,622 shares to a director and an aggregate of 336,185 shares to three non-officer employees. The RSA grants to the CEO, director and one of the employees were for the replacement of canceled stock options and restricted stock units granted in April 2012, which was done in order to complete the capital restructuring that took place in September 2013. These RSAs were granted outside of the 2013 Equity Plan, but are governed in all respects by the 2013 Equity Plan. These RSAs were granted with a combination of performance-based and time-based vesting components. As of December 31, 2017, all performance-based and time-based vesting conditions had been satisfied. In July 2015, the vesting conditions for 1,042,680 shares of unvested and outstanding RSAs awarded to the CEO were amended to provide that vesting and delivery of the shares were deferred until March 15, 2017, subject to the CEO’s continued service with the Company through such date. In December 2016, vesting and delivery was accelerated for 500,000 shares of the RSAs that had been deferred until March 15, 2017. As of December 31, 2017, the remaining 542,680 shares of the RSAs had vested and been delivered. In August 2015, the Company issued a fully vested RSA representing the right to acquire 4,000 shares of common stock with a grant date fair value of approximately $0.1 million. The Company’s RSA activity for the years ended December 31, 2017, 2016 and 2015 was comprised of the following:
Stock Option Valuation The fair value of each stock option award is estimated on the grant date using a Black-Scholes option pricing model (Black-Scholes model), which uses the assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s common stock. In determining the expected life of employee stock options, the Company uses the “simplified” method. The expected life assumptions for non-employees’ options are based upon the contractual term of the stock options. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company. The Company estimated the fair value of each stock option grant on the grant date using the Black-Scholes model with the following weighted-average assumptions:
Share-Based Compensation Expense Total share-based compensation expense related to all share-based awards for the years ended December 31, 2017, 2016 and 2015 was comprised of the following (in thousands):
Share-based compensation expense recognized for the years ended December 31, 2017, 2016 and 2015 is reduced by actual forfeitures in the period that the forfeiture occurs. Third Party Share-based Compensation Expense The Company initially estimates the fair value of stock options and warrants issued to non-employees, other than non-employee directors, on the grant date using the Black-Scholes model. Thereafter, the Company re-measures the fair value using the Black-Scholes model as of each balance sheet date as the stock options and warrants vest. In December 2014, the Company granted warrants to purchase 51,000 shares of common stock to two outside third parties at an exercise price equal to the fair market value of the stock on the grant dates. One grant vests 25% on each anniversary date over four years. The other grant vested 100% on the one-year anniversary of the grant. In January 2016, the Company granted a warrant to purchase 17,000 shares of common stock to an outside third party at an exercise price equal to the fair market value of the stock on the date of each grant. The grant vested 100% on the one-year anniversary of the grant. In January 2017, the Company granted a warrant to purchase 25,013 shares of common stock to an outside third party at an exercise price equal to the fair market value of the stock on the date of each grant. The grant vests 100% on the one-year anniversary of the grant. The Company recognized compensation expense for these warrant grants of approximately $0.6 million, $0.2 million and $1.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. In February 2015, the Company granted a stock option to purchase 60,000 shares of common stock to a consultant at an exercise price equal to the fair market value of the Company’s common stock on the grant date. This grant was made from the 2013 Equity Plan. The stock option vested with respect to 25% of the underlying shares on the grant date with the remainder to vest quarterly over three years. The Company recognized third-party compensation expense for this stock option grant of approximately $0.4 million for the year ended December 31, 2015. In July 2015, this consultant became an employee of the Company. In August and November 2015, the Company granted stock options to purchase 50,000 shares of common stock to two consultants at exercise prices equal to the fair market value of the Company’s common stock on the grant dates. These grants were made from the 2013 Equity Plan. The vesting of these stock options was contingent on the achievement of a performance milestone by the end of 2016, at which time any unvested shares underlying the options would be canceled. The milestone was achieved in the fourth quarter of 2016 at a 75% achievement level, with 25% of the options canceling. The Company recognized compensation (benefit) expense for these stock option grants of approximately $(0.1) million and $0.1 million for the years ended December 31, 2016 and 2015, respectively. In September 2016, the Company granted a stock option to purchase 35,000 shares of common stock to a consultant at an exercise price equal to the fair market value of the Company’s common stock on the grant date. This grant was made from the 2013 Equity Plan. The stock option will vest with respect to 25% of the underlying shares on the one-year anniversary of the grant, with the remainder to vest monthly over the next three years, subject to continued service during that time. In January 2017, this consultant became an employee of the Company. In February 2017, the Company granted stock options to purchase 42,000 shares of common stock to three consultants at exercise prices equal to the fair market value of the Company’s common stock on the grant dates. These grants were made from the 2013 Equity Plan. Two of the stock options will vest with respect to 25% of the underlying shares on the one-year anniversary of the grant, with the remainder to vest monthly over the next three years, subject to continued service during that time. The other stock option will vest with respect to 25% of the underlying shares on the one-year anniversary of the grant, with the remainder to vest monthly over the next two years, subject to continued service during that time. In addition, an employee converted to a consultant during April 2017. Two of his options were modified and are continuing to vest over the next two years. The Company recognized third-party compensation expense for these stock option grants of approximately $0.4 million for the year ended December 31, 2017. |
Defined Contribution Plan |
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Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | Defined Contribution Plan The Company has a defined contribution plan (401k Plan) covering substantially all of the Company’s employees. The 401k Plan was established to provide retirement benefits for employees and is employee funded up to the elective annual deferral limits. Effective January 1, 2015, the 401k Plan was amended. As a result, all employees are eligible to participate with no minimum service requirement, and the Company made matching contributions of $0.7 million, $0.4 million and $0.2 million for the years December 31, 2017, 2016 and 2015, respectively. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The Company did not record a provision for income taxes for the years ended December 2017, 2016 and 2015 due to a full valuation allowance against its deferred tax assets. On December 22, 2017, the Tax Cuts and Jobs Act (2017 Tax Act) was enacted. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the Company, most notably a reduction of the U.S. corporate tax rate from 34% to 21%, for tax years beginning after December 31, 2017. The 2017 Tax Act also provides for the implementation of a territorial tax system, a one-time transition tax on certain foreign earnings, the acceleration of depreciation for certain assets placed into service after September 27, 2017 and other prospective changes beginning in 2018, including repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on executive compensation and limitations on the deductibility of interest. Pursuant to the SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, the Company has not finalized its accounting for the income tax effects of the 2017 Tax Act. This includes a provisional amount related to the re-measurement of deferred tax assets based on the rates at which they are expected to reverse in the future, which is generally 21% plus the applicable state tax rate, with a corresponding change to the valuation allowance as of December 31, 2017. The impact of the 2017 Tax Act may differ from this estimate during the one-year measurement period due to, among other things, further refinement of the Company’s calculation, changes in interpretations and assumptions the Company has made, additional guidance that may be issued and actions the Company may take as a result of the 2017 Tax Act. Significant components of the Company’s deferred tax assets are as follows (in thousands):
The difference between the provision for income taxes and income taxes computed using the effective U.S. federal statutory rate is as follows (in thousands):
The Company has established a valuation allowance against its federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred assets are realizable, the valuation allowance will be reduced accordingly and recorded as a tax benefit. Pursuant to Section 382 and 383 of the IRC, utilization of the Company’s federal net operating loss and research and development credit carryforwards may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating loss and research and development credit carryforwards prior to utilization. The Company has not completed an IRC Section 382 and 383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. The Company does not presently plan to complete an IRC Section 382 and 383 analysis; and until this analysis has been completed, the Company has removed the deferred tax assets for net operating losses and research and development credits generated through 2017 from its deferred tax assets and has recorded a corresponding increase to its valuation allowance. As of December 31, 2017, the Company has estimated federal and California net operating loss carryforwards of approximately $537.1 million and $323.5 million, respectively. The difference between the federal and California tax net operating loss carryforwards is primarily attributable to the capitalization of research and development expenses for California income tax purposes. In addition, the Company has estimated federal and California research and development tax credit carryforwards of approximately $21.0 million and $13.4 million, respectively. The federal net operating loss carryforwards, federal research tax credit carryforwards and California net operating loss carryforwards will begin to expire in 2018, if not utilized. California research and development credit carryforwards will carry forward indefinitely until utilized. The Company believes that, in May 2010 and February 2009, it experienced ownership changes at times when its enterprise value was minimal. As a result of the ownership changes and low enterprise values at such times, the Company’s federal and California net operating loss carryforwards and federal research and development credit carryforwards as of December 31, 2017 will likely be subject to annual limitations under IRC Section 382 and 383 and, more likely than not, will expire unused. There were no unrecognized tax benefits as of the December 31, 2017 and 2016. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months. The Company had no accrual for interest or penalties on the Company’s consolidated balance sheets as of December 31, 2017 or December 31, 2016, and has not recognized interest and/or penalties in the consolidated statements of operations for the years ended December 31, 2017, 2016 and 2015. The Company is subject to taxation in the U.S. and various state jurisdictions. The Company’s tax returns since inception are subject to examination by the U.S. and various state tax authorities. The Company is not currently undergoing a tax audit in any federal or state jurisdiction. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Leases On December 29, 2016, the Company entered into an agreement with BMR-Axiom LP to lease office and laboratory space as the Company’s new corporate headquarters located at 4550 Towne Centre Court, San Diego, California (Lease) for a period of ten years commencing on October 30, 2017. The Lease provides an option to extend the Lease for an additional 5.0 years at the end of the initial term. The Company has provided a standby letter of credit for $0.9 million in lieu of a security deposit. This amount will decrease to $0.6 million after year two of the lease and decrease to $0.3 million after year 5 of the lease term. The Lease provided an allowance for tenant improvements of $13.7 million, which was classified as deferred rent on the Company’s balance sheet and will be amortized as an offset to rent expense with a corresponding charge to depreciation expense on a straight-line basis over the term of the lease. The annual rent under the Lease is subject to escalation during the term. In addition to rent, the Lease requires the Company to pay certain taxes, insurance and operating costs relating to the leased premises. The Lease contains customary default provisions, representations, warranties and covenants. Annual future minimum payments under operating leases as of December 31, 2017 are as follows (in thousands):
Rent expense was $1.7 million, $1.1 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. Licensing Agreements In the normal course of business, the Company enters into licensing agreements under which the Company commits to certain annual maintenance payments. Annual future minimum licensing payments under the Company’s agreements as of December 31, 2017 are as follows (in thousands):
Supply Agreements In the normal course of business, the Company enters into agreements for the manufacturing and supply of its clinical and commercial products. In 2017, the Company entered into agreements arranging for the manufacture and supply of GIAPREZA through 2022. During this time, the Company will be obligated to make certain minimum purchases. Annual future minimum payments for manufacturing and supply agreements as of December 31, 2017 are as follows (in thousands):
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Quarterly Financial Information (unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information (unaudited) | Quarterly Financial Information (unaudited) The following is a summary of the quarterly results of operations for the years ended December 31, 2017 and 2016 (in thousands, except per share amounts):
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Summary of Significant Accounting Policies (Policies) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation and Use of Estimates The consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include the accounts of the Company and its wholly owned subsidiaries. |
Principles of Consolidation | All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | The preparation of financial statements requires that management make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Actual results could differ materially from those estimates. |
Reclassification | Certain amounts previously reported in the financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not affect net loss, shareholders’ equity or cash flows. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity from the date of purchase of less than three months to be cash equivalents. The carrying value of the Company’s money market funds is included in cash equivalents and approximates the fair value. |
Concentration of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents. The Company invests excess cash in money market accounts. This investment strategy is consistent with the Company’s policy to ensure safety of principal and maintain liquidity. |
Property and Equipment | Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Amortization of leasehold improvements is recorded over the shorter of the lease term or the estimated useful life of the related assets. Maintenance and repairs are charged to operating expense as incurred. When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any gain or loss is included in operating expense. Lease incentives are amortized on a straight-line basis over the lease term as a reduction to rent expense. Leasehold improvements are capitalized and amortized over the shorter of the lease term or expected useful lives. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when all of the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable; and (4) collectibility is reasonably assured. The Company has recognized revenue from payments received under a services agreement with a related party. Under the terms of this services agreement, the Company receives payments from this related party for research and development services that the Company provides at a negotiated, arms-length rate. |
Research and Development Expenses | Research and Development Expense Research and development expense includes salaries and benefits, facilities and other overhead costs, research-related manufacturing costs, contract service and clinical and preclinical-related service costs performed by clinical research organizations, research institutions and other outside service providers. Research and development expense is expensed as incurred when these expenditures relate to the Company’s research and development efforts and have no alternative future uses. In accordance with certain research and development agreements, the Company is obligated to make certain upfront payments upon execution of the agreement. Advance payments, including nonrefundable amounts, for materials or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the related services are performed. Acquisition or milestone payments that the Company makes in connection with in-licensed technology are expensed as incurred when there is uncertainty in receiving future economic benefits from the licensed technology. The Company considers the future economic benefits from the licensed technology to be uncertain until such licensed technology is incorporated into products that are approved for marketing by the FDA or when other significant risk factors are abated. For accounting purposes, management has viewed future economic benefits for all of the Company’s licensed technology to be uncertain. |
Clinical Trial Expenses | Clinical Trial Expenses Payments in connection with the Company’s clinical trials are often made under contracts with multiple contract research organizations that conduct and manage clinical trials on the Company’s behalf. The financial terms of these contracts are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Generally, these contracts set forth the scope of work to be performed at a fixed fee, unit price or on a time and materials basis. Payments under these contracts depend on factors such as the successful enrollment or treatment of patients or the completion of other clinical trial milestones. The Company amortizes prepaid clinical trial costs to expense based on estimates regarding work performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials. Expenses related to clinical trials are accrued based on estimates regarding work performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials. Other incidental costs related to patient enrollment or treatment are accrued when reasonably certain. If the contracted amounts are modified, the accruals are modified accordingly on a prospective basis. Revisions in the scope of a contract are charged to research and development expense in the period in which the facts that give rise to the revision occur. |
Patent Costs | Patent Costs Legal costs in connection with approved patents and patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are recorded in general and administrative expense in the consolidated statements of operations. |
Share-based Compensation | Share-based Compensation The Company accounts for share-based payment arrangements in accordance with Accounting Standards Codification (ASC) 718, Compensation - Stock Compensation and ASC 505-50, Equity - Equity Based Payments to Non-Employees, which requires the recognition of compensation expense, using a fair-value based method, for all costs related to share-based payments, including stock options and restricted stock awards. These standards require companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The Company has elected to account for forfeitures as they occur. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the income tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates applicable to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is applied against any deferred tax asset if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of operations. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated based on the weighted-average number of common shares outstanding, excluding unvested restricted stock awards. Diluted net loss per share is calculated using the weighted-average number of common shares outstanding plus common stock equivalents. Convertible preferred stock, stock options, warrants and unvested restricted stock awards are considered common stock equivalents and are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Common stock equivalents are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. |
Segment Reporting | Segment Reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. Management views its operations and manages its business in one operating segment. |
Fair Value Measurement | Fair Value Measurements The Company follows the provisions of ASC 820-10, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP and requires certain disclosures about fair value measurements. Broadly, the ASC 820-10 framework clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: Level 1) observable inputs such as quoted prices in active markets; Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3) unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. The hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Cash equivalents consist of money market accounts with maturities of 90 days or less. Due to the high ratings and short-term nature of these funds, the Company considers the inputs to the value of all cash and cash equivalents as Level 1. The Company’s consolidated financial instruments include cash and cash equivalents, prepaid expenses, accounts payable and accrued expenses. The carrying amounts reported in the balance sheets for cash equivalents, prepaid expenses, accounts payable and accrued expenses approximate fair values because of the short-term nature of these instruments. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2017-09, Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting. The new standard clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 will be effective for the Company in the first quarter of 2018. Early adoption is permitted, including adoption in an interim period for which financial statements have not yet been issued. The Company plans to adopt the ASU in the first quarter of 2018 and expects the standard to have no material impact on the Company’s financial position or results of operations. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard update clarifies the presentation of restricted cash and cash equivalents, and requires companies to include restricted cash and cash equivalents in the beginning and ending cash and cash equivalents on the statement of cash flows. Additional disclosures will be required to describe the amount and detail of the restriction by balance sheet line item. ASU 2016-18 will be effective for the Company in the first quarter of 2018. The Company plans to adopt the ASU in the first quarter of 2018, which will require inclusion of the Company’s restricted cash balances in cash and cash equivalents on the statement of cash flows with retrospective application of each prior period presented. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets and eliminates certain real estate-specific provisions. ASU 2016-02 will be effective for the Company in the first quarter of 2019 and will be adopted with modified retrospective application for the Company's new 10-year lease agreement for its corporate headquarters, which commenced October 30, 2017. This lease will be recognized on the balance sheet as a lease liability with a corresponding right-of-use asset, which will require modified retrospective application back to the fourth quarter of 2017 and for all of 2018. By 2019, all of the Company’s prior existing leases will have ended. Those leases will not require modified retrospective disclosures applied within the consolidated financial statements upon adoption in 2019. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Since its initial release, the FASB has issued several amendments to the standard, which include clarification of accounting guidance related to identification of performance obligations and principal versus agent considerations. Topic 606 will be effective for the Company in the first quarter of 2018 and allows for a full retrospective or a modified retrospective adoption approach. The Company currently does not have, and has never had any, contracts that are within the scope of Topic 606 or its predecessor guidance, ASC 605 Revenue Recognition. Accordingly, there will not be any retrospective impact to the financial statements upon the adoption of Topic 606, which the Company will implement when it has contracts within its scope. The Company anticipates that initial sales subject to Topic 606 will begin in the first quarter of 2018, and that such sales will be to a limited number of customers, which are pharmaceutical specialty distributors. The Contract Revenue - Related Party reported in our results of operations for 2015 and 2016, which represents expense reimbursements from a related party, will not be impacted by the adoption of the new guidance. |
Balance Sheet Account Details (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and equipment, net consists of the following (in thousands):
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Accrued Expenses | Accrued clinical and other expenses consist of the following (in thousands):
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Shareholders’ Equity (Tables) |
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity and Related Data | The Company’s 2013 Equity Plan stock option activity for the years ended December 31, 2017, 2016 and 2015 was comprised of the following:
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Summary of restricted stock activity | The Company’s RSA activity for the years ended December 31, 2017, 2016 and 2015 was comprised of the following:
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Stock Options, Valuation Assumptions | The Company estimated the fair value of each stock option grant on the grant date using the Black-Scholes model with the following weighted-average assumptions:
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Summary of Share-based Compensation Expense | Total share-based compensation expense related to all share-based awards for the years ended December 31, 2017, 2016 and 2015 was comprised of the following (in thousands):
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant components deferred tax assets | Significant components of the Company’s deferred tax assets are as follows (in thousands):
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Provision for income taxes | The difference between the provision for income taxes and income taxes computed using the effective U.S. federal statutory rate is as follows (in thousands):
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Commitments and Contingencies (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Future minimum annual lease payments under lease agreements | Annual future minimum payments under operating leases as of December 31, 2017 are as follows (in thousands):
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Annual future minimum licensing payments | Annual future minimum licensing payments under the Company’s agreements as of December 31, 2017 are as follows (in thousands):
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Annual future minimum payments for manufacturing and supply agreements | Annual future minimum payments for manufacturing and supply agreements as of December 31, 2017 are as follows (in thousands):
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Quarterly Financial Information (unaudited) (Tables) |
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of quarterly financial information | The following is a summary of the quarterly results of operations for the years ended December 31, 2017 and 2016 (in thousands, except per share amounts):
|
Business (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 90,915 | $ 65,726 | $ 126,467 | $ 48,555 |
Balance Sheet Account Details (Property and Equipment) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 26,803 | $ 4,229 |
Accumulated depreciation and amortization | (2,235) | (1,084) |
Total property and equipment, net | 24,568 | 3,145 |
Lab equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 7,812 | 2,610 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 2,282 | 389 |
Computer hardware | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 1,238 | 457 |
Software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 619 | 309 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 14,852 | $ 464 |
Balance Sheet Account Details (Accrued Expenses) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued clinical trials | $ 577 | $ 828 |
Accrued other | 126 | 77 |
Total accrued clinical and other expenses | $ 703 | $ 905 |
Licensed Technology (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||
Licensing and milestone fees | $ 1.6 | $ 0.5 | $ 0.8 | |
Scenario, Forecast [Member] | GeorgeWashington [Member] | ||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||
Licensing and milestone fees | $ 0.5 | |||
Scenario, Forecast [Member] | Inserm [Member] [Member] | ||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | ||||
Licensing and milestone fees | $ 4.1 |
Contract Revenue - Related Party (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Related Party Transactions [Abstract] | |||
Term of written notice for termination of agreement | 60 days | ||
Contract revenue - related party | $ 0 | $ 616,000 | $ 1,057,000 |
Shareholders’ Equity (Summary of Restricted Stock Awards) (Details) - Restricted Stock [Member] - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Beginning balance (in shares) | 542,680 | 1,072,899 | 1,279,007 |
Granted (in shares) | 4,000 | ||
Vested (in shares) | (542,680) | (530,219) | (210,108) |
Ending balance in shares (in shares) | 0 | 542,680 | 1,072,899 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |||
Beginning balance (in usd per share) | $ 13.22 | $ 13.00 | $ 12.86 |
Granted (in usd per share) | 23.12 | ||
Vested (in usd per share) | 13.22 | 12.78 | 12.41 |
Ending balance (in usd per share) | $ 0.00 | $ 13.22 | $ 13.00 |
Shareholders’ Equity (Stock Options, Valuation Assumptions) (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Volatility | 139.00% | 143.00% | 149.00% |
Expected life (years) | 6 years 1 month 15 days | 5 years 9 months 18 days | 5 years 3 months 10 days |
Risk-free interest rate | 2.10% | 1.40% | 1.50% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Defined Contribution Plan (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Retirement Benefits [Abstract] | |||
Matching contributions made | $ 0.7 | $ 0.4 | $ 0.2 |
Income Taxes (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Line Items] | |||
Unrecognized tax benefits | $ 0 | $ 0 | |
Accrual for interest or penalties | 0 | 0 | |
Recognized interest and penalties | 0 | $ 0 | $ 0 |
Domestic Tax Authority [Member] | |||
Income Tax Disclosure [Line Items] | |||
Income tax net operating loss carryforwards | 537,100,000 | ||
Domestic Tax Authority [Member] | Research Tax Credit Carryforward [Member] | |||
Income Tax Disclosure [Line Items] | |||
California research and development tax credit carryforwards | 21,000,000 | ||
State and Local Jurisdiction [Member] | |||
Income Tax Disclosure [Line Items] | |||
Income tax net operating loss carryforwards | 323,500,000 | ||
State and Local Jurisdiction [Member] | Research Tax Credit Carryforward [Member] | |||
Income Tax Disclosure [Line Items] | |||
California research and development tax credit carryforwards | $ 13,400,000 |
Income Taxes (Significant Components of Deferred Tax Assets) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|
Income Tax Disclosure [Abstract] | |||
Capitalized research and development and other | $ 7,379 | $ 9,380 | $ 33,894 |
Valuation allowance | (7,379) | (9,380) | (33,894) |
Net deferred tax assets | $ 0 | $ 0 | $ 0 |
Income Taxes (Provision for Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Income tax benefit at statutory federal rate | $ (39,033) | $ (26,583) | $ (14,250) |
Research and development credits | (2,691) | (1,240) | 1,128 |
Foreign rate differential | 1,249 | 0 | 0 |
Expired tax attributes | 2,228 | (5) | 31 |
Impact of the 2017 Tax Act | 71,199 | 0 | 0 |
Stock-based compensation | 2,253 | 0 | 0 |
Change in valuation allowance | (35,246) | 25,091 | 12,042 |
Other permanent differences | 41 | 2,737 | 1,049 |
Provision for income taxes | $ 0 | $ 0 | $ 0 |
Commitments and Contingencies (Annual Future Minimum Payments Under Operating Leases) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 1,945 |
2019 | 3,951 |
2020 | 4,070 |
2021 | 4,192 |
2022 | 4,318 |
Thereafter | 22,755 |
Total future minimum lease payments | $ 41,231 |
Commitments and Contingencies (Annual Future Minimum Licensing Payments) (Details) - Licensing Agreements [Member] $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Unrecorded Unconditional Purchase Obligation [Line Items] | |
2018 | $ 142 |
2019 | 147 |
2020 | 148 |
2021 | 147 |
2022 | 158 |
Thereafter | 53 |
Total future minimum license payments | $ 795 |
Commitments and Contingencies (Annual Future Minimum Payments for Manufacturing and Supply Agreements) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 1,092 |
2019 | 921 |
2020 | 921 |
2021 | 921 |
Total future minimum manufacturing and supply agreement payments | $ 3,855 |
Quarterly Financial Information (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2016 |
Jun. 30, 2016 |
Sep. 30, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenue | $ 0 | $ 0 | $ 0 | $ 0 | $ 85 | $ 234 | $ 253 | $ 44 | $ 0 | $ 616 | $ 1,057 |
Loss from operations | (38,846) | (26,483) | (26,830) | (23,268) | (24,924) | (16,534) | (15,617) | (21,297) | (115,427) | (78,372) | (41,969) |
Net loss | $ (38,546) | $ (26,288) | $ (26,729) | $ (23,240) | $ (24,887) | $ (16,481) | $ (15,566) | $ (21,251) | $ (114,803) | $ (78,185) | $ (41,912) |
Basic and diluted net loss per share (usd per share) | $ (1.74) | $ (1.19) | $ (1.21) | $ (1.26) | $ (1.44) | $ (0.96) | $ (0.90) | $ (1.23) | $ (5.41) | $ (4.54) | $ (2.68) |
Weighted-average common shares outstanding - basic and diluted (in shares) | 22,151 | 22,125 | 22,123 | 18,410 | 17,280 | 17,210 | 17,211 | 17,211 | 21,215 | 17,228 | 15,651 |
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