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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2019	Aug. 01, 2019
Document and Entity Information
Entity Registrant Name	Verastem, Inc.
Entity Central Index Key	0001526119
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		74,140,687
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 113,080	$ 129,867
Short-term investments	74,173	119,786
Accounts receivable, net	1,389	306
Inventory	294	327
Prepaid expenses and other current assets	3,410	2,973
Total current assets	192,346	253,259
Property and equipment, net	1,149	1,369
Right-of-use asset, net	3,225
Intangible assets, net	20,793	21,577
Other assets	1,028	1,031
Total assets	218,541	277,236
Current liabilities:
Accounts payable	11,538	10,253
Accrued expenses	19,372	21,108
Lease liability, short-term	294
Current portion of long-term debt		5,716
Total current liabilities	31,204	37,077
Non-current liabilities:
Long-term debt	34,673	19,506
Convertible senior notes	99,163	95,231
Lease liability, long-term	3,694
Other non-current liabilities	500	1,123
Total liabilities	169,234	152,937
Stockholders' equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized, no shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
Common stock, $0.0001 par value; 200,000 shares authorized, 73,877 and 73,806 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	7	7
Additional paid-in capital	505,086	499,741
Accumulated other comprehensive income	86	127
Accumulated deficit	(455,872)	(375,576)
Total stockholders' equity	49,307	124,299
Total liabilities and stockholders' equity	$ 218,541	$ 277,236

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue:
Total revenue	$ 3,136	$ 10,000	$ 4,807	$ 10,000
Operating expenses:
Cost of sales - product	377		534
Cost of sales - intangible amortization	392		785
Research and development	11,346	12,381	21,103	23,315
Selling, general and administrative	29,298	15,813	55,331	25,640
Total operating expenses	41,413	28,194	77,753	48,955
Loss from operations	(38,277)	(18,194)	(72,946)	(38,955)
Interest income	1,268	343	2,765	534
Interest expense	(5,185)	(516)	(10,115)	(996)
Net loss	$ (42,194)	$ (18,367)	$ (80,296)	$ (39,417)
Net loss per share - basic and diluted	$ (0.57)	$ (0.30)	$ (1.09)	$ (0.70)
Weighted average common shares outstanding used in computing net loss per share - basic and diluted (in shares)	73,877	61,256	73,865	56,074
Net loss	$ (42,194)	$ (18,367)	$ (80,296)	$ (39,417)
Unrealized (loss) gain on available-for-sale securities	(24)	4	(41)	6
Comprehensive loss	(42,218)	(18,363)	(80,337)	(39,411)
Product
Revenue:
Total revenue	3,019		4,690
License and collaboration revenue
Revenue:
Total revenue	$ 117	$ 10,000	$ 117	$ 10,000

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Accumulated deficit	Total
Balance at Dec. 31, 2017	$ 5	$ 360,823	$ (2)	$ (303,142)	$ 57,684
Balance (in shares) at Dec. 31, 2017	50,800,908
Increase (Decrease) in Stockholders' Equity
Net loss				(21,050)	(21,050)
Unrealized (loss) gain on available-for-sale securities			2		2
Issuance of common stock resulting from at-the-market transactions, net of issuance costs		588			588
Issuance of common stock resulting from at-the-market transactions, net of issuance costs (in shares)	167,065
Stock-based compensation expense		1,328			1,328
Balance at Mar. 31, 2018	$ 5	362,739		(324,192)	38,552
Balance (in shares) at Mar. 31, 2018	50,967,973
Balance at Dec. 31, 2017	$ 5	360,823	(2)	(303,142)	57,684
Balance (in shares) at Dec. 31, 2017	50,800,908
Increase (Decrease) in Stockholders' Equity
Net loss					(39,417)
Unrealized (loss) gain on available-for-sale securities					6
Balance at Jun. 30, 2018	$ 7	469,415	4	(342,559)	126,867
Balance (in shares) at Jun. 30, 2018	73,579,699
Balance at Mar. 31, 2018	$ 5	362,739		(324,192)	38,552
Balance (in shares) at Mar. 31, 2018	50,967,973
Increase (Decrease) in Stockholders' Equity
Net loss				(18,367)	(18,367)
Unrealized (loss) gain on available-for-sale securities			4		4
Issuance of common stock resulting from at-the-market transactions, net of issuance costs	$ 1	23,687			23,688
Issuance of common stock resulting from at-the-market transactions, net of issuance costs (in shares)	6,314,410
Issuance of common stock resulting from follow-on offering, net of issuance costs	$ 1	81,188			81,189
Issuance of common stock resulting from follow-on offering, net of issuance costs (in shares)	16,111,110
Issuance of common stock resulting from exercise of stock options		261			261
Issuance of common stock resulting from exercise of stock options (in shares)	186,206
Stock-based compensation expense		1,540			1,540
Balance at Jun. 30, 2018	$ 7	469,415	4	(342,559)	126,867
Balance (in shares) at Jun. 30, 2018	73,579,699
Balance at Dec. 31, 2018	$ 7	499,741	127	(375,576)	$ 124,299
Balance (in shares) at Dec. 31, 2018	73,806,344				73,806,000
Increase (Decrease) in Stockholders' Equity
Net loss				(38,102)	$ (38,102)
Unrealized (loss) gain on available-for-sale securities			(17)		(17)
Issuance of common stock resulting from exercise of stock options		75			75
Issuance of common stock resulting from exercise of stock options (in shares)	46,803
Issuance of common stock resulting from vesting of restricted stock units and payment of tax withholdings		(43)			(43)
Issuance of common stock resulting from vesting of restricted stock units and payment of tax withholdings (in shares)	23,792
Stock-based compensation expense		2,248			2,248
Balance at Mar. 31, 2019	$ 7	502,021	110	(413,678)	88,460
Balance (in shares) at Mar. 31, 2019	73,876,939
Balance at Dec. 31, 2018	$ 7	499,741	127	(375,576)	$ 124,299
Balance (in shares) at Dec. 31, 2018	73,806,344				73,806,000
Increase (Decrease) in Stockholders' Equity
Net loss					$ (80,296)
Unrealized (loss) gain on available-for-sale securities					(41)
Balance at Jun. 30, 2019	$ 7	505,086	86	(455,872)	$ 49,307
Balance (in shares) at Jun. 30, 2019	73,876,939				73,877,000
Balance at Mar. 31, 2019	$ 7	502,021	110	(413,678)	$ 88,460
Balance (in shares) at Mar. 31, 2019	73,876,939
Increase (Decrease) in Stockholders' Equity
Net loss				(42,194)	(42,194)
Unrealized (loss) gain on available-for-sale securities			(24)		(24)
Stock-based compensation expense		3,065			3,065
Balance at Jun. 30, 2019	$ 7	$ 505,086	$ 86	$ (455,872)	$ 49,307
Balance (in shares) at Jun. 30, 2019	73,876,939				73,877,000

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net loss	$ (80,296)	$ (39,417)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	227	792
Amortization of acquired intangible asset	785
Amortization of right-of-use asset and lease liability	112
Stock-based compensation expense	5,313	2,867
Amortization of deferred financing costs, debt discounts and premiums and discounts on available-for-sale marketable securities	2,815	178
Gain on sale of fixed assets		(79)
Changes in operating assets and liabilities:
Accounts receivable, net	(1,083)
Inventory	33
Prepaid expenses, other current assets and other assets	(434)	(457)
Accounts payable	1,278	(1,436)
Accrued expenses and other liabilities	(2,199)	4,785
Net cash used in operating activities	(73,449)	(32,767)
Investing activities
Purchases of property and equipment		(677)
Sales of property and equipment		82
Purchases of investments	(37,637)
Maturities of investments	84,530	4,500
Net cash provided by investing activities	46,893	3,905
Financing activities
Proceeds from long-term debt, net of issuance costs	9,694	9,900
Proceeds from the exercise of stock options	75	262
Proceeds from the issuance of common stock, net		105,457
Net cash provided by financing activities	9,769	115,619
Increase (decrease) in cash, cash equivalents and restricted cash	(16,787)	86,757
Cash, cash equivalents and restricted cash at beginning of period	130,608	82,338
Cash, cash equivalents and restricted cash at end of period	113,821	169,095
Supplemental disclosure of non-cash investing and financing activities
Purchases of property and equipment in accounts payable	7	527
Common stock issuance costs included in accounts payable and accrued expenses	$ 15	$ 316

Summary of significant accounting policies

6 Months Ended

Jun. 30, 2019

Summary of significant accounting policies

Summary of significant accounting policies

2. Summary of significant accounting policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) for interim financial reporting and as required by Regulation S-X, Rule 10-01 under the assumption that the Company will continue as a going concern for the next twelve months. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, or any adjustments that might result from the uncertainty related to the Company’s ability to continue as a going concern. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2019. For further information, refer to the financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission (SEC) on March 12, 2019.

Significant Accounting Policies

The significant accounting policies identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 that require the Company to make estimates and assumptions include accrued research and development expenses, stock-based compensation, revenue recognition, collaborative arrangements, accounts receivable, inventory and intangible assets. During the six months ended June 30, 2019, there were no material changes to the significant accounting policies, except for the adoption of Accounting Standards Codification (ASC) 842, Leases, issued by the Financial Accounting Standards Board (the FASB), which is detailed below.

Leases

Effective January 1, 2019, the Company adopted ASC 842. This standard requires lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances within the arrangement. A lease is identified where an arrangement conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration. Leases which are identified within the scope of ASC 842 and which have a term greater than one year are recognized on the Company’s condensed consolidated balance sheets as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with terms of one year or less on its condensed consolidated balance sheets. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates to calculate the present value of lease payments. Incremental borrowing rates are the rates the Company incurs to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

In accordance with ASC 842, components of a lease are split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). The fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components. Rather, they would account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating right-of-use asset being recorded on the condensed consolidated balance sheets and amortized on a straight-line basis as lease expense.

Revenue Recognition

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services in accordance with ASC 606 Revenue from Contracts with Customers. To determine revenue recognition for contracts with its customers, the Company performs the following five step assessment: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines which goods and services are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Product Revenue, Net – The Company sells COPIKTRA to a limited number of specialty pharmacies and specialty distributors in the United States. These customers subsequently resell COPIKTRA either directly to patients or to community hospitals or oncology clinics with in-office dispensaries who in turn distribute COPIKTRA to patients. In addition to distribution agreements with customers, the Company also enters into arrangements with (1) certain government agencies and various private organizations (Third-Party Payers), which may provide for chargebacks or discounts with respect to the purchase of COPIKTRA, and (2) Medicare and Medicaid, which may provide for certain rebates with respect to the purchase of COPIKTRA.

The Company recognizes revenue on sales of COPIKTRA when a customer obtains control of the product, which occurs at a point in time (typically upon delivery). Product revenues are recorded at the wholesale acquisition costs, net of applicable reserves for variable consideration. Components of variable consideration include trade discounts and allowances, Third-Party Payer chargebacks and discounts, government rebates, other incentives, such as voluntary co-pay assistance, product returns, and other allowances that are offered within contracts between the Company and customers, payors, and other indirect customers relating to the Company’s sale of COPIKTRA. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable or a current liability. These estimates take into consideration a range of possible outcomes based upon relevant factors such as customer contract terms, information received from third parties regarding the anticipated payor mix for COPIKTRA, known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled with respect to sales made.

The amount of variable consideration which is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized under contracts will not occur in a future period. The Company’s analyses contemplate the application of the constraint in accordance with ASC 606. For the three and six months ended June 30, 2019, the Company determined a material reversal of revenue would not occur in a future period for the estimates detailed below and, therefore, the transaction price was not reduced further. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances: The Company generally provides customers with invoice discounts on sales of COPIKTRA for prompt payment, which are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company compensates its specialty distributor customers for sales order management, data, and distribution services. The Company has determined such services are not distinct from the Company’s sale of COPIKTRA to the specialty distributor customers and, therefore, these payments have also been recorded as a reduction of revenue within the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019.

Third-Party Payer Chargebacks, Discounts and Fees: The Company executes contracts with Third-Party Payers which allow for eligible purchases of COPIKTRA at prices lower than the wholesale acquisition cost charged to customers who directly purchase the product from the Company. In some cases, customers charge the Company for the difference between what they pay for COPIKTRA and the ultimate selling price to the Third-Party Payers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable, net. Chargeback amounts are generally determined at the time of resale to the qualified Third-Party Payer by customers, and the Company generally issues credits for such amounts within a few weeks of the customer’s notification to the Company of the resale. Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel inventories at the end of each reporting period that the Company expects will be sold to Third-Party Payers, and chargebacks that customers have claimed, but for which the Company has not yet issued a credit. In addition, the Company compensates certain Third-Party Payers for administrative services, such as account management and data reporting. These administrative service fees have also been recorded as a reduction of product revenue within the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019.

Government Rebates: The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.

Other Incentives: Other incentives which the Company offers include voluntary co-pay assistance programs, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive for product that has been recognized as revenue but remains in the distribution channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a component of accrued expenses on the condensed consolidated balance sheets.

Product Returns: Consistent with industry practice, the Company generally offers customers a limited right of return for product that has been purchased from the Company. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution channel.

Subject to certain limitations, the Company’s return policy allows for eligible returns of COPIKTRA for credit under the following circumstances:

Receipt of damaged product;

Shipment errors that were a result of an error by the Company;

Expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;

Product subject to a recall; and

Product that the Company, at its sole discretion, has specified can be returned for credit.

The Company has not received any returns to date.

If taxes should be collected from customers relating to product sales and remitted to governmental authorities, they will be excluded from product revenue. The Company expenses incremental costs of obtaining a contract when incurred, if the expected amortization period of the asset that the Company would have recognized is one year or less. However, no such costs were incurred during the three and six months ended June 30, 2019.

Exclusive Licenses of Intellectual Property - The Company may enter into collaboration and licensing arrangements for research and development, manufacturing, and commercialization activities with collaboration partners for the development and commercialization of its product candidates, which have components within the scope of ASC 606. The arrangements generally contain multiple elements or deliverables, which may include (i) licenses, or options to obtain licenses, to the Company’s intellectual property, (ii) research and development activities performed for the collaboration partner, (iii) participation on joint steering committees, and (iv) the manufacturing of commercial, clinical or preclinical material. Payments pursuant to these arrangements typically include non-refundable, upfront payments, milestone payments upon the achievement of significant development events, research and development reimbursements, sales milestones, and royalties on product sales. The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period. The contracts into which the Company enters generally do not include significant financing components.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its collaboration and license agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract within the scope of ASC 606; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. As part of the accounting for these arrangements, the Company must use significant judgment to determine: a) the number of performance obligations based on the determination under step (ii) above; b) the transaction price under step (iii) above; c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above; and d) the measure of progress in step (v) above. The Company uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as described further below.

If a license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. In assessing whether a promise or performance obligation is distinct from the other elements, the Company considers factors such as the research, development, manufacturing and commercialization capabilities of the collaboration partner and the availability of its associated expertise in the general marketplace. In addition, the Company considers whether the collaboration partner can benefit from a promise for its intended purpose without the receipt of the remaining elements, whether the value of the promise is dependent on the unsatisfied promise, whether there are other vendors that could provide the remaining promise, and whether it is separately identifiable from the remaining promise. For licenses that are combined with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue. The Company evaluates the measure of progress of each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The measure of progress, and thereby periods over which revenue should be recognized, is subject to estimates by management and may change over the course of the arrangement. Such a change could have a material impact on the amount of revenue the Company records in future periods.

Customer Options: If an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services such as research and development services or manufacturing services, the goods and services underlying the customer options are not considered to be performance obligations at the inception of the arrangement; rather, such goods and services are contingent on exercise of the option, and the associated option fees are not included in the transaction price. The Company evaluates customer options for material rights or options to acquire additional goods or services for free or at a discount. If a customer option is determined to represent a material right, the material right is recognized as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified discount and the estimated probability that the customer will exercise the option. Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised.

Milestone Payments: At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the respective milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

Collaborative Arrangements: Contracts are considered to be collaborative arrangements when they satisfy the following criteria defined in ASC 808, Collaborative Arrangements: (i) the parties to the contract must actively participate in the joint operating activity and (ii) the joint operating activity must expose the parties to the possibility of significant risk and rewards, based on whether or not the activity is successful. Payments received from or made to a partner that are the result of a collaborative relationship with a partner, instead of a customer relationship, such as co-development activities, are recorded as a reduction or increase to research and development expense, respectively.

Concentrations of credit risk and off-balance sheet risk

Cash, cash equivalents, short-term investments and trade accounts receivable are financial instruments that potentially subject the Company to concentrations of credit risk. The Company mitigates this risk by maintaining its cash and cash equivalents and investments with high quality, accredited financial institutions. The management of the Company’s investments is not discretionary on the part of these financial institutions. As of June 30, 2019, the Company’s cash, cash equivalents and short-term investments were deposited at two financial institutions and it has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

As of June 30, 2019, there were two customers that cumulatively made up more than 60% of the Company’s trade accounts receivable balance. The Company assesses the creditworthiness of all its customers and sets and reassesses customer credit limits to ensure collectability of any trade accounts receivable balances are assured.

For the quarter ended June 30, 2019, there were five customers who each individually accounted for greater than 10% of the Company’s total revenues.

Recently Issued Accounting Standards Updates

In November 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which makes targeted improvements for collaborative arrangements to clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, adds unit of account guidance in Topic 808 to align with guidance in Topic 606, and clarifies presentation of certain revenues with a collaborative arrangement participant which are not directly related to a third party. ASU 2018-18 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not elected to early adopt this standard and is currently evaluating the impact the adoption of the standard will have on its condensed consolidated financial statements and related disclosures.

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not elected to early adopt this standard and is currently evaluating the impact the adoption of the standard will have on its condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information and modifies some disclosure requirements. ASU 2018-13 is effective for all entities for annual and interim periods beginning after December 15, 2019. An entity is permitted to early adopt either the entire standard or only the provisions that eliminate or modify requirements. The Company has not elected to early adopt this standard and is currently evaluating the impact the adoption of the standard will have on its condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 will replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard will be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not elected to early adopt this standard and is currently evaluating the impact the adoption of the standard will have on its condensed consolidated financial statements and related disclosures.

Recently Adopted Accounting Standards Updates

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services to be used or consumed in its own operations by issuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract and services from nonemployees. ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions accounted for under ASC 606. ASU 2018-07 was effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted, but no earlier than the date on which ASC 606 is adopted. The Company adopted this standard prospectively effective January 1, 2019. The adoption of this ASU did not have an effect on the Company’s condensed consolidated financial statements or related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the guidance under FASB Accounting Standards Codification (ASC) Topic 840, Leases, resulting in the creation of FASB ASC Topic 842, Leases (ASC 842). ASU 2016-02 requires lessees to recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for both finance and operating leases. The guidance also eliminates the current real estate-specific provisions for all entities. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard, ASU 2016-02. Under the amendments in ASU 2018-11, entities may elect not to restate the comparative periods presented when transitioning to ASC 842 (optional transition method) and lessors may elect not to separate lease and non-lease components when certain conditions are met (lessor relief practical expedient). The optional transition method applies to entities that have not yet adopted ASU 2016-02, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted.

The Company adopted this standard using the optional transition method effective January 1, 2019. Upon adoption of this standard, the Company recognized a lease liability and a corresponding right-of use asset of $4.0 million and $3.4 million, respectively, and derecognized a deferred rent liability and a corresponding lease incentive obligation of $0.4 million and $0.2 million, respectively. The Company did not record any cumulative effect adjustment to accumulated deficit as a result of adopting this standard. The Company also elected to adopt the practical expedients upon transition, which permit companies to not reassess lease identification, classification, and initial direct costs under ASU 2016-02 for leases that commenced prior to the effective date.

Fair value of financial instruments

6 Months Ended

Jun. 30, 2019

Fair value of financial instruments

Fair value of financial instruments

4. Fair value of financial instruments

The Company determines the fair value of its financial instruments based upon the fair value hierarchy, which prioritizes valuation inputs based on the observable nature of those inputs. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality. The hierarchy defines three levels of valuation inputs:

Level 1 inputs	Quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.
Level 2 inputs	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs	Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

Items Measured at Fair Value on a Recurring Basis

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis (in thousands):




	June 30, 2019
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	111,174	$	111,174	$	—	$	—
Short-term investments		74,173		—		74,173		—
Total financial assets	$	185,347	$	111,174	$	74,173	$	—




	December 31, 2018
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	127,689	$	60,092	$	67,597	$	—
Short-term investments		119,786		—		119,786		—
Total financial assets	$	247,475	$	60,092	$	187,383	$	—

The Company’s cash equivalents and short-term investments consist of U.S. Government money market funds, corporate bonds and commercial paper of publicly traded companies. The investments and cash equivalents have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. The Company validates the prices provided by third party pricing services by reviewing their pricing methods and matrices, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of June 30, 2019 and December 31, 2018.

Fair Value of Financial Instruments

The fair value of the Company’s long-term debt is determined using a discounted cash flow analysis with current applicable rates for similar instruments as of the condensed consolidated balance sheet dates. The carrying value of the Company’s long-term debt, including the current portion, at June 30, 2019 and December 31, 2018 was approximately $34.7 million and $25.2 million, respectively. At June 30, 2019, the Company estimates that the fair value of its long-term debt, including the current portion, was approximately $37.1 million. The fair value of the Company’s long-term debt was determined using Level 3 inputs.

The fair value of the Company’s 5.00% Convertible Senior Notes due 2048 (the Notes) as of June 30, 2019 was approximately $77.6 million, which differs from the carrying value of the Notes. The fair value of the Notes was determined using Level 2 inputs.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Investments

6 Months Ended

Jun. 30, 2019

Investments

Investments

5. Investments

Cash, cash equivalents, and short-term investments consist of the following (in thousands):


	June 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash and money market accounts	$	113,080	$	—	$	—	$	113,080
Corporate bonds and commercial paper (due within 90 days)		—		—		—		—
Total cash and cash equivalents	$	113,080	$	—	$	—	$	113,080
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	74,088	$	86	$		$	74,173
Total investments	$	74,088	$	86	$	—	$	74,173
Total cash, cash equivalents and investments	$	187,168	$	86	$	—	$	187,253


	December 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash and money market accounts	$	62,270	$	—	$	—	$	62,270
Corporate bonds and commercial paper (due within 90 days)		67,590	$	8	$	(1)	$	67,597
Total cash and cash equivalents	$	129,860	$	8	$	(1)	$	129,867
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	119,666	$	132	$	(12)	$	119,786
Total investments	$	119,666	$	132	$	(12)	$	119,786
Total cash, cash equivalents and investments	$	249,526	$	140	$	(13)	$	249,653

There were no realized gains or losses on investments for the three and six months ended June 30, 2019 or 2018, respectively. There were zero and fourteen investments in an unrealized loss position as of June 30, 2019 and December 31, 2018, respectively. None of these investments had been in an unrealized loss position for more than 12 months as of June 30, 2019 and December 31, 2018, respectively. The fair value of these securities as of June 30, 2019 and December 31, 2018 was $0 and $46.9 million, respectively, and the aggregate unrealized loss was immaterial. The Company considered the decline in the market value for these securities to be primarily attributable to current economic conditions. As it was not more likely than not that the Company would be required to sell these securities before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of June 30, 2019 and December 31, 2018, respectively.

Product revenue reserves and allowances

6 Months Ended

Jun. 30, 2019

Product revenue reserves and allowances

Product revenue reserves and allowances

9. Product revenue reserves and allowances

As of June 30, 2019, the Company’s sole source of product revenue has been from sales of COPIKTRA in the United States, which it began shipping to customers on September 25, 2018. The following table summarizes activity in each of the product revenue allowance and reserve categories for the three and six months ended June 30, 2019 (in thousands):


			Third-Party
	Trade		Payer		Government
	discounts		chargebacks,		rebates and
	and		discounts		other
	allowances		and fees		incentives		Returns		Total
Beginning balance at December 31, 2018	$	29	$	88	$	157	$	2	$	276
Provision related to sales in the current year		75		136		177		2		390
Adjustments related to prior period sales		—		—		(32)		—		(32)
Credits and payments made		(61)		(120)		(20)		—		(201)
Ending Balance at March 31, 2019	$	43	$	104	$	282	$	4	$	433
Provision related to sales in the current year		111		280		76		4		471
Adjustments related to prior period sales		—		—		(44)		—		(44)
Credits and payments made		(102)		(231)		(115)		—		(448)
Ending balance at June 30, 2019	$	52	$	153	$	199	$	8	$	412

Trade discounts and Third-Party Payer chargebacks and discounts are recorded as a reduction to accounts receivable, net on the condensed consolidated balance sheets. Trade allowances and Third-Party Payer fees, government rebates, other incentives and returns are recorded as a component of accrued expenses on the condensed consolidated balance sheets.

Leases

6 Months Ended

Jun. 30, 2019

Leases

Leases

10. Leases

On April 15, 2014, the Company entered into a lease agreement for approximately 15,197 square feet of office and laboratory space in Needham, Massachusetts. Effective February 15, 2018, the Company amended its lease agreement to relocate within the facility to another location consisting of 27,810 square feet of office space (the Amended Lease Agreement). The Amended Lease Agreement extends the expiration date of the lease from September 2019 through May 2025. Pursuant to the Amended Lease Agreement, the initial annual base rent amount is approximately $0.7 million, which increases during the lease term to $1.1 million for the last twelve-month period.

The Company has accounted for its Needham, Massachusetts office space as an operating lease. The Company’s lease contains an option to renew and extend the lease terms and an option to terminate the lease prior to the expiration date. The Company has not included the lease extension or the termination options within the right-of-use asset and lease liability on the condensed consolidated balance sheets as neither option is reasonably certain to be exercised. The Company’s lease includes variable non-lease components (e.g., common area maintenance, maintenance, consumables, etc.) that are not included in the right-of-use asset and lease liability and are reflected as an expense in the period incurred. The Company does not have any other operating or finance leases.

In calculating the present value of future lease payments, the Company has elected to utilize its incremental borrowing rate based on the remaining lease term at the date of adoption of ASC 842. The Company has elected to account for lease components and associated non-lease components as a single lease component and has allocated all of the contract consideration to the lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was not applied.

As of June 30, 2019, a right-of-use asset of $3.2 million and lease liability of $4.0 million are reflected on the condensed consolidated balance sheets. The elements of lease expense were as follows (dollar amounts in thousands):


	Three months ended		Six months ended
	June 30, 2019		June 30, 2019
Lease Expense
Operating lease expense	$	222	$	444
Total Lease Expense	$	222	$	444
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$	166	$	331


		June 30, 2019
Other Balance Sheet Information - Operating Leases
Weighted average remaining lease term (in years)		5.9
Weighted average discount rate		14.60%
Maturity Analysis
Remainder of 2019	$	385
2020		971
2021		1,020
2022		1,041
2023		1,062
Thereafter		1,538
Total	$	6,017
Less: Present value discount		(2,029)
Lease Liability	$	3,988

The Company adopted ASU 2016-02 effective January 1, 2019 using the optional transition method permitted under ASU 2018-11. Accordingly, periods presented prior to January 1, 2019 were not restated to reflect the accounting principles adopted under ASU 2016-02. Prior to adoption, the Company recorded rent expense from its Needham office on a straight-line basis over the term of the lease with the deferred rent obligation included in accrued expenses (current portion) and other liabilities (noncurrent portion) in the condensed consolidated balance sheet as of December 31, 2018. The Company amortized any leasehold improvements over the lesser of the useful life of those improvements or the life of the lease. For the three and six months ended June 30, 2018, the Company recorded rent expense of $0.2 and $0.3 million.

At December 31, 2018, future minimum lease payments under non-cancelable leases under ASC 840 were as follows (in thousands):


2019	$	716
2020		971
2021		1,020
2022		1,041
2023		1,062
Thereafter		1,538
Total	$	6,348

Long-term debt

6 Months Ended

Jun. 30, 2019

Long-term debt

Long-term debt

11. Long-term debt

On March 21, 2017, the Company entered into a term loan facility of up to $25.0 million with Hercules Capital, Inc. (Hercules). The term loan facility is governed by a loan and security agreement, dated March 21, 2017 (the Original Loan Agreement), which was amended on January 4, 2018, March 6, 2018 and October 11, 2018 (the Amended Loan Agreement) to increase the total borrowing limit under the Original Loan Agreement from up to $25.0 million to up to $50.0 million (the Amended Term Loan), pursuant to certain conditions of funding. On April 23, 2019 (the Amendment Date), the Company entered into the Fourth Amendment (the Amendment) to the Loan and Security Agreement with Hercules. The Amendment amends the Amended Loan Agreement (together with the Amendment, the 2019 Term Loan Agreement).

Per the terms of the Amendment, the Company may borrow up to an aggregate of $75.0 million, of which $35.0 million was outstanding immediately as of the Amendment Date (2019 Term A Loan) as a result of the existing outstanding principal of term loans of $25.0 million under the Amended Loan Agreement being converted into the 2019 Term A Loan, and an additional $10.0 million being drawn on the Amendment Date. The remaining $40.0 million of borrowing capacity may be drawn in multiple tranches comprised of (i) a term loan in an amount of up to $15.0 million upon the Company generating cumulative net product revenues (as defined in the 2019 Term Loan Agreement) of either (a) $37.5 million on or before April 30, 2020 or (b) $50.0 million on or before June 30, 2020 (2019 Term B Loan), and (ii) a term loan in an amount of up to $25.0 million available through December 31, 2021, subject to Hercules’ approval and certain other conditions specified in the 2019 Term Loan Agreement (the 2019 Term C Loan, and together with the 2019 Term A Loan and 2019 Term B Loan, the 2019 Term Loan).

The 2019 Term Loan will mature on December 1, 2022 (2019 Term Loan Maturity Date). Each advance accrues interest at a floating per annum rate equal to the greater of (a) 9.75% or (b) the lesser of (i) 12.00% and (ii) the sum of (x) 9.75% plus (y) (A) the prime rate minus (B) 5.50%. In addition, the Company is required to make a final payment equal to 5.25% of the aggregate original principal balance of all advances upon the earliest to occur (a) 2019 Term Loan Maturity Date, (b) prepayment of the debt or (c) the date the 2019 Term Loan becomes due and payable. The 2019 Term Loan provides for interest-only payments until April 1, 2021, which may be extended to December 1, 2021 pursuant to the Company generating $40.0 million in net product revenue on a trailing six-month basis on or prior to December 31, 2020 provided that no event of default has occurred. Thereafter, amortization payments will be payable monthly in equal installments of principal and interest (subject to recalculation upon a change in prime rates). As such, all outstanding balances related to the Amended Term Loan have been classified as long-term debt on the condensed consolidated Balance Sheet as of June 30, 2019.

The 2019 Term Loan is secured by a lien on substantially all of the assets of the Company, other than intellectual property and contains customary covenants and representations, including a liquidity covenant, minimum net revenue covenant, financial reporting covenant and limitations on dividends, indebtedness, collateral, investments, distributions, transfers, mergers or acquisitions, taxes, corporate changes, deposit accounts, and subsidiaries.

On the Amendment Date, the Company was required to pay any outstanding accrued interest as well as the final payment fee equal to 4.5% on the outstanding principal balance of the Amended Term Loan, or $1.1 million on the existing term loans. No prepayment charges were due as a result of executing the Amendment or conversion of the existing term loans into 2019 Term A Loans.

As of June 30, 2019, the Company has assessed all terms and features of the 2019 Term Loan Agreement in order to identify any potential embedded features that would require bifurcation or any beneficial conversion features. As part of this analysis, the Company assessed the economic characteristics and risks of the 2019 Term Loan Agreement, including put and call features. The Company determined that all features of the 2019 Term Loan Agreement were clearly and closely associated with a debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company’s condensed consolidated financial statements. The Company reassesses the features on a quarterly basis to determine if they require separate accounting. There have been no changes to the Company’s original assessment through June 30, 2019.

The future principal payments under the 2019 Term Loan are as follows as of June 30, 2019 (in thousands):


2021	$	14,234
2022		20,766
Total principal payments	$	35,000

Stock-based compensation

6 Months Ended

Jun. 30, 2019

Stock-based compensation

Stock-based compensation

13. Stock‑based compensation

Stock options

A summary of the Company’s stock option activity and related information for the six months ended June 30, 2019 is as follows:


				Weighted-average
		Weighted-average		remaining	Aggregate
		exercise price per		contractual term	intrinsic value
	Shares	share		(years)	(in thousands)
Outstanding at December 31, 2018	12,522,867	$	5.42	7.8	$	6,909
Granted	4,978,840	$	2.58
Exercised	(46,803)	$	1.60
Forfeited/cancelled	(819,147)	$	4.31
Outstanding at June 30, 2019	16,635,757	$	4.64	7.4	$	450
Vested at June 30, 2019	7,304,693	$	5.55	5.5	$	334
Vested and expected to vest at June 30, 2019(1)	15,922,757	$	4.69	7.4	$	450

(1)

This represents the number of vested options as of June 30, 2019, plus the number of unvested options expected to vest as of June 30, 2019.

The fair value of each stock option granted during the three months ended June 30, 2019 and 2018 was estimated on the grant date using the Black-Scholes option-pricing model using the following weighted-average assumptions:


	Six months ended June 30,
	2019		2018
Risk-free interest rate	2.16	%	2.51	%
Volatility	86	%	81	%
Dividend yield	—		—
Expected term (years)	5.8		6.0

During the first quarter of 2018, the Company granted stock options to purchase a total of 582,500 shares of common stock to certain executives that vest only upon the achievement of specified performance conditions. The Company determined that a number of the performance conditions are considered probable of achievement as of June 30, 2018, and as a result recognized approximately $0.2 million and $0.5 million of stock-based compensation expense during the three and six months ended June 30, 2018 related to awards that vest upon the achievement of performance conditions. No stock-based compensation expense has been recognized during the three and six months ended June 30, 2019 related to awards that vest upon the achievement of performance conditions

At June 30, 2019, there was $21.4 million of total unrecognized compensation cost related to unvested stock options and the Company expects to recognize this cost over a remaining weighted-average period of approximately 4.06 years.

Restricted stock units (RSUs)

The Company awards RSUs to employees under its Amended and Restated 2012 Incentive Plan and its inducement award program. Each RSU entitles the holder to receive one share of the Company’s common stock when the RSU vests. The RSUs generally vest in either (i) four substantially equal installments on each of the first four anniversaries of the vesting commencement date, or (ii) 100 percent on the first anniversary of the vesting commencement date, subject to the employee’s continued employment with, or service to, the Company on such vesting date. Compensation expense is recognized on a straight-line basis.

A summary of RSU activity during the six months ended June 30, 2019 is as follows:


	Shares	Weighted-average grant date fair value per share
Outstanding at December 31, 2018	306,750	$	5.24
Granted	528,904	$	3.12
Vested	(36,439)	$	3.00
Forfeited/cancelled	(60,098)	$	3.94
Outstanding at June 30, 2019	739,117	$	3.98

At June 30, 2019, there was approximately $2.0 million of total unrecognized compensation cost related to unvested RSUs and the Company expects to recognize this cost over a remaining weighted-average period of approximately 2.90 years.

Employee stock purchase plan

At the Special Meeting of Stockholders, held on December 18, 2018, the stockholders approved the 2018 Employee Stock Purchase Plan (2018 ESPP). On June 21, 2019, the board of directors of the Company amended and restated the 2018 ESPP, to account for certain non-material changes to the plan’s administration (the Amended and Restated 2018 ESPP). The Amended and Restated 2018 ESPP provides eligible employees with the opportunity, through regular payroll deductions, to purchase shares of the Company’s common stock at 85% of the lesser of the fair market value of the common stock (a) on the date the option is granted, which is the first day of the purchase period, and (b) on the exercise date, which is the last business day of the purchase period. The Amended and Restated 2018 ESPP generally allows for two six-month purchase periods per year beginning in January and July, or such other periods as determined by the compensation committee of our board of directors. The initial purchase plan period commenced in February 2019. The Company has reserved 2,000,000 shares of common stock for the administration of the Amended and Restated 2018 ESPP. The fair value of shares expected to be purchased under the Amended and Restated 2018 ESPP was calculated using the Black-Scholes model with the following assumptions:


	Six months ended June 30,
	2019
Risk-free interest rate	2.46	%
Volatility	79	%
Dividend yield	—
Expected term (years)	0.4

For the three and six months ended June 30, 2019, the Company has recognized $0.1 million and $0.3 million of stock-based compensation under the Amended and Restated 2018 ESPP. As of June 30, 2019, there have been no purchases of the Company’s common stock under the plan.

License and collaboration agreements	6 Months Ended
License and collaboration agreements	Jun. 30, 2019
License and collaboration agreements
License and collaboration agreements	15. License and collaboration agreements Yakult Honsha Co., Ltd. (Yakult) On June 5, 2018, the Company entered into a license and collaboration agreement with Yakult (the Yakult Agreement), under which the Company granted exclusive rights to Yakult to develop and commercialize products containing duvelisib in Japan for the treatment, prevention, palliation or diagnosis of all oncology indications in humans or animals. Under the terms of the Yakult Agreement, Yakult received an exclusive right to develop and commercialize products containing duvelisib in Japan under mutually agreed upon development and commercialization plans at its own cost and expense. Yakult also received certain limited manufacturing rights in the event that the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to Yakult during the term of the Yakult Agreement. The Company retained all rights to duvelisib outside of Japan. Yakult paid the Company an upfront, non-refundable payment of $10.0 million in June 2018. The Company is also entitled to receive aggregate payments of up to $90.0 million if certain development, regulatory and commercial milestones are successfully achieved. Yakult is obligated to pay the Company a double-digit royalty on net sales of products containing duvelisib in Japan, subject to reduction in certain circumstances, and to fund certain global development costs related to worldwide clinical trials conducted by the Company in which Yakult has opted to participate on a pro-rata basis. For the three and six months ended June 30, 2019, there have been no additional milestones achieved under the Yakult Agreement. Subsequently, on February 28, 2019, the Company entered into a supply agreement with Yakult (the Yakult Supply Agreement), under which the Company agreed to provide Yakult with drug product for clinical and commercial use in accordance with the Yakult Agreement. Under the terms of the Yakult Supply Agreement, the Company also granted to Yakult a limited manufacturing license to fill, finish, package, and label the drug product solely for clinical and commercial purposes in Japan. Unless earlier terminated by either party, the Yakult Agreement will expire upon the fulfillment of Yakult’s royalty obligations to the Company for the sale of any products containing duvelisib in Japan, which royalty obligations expire, on a product-by-product basis, upon the last to occur of (a) expiration of valid claims covering such product, (b) expiration of regulatory exclusivity for such product or (c) 10 years from first commercial sale of such product. Yakult may terminate the Yakult Agreement in its entirety at any time with 180 days’ written notice. Either party may terminate the Yakult Agreement in its entirety with 60 days’ written notice for the other party’s material breach if such party fails to cure the breach. The Company may terminate the Yakult Agreement if (i) Yakult fails to use commercially reasonable efforts to develop and commercialize products containing duvelisib in Japan or (ii) Yakult challenges any patent licensed by the Company to Yakult under the Yakult Agreement. Either party may terminate the Yakult Agreement in its entirety upon certain insolvency events involving the other party. CSPC Pharmaceutical Group Limited (CSPC) On September 25, 2018, the Company entered into a license and collaboration agreement with CSPC (the CSPC Agreement), under which the Company granted exclusive rights to CSPC to develop and commercialize products containing duvelisib in the People’s Republic of China (China), Hong Kong, Macau and Taiwan (each, a Region and collectively, the CSPC Territory) for the treatment, prevention, palliation or diagnosis of all oncology indications in humans. Under the terms of the CSPC Agreement, CSPC received an exclusive right to develop and commercialize products containing duvelisib in the CSPC Territory under mutually agreed upon development and commercialization plans at its own cost and expense. CSPC also received certain limited manufacturing rights in the event that the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to CSPC during the term of the CSPC Agreement. The Company retained all rights to duvelisib outside of the CSPC Territory. The Company is entitled to receive aggregate payments of up to $160.0 million if certain development, regulatory and commercial milestones are successfully achieved. CSPC is obligated to pay the Company a double-digit royalty on net sales of products containing duvelisib in the CSPC Territory, subject to reduction in certain circumstances, and to fund certain global development costs related to worldwide clinical trials conducted by the Company in which CSPC has opted to participate on a pro-rata basis. For the three months ended June 30, 2019, there have been no additional milestones achieved under the CSPC Agreement. Unless earlier terminated by either party, the CSPC Agreement will expire upon the fulfillment of CSPC’s royalty obligations to the Company for the sale of any products containing duvelisib in the CSPC Territory, which royalty obligations expire, on a product-by-product basis, upon the last to occur, in each specific Region of (a) expiration of valid claims covering such product, (b) expiration of regulatory exclusivity for such product or (c) 10 years from first commercial sale of such product. CSPC may terminate the CSPC Agreement in its entirety at any time with 180 days’ written notice. Either party may terminate the CSPC Agreement in its entirety with 60 days’ written notice for the other party’s material breach if such party fails to cure the breach. The Company may terminate the CSPC Agreement immediately if CSPC breaches its non-compete obligations or any of its representations and warranties or covenants under the CSPC Agreement. The Company may also terminate the CSPC Agreement if (i) CSPC fails to use commercially reasonable efforts to develop and commercialize products containing duvelisib in and Region or the CSPC Territory or (ii) CSPC challenges any patent licensed by the Company to CSPC under the CSPC Agreement. Either party may terminate the CSPC Agreement in its entirety upon certain insolvency events involving the other party.

Summary of significant accounting policies (Policies)

6 Months Ended

Jun. 30, 2019

Summary of significant accounting policies

Basis of presentation

Basis of Presentation

Leases

Revenue Recognition

Subject to certain limitations, the Company’s return policy allows for eligible returns of COPIKTRA for credit under the following circumstances:

Receipt of damaged product;

Shipment errors that were a result of an error by the Company;

Expired product that is returned during the period beginning three months prior to the product’s expiration and ending six months after the expiration date;

Product subject to a recall; and

Product that the Company, at its sole discretion, has specified can be returned for credit.

The Company has not received any returns to date.

Concentrations of credit risk and off-balance sheet risk

For the quarter ended June 30, 2019, there were five customers who each individually accounted for greater than 10% of the Company’s total revenues.

Recently Issued and/or Adopted Accounting Standards Updates

Recently Issued Accounting Standards Updates

Recently Adopted Accounting Standards Updates

Fair value of financial instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair value of financial instruments

Schedule of financial instruments measured at fair value on a recurring basis

The following table presents information about the Company’s financial instruments that are measured at fair value on a recurring basis (in thousands):




	June 30, 2019
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	111,174	$	111,174	$	—	$	—
Short-term investments		74,173		—		74,173		—
Total financial assets	$	185,347	$	111,174	$	74,173	$	—




	December 31, 2018
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	127,689	$	60,092	$	67,597	$	—
Short-term investments		119,786		—		119,786		—
Total financial assets	$	247,475	$	60,092	$	187,383	$	—

Investments (Tables)

6 Months Ended

Jun. 30, 2019

Investments

Schedule of cash, cash equivalents and investments

Cash, cash equivalents, and short-term investments consist of the following (in thousands):


	June 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash and money market accounts	$	113,080	$	—	$	—	$	113,080
Corporate bonds and commercial paper (due within 90 days)		—		—		—		—
Total cash and cash equivalents	$	113,080	$	—	$	—	$	113,080
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	74,088	$	86	$		$	74,173
Total investments	$	74,088	$	86	$	—	$	74,173
Total cash, cash equivalents and investments	$	187,168	$	86	$	—	$	187,253


	December 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents:
Cash and money market accounts	$	62,270	$	—	$	—	$	62,270
Corporate bonds and commercial paper (due within 90 days)		67,590	$	8	$	(1)	$	67,597
Total cash and cash equivalents	$	129,860	$	8	$	(1)	$	129,867
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	119,666	$	132	$	(12)	$	119,786
Total investments	$	119,666	$	132	$	(12)	$	119,786
Total cash, cash equivalents and investments	$	249,526	$	140	$	(13)	$	249,653

Product revenue reserves and allowances (Tables)

6 Months Ended

Jun. 30, 2019

Product revenue reserves and allowances

Schedule of product revenue allowance and reserve categories

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three and six months ended June 30, 2019 (in thousands):


			Third-Party
	Trade		Payer		Government
	discounts		chargebacks,		rebates and
	and		discounts		other
	allowances		and fees		incentives		Returns		Total
Beginning balance at December 31, 2018	$	29	$	88	$	157	$	2	$	276
Provision related to sales in the current year		75		136		177		2		390
Adjustments related to prior period sales		—		—		(32)		—		(32)
Credits and payments made		(61)		(120)		(20)		—		(201)
Ending Balance at March 31, 2019	$	43	$	104	$	282	$	4	$	433
Provision related to sales in the current year		111		280		76		4		471
Adjustments related to prior period sales		—		—		(44)		—		(44)
Credits and payments made		(102)		(231)		(115)		—		(448)
Ending balance at June 30, 2019	$	52	$	153	$	199	$	8	$	412

Leases (Tables)

6 Months Ended

Jun. 30, 2019

Leases

Summary of elements of lease expenses


	Three months ended		Six months ended
	June 30, 2019		June 30, 2019
Lease Expense
Operating lease expense	$	222	$	444
Total Lease Expense	$	222	$	444
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$	166	$	331


		June 30, 2019
Other Balance Sheet Information - Operating Leases
Weighted average remaining lease term (in years)		5.9
Weighted average discount rate		14.60%
Maturity Analysis
Remainder of 2019	$	385
2020		971
2021		1,020
2022		1,041
2023		1,062
Thereafter		1,538
Total	$	6,017
Less: Present value discount		(2,029)
Lease Liability	$	3,988

Schedule of Minimum Future Lease Commitments (ASC 840)

At December 31, 2018, future minimum lease payments under non-cancelable leases under ASC 840 were as follows (in thousands):


2019	$	716
2020		971
2021		1,020
2022		1,041
2023		1,062
Thereafter		1,538
Total	$	6,348

Stock-based compensation (Tables)

6 Months Ended

Jun. 30, 2019

Stock-based compensation

Summary of stock option activity and related information


				Weighted-average
		Weighted-average		remaining	Aggregate
		exercise price per		contractual term	intrinsic value
	Shares	share		(years)	(in thousands)
Outstanding at December 31, 2018	12,522,867	$	5.42	7.8	$	6,909
Granted	4,978,840	$	2.58
Exercised	(46,803)	$	1.60
Forfeited/cancelled	(819,147)	$	4.31
Outstanding at June 30, 2019	16,635,757	$	4.64	7.4	$	450
Vested at June 30, 2019	7,304,693	$	5.55	5.5	$	334
Vested and expected to vest at June 30, 2019(1)	15,922,757	$	4.69	7.4	$	450

(1)

This represents the number of vested options as of June 30, 2019, plus the number of unvested options expected to vest as of June 30, 2019.

Schedule of assumptions used to estimate fair value of each stock option on grant date


	Six months ended June 30,
	2019		2018
Risk-free interest rate	2.16	%	2.51	%
Volatility	86	%	81	%
Dividend yield	—		—
Expected term (years)	5.8		6.0

Schedule of restricted stock units


	Shares	Weighted-average grant date fair value per share
Outstanding at December 31, 2018	306,750	$	5.24
Granted	528,904	$	3.12
Vested	(36,439)	$	3.00
Forfeited/cancelled	(60,098)	$	3.94
Outstanding at June 30, 2019	739,117	$	3.98

Schedule of assumptions used to estimate fair value of each employee stock purchase plan on grant date


	Six months ended June 30,
	2019
Risk-free interest rate	2.46	%
Volatility	79	%
Dividend yield	—
Expected term (years)	0.4

Fair value of financial instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Oct. 17, 2018
Financial liabilities
Long-term debt	$ 34,700	$ 25,200
5.00% Convertible Senior Notes due 2048
Financial liabilities
Interest rate (as a percent)			5.00%
Recurring basis
Financial assets
Cash equivalents	111,174	127,689
Short-term investments	74,173	119,786
Total financial assets	185,347	247,475
Level 1 \| Recurring basis
Financial assets
Cash equivalents	111,174	60,092
Total financial assets	$ 111,174	60,092
Level 2 \| 5.00% Convertible Senior Notes due 2048
Financial liabilities
Interest rate (as a percent)	5.00%
Debt, fair value	$ 77,600
Level 2 \| Recurring basis
Financial assets
Cash equivalents		67,597
Short-term investments	74,173	119,786
Total financial assets	74,173	$ 187,383
Level 3
Financial liabilities
Fair value of long-term debt	$ 37,100

Investments (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
Investments (Details) $ in Thousands	Jun. 30, 2019 USD ($) item	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) item	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($) item
Investments
Cash and cash equivalents	$ 113,080		$ 113,080		$ 129,867
Total cash, cash equivalents, and investments, gross unrealized gains			86		140
Total cash, cash equivalents, and investments, gross unrealized losses					$ (13)
Total cash, cash equivalents, and investments, Fair Value	187,300		187,300
Realized gains or losses on investments	$ 0	$ 0	$ 0	$ 0
Number of investments in unrealized loss position \| item	0		0		14
Number of investments in unrealized loss position for more than 12 months \| item	0		0		0
Unrealized loss on fair value	$ 0		$ 0		$ 46,900
Amortized Cost
Investments
Total cash, cash equivalents, and investments	187,168		187,168		249,526
Fair Value
Investments
Total cash, cash equivalents, and investments, Fair Value	187,253		187,253		249,653
Cash and cash equivalents
Investments
Gross unrealized gains					8
Gross unrealized losses					(1)
Cash and cash equivalents \| Amortized Cost
Investments
Cash and cash equivalents	113,080		113,080		129,860
Cash and cash equivalents \| Fair Value
Investments
Cash and cash equivalents, Fair value	113,080		113,080		129,867
Cash and money market accounts \| Amortized Cost
Investments
Cash and cash equivalents	113,080		113,080		62,270
Cash and money market accounts \| Fair Value
Investments
Cash and cash equivalents, Fair value	113,080		$ 113,080		$ 62,270
Corporate bonds and commercial paper
Investments
Original maturity period, cash and cash equivalents			90 days		90 days
Gross unrealized gains					$ 8
Gross unrealized losses					(1)
Corporate bonds and commercial paper \| Amortized Cost
Investments
Cash and cash equivalents					67,590
Corporate bonds and commercial paper \| Fair Value
Investments
Cash and cash equivalents, Fair value					67,597
Investments
Investments
Gross unrealized gains	86		$ 86		132
Gross unrealized losses					(12)
Investments \| Amortized Cost
Investments
Investments	74,088		74,088		119,666
Investments \| Fair Value
Investments
Investments	74,173		$ 74,173		$ 119,786
Corporate bonds and commercial paper
Investments
Maximum maturity period, investments			1 year		1 year
Gross unrealized gains	86		$ 86		$ 132
Gross unrealized losses					(12)
Corporate bonds and commercial paper \| Amortized Cost
Investments
Due within 1 year	74,088		74,088		119,666
Corporate bonds and commercial paper \| Fair Value
Investments
Due within 1 year	$ 74,173		$ 74,173		$ 119,786

Intangible assets (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
Intangible assets (Details) - USD ($) $ in Thousands	Nov. 30, 2018	Jun. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Intangible assets
Less: accumulated amortization		$ (1,207)	$ (1,207)
Intangible assets, net		20,793	20,793	$ 21,577
Amortization of acquired intangible asset		400	785
Amortization for the remainder of year		800	800
Future amortization per year thereafter		1,600	1,600
Acquired and in-license rights
Intangible assets
Intangible assets, gross		22,000	$ 22,000
Estimated useful life			14 years
Milestone payment payable		$ 22,000	$ 22,000
Payments for milestone payment	$ 22,000

Accrued expenses (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Accrued expenses
Compensation and related benefits	$ 6,689	$ 8,749
Contract research organization costs	6,516	6,682
Commercialization costs	2,298	1,979
Interest	1,534	1,786
Consulting fees	1,267	494
Professional fees	661	482
Other	407	936
Total accrued expenses	$ 19,372	$ 21,108

Leases - Balance sheet and other information (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Leases
Right-of use asset	$ 3,225	$ 3,225
Lease liability	3,988	3,988
Lease Expense
Operating lease expense	222	444
Total Lease Expense	222	444
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$ 166	$ 331
Weighted average remaining lease term (in years)	5 years 10 months 24 days	5 years 10 months 24 days
Weighted average discount rate	14.60%	14.60%
Maturity Analysis
Remainder of 2019	$ 385	$ 385
2020	971	971
2021	1,020	1,020
2022	1,041	1,041
2023	1,062	1,062
Thereafter	1,538	1,538
Total	6,017	6,017
Less: Present value discount	(2,029)	(2,029)
Lease Liability	$ 3,988	$ 3,988

Leases - Schedule of Minimum Future Lease Commitments (ASC 840) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Dec. 31, 2018
Minimum aggregate future lease commitments
2019			$ 716
2020			971
2021			1,020
2022			1,041
2023			1,062
Thereafter			1,538
Total			$ 6,348
Rent expense	$ 200	$ 300

Long-term debt - Hercules term loan facility (Details) - USD ($) $ in Thousands		6 Months Ended
	Apr. 23, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Oct. 11, 2018	Mar. 21, 2017
Long-term debt
Amount drawn		$ 9,694	$ 9,900
Long-term debt		34,700		$ 25,200
Term loan \| Original Loan Agreement
Long-term debt
Maximum borrowing capacity						$ 25,000
Term loan \| Amended Term Loan
Long-term debt
Maximum borrowing capacity					$ 50,000
Outstanding amount	$ 25,000
Outstanding accrued interest and the final payment fee (as a percent)	4.50%
Outstanding accrued interest and the final payment fee	$ 1,100
Term loan \| 2019 Term Loan Agreement
Long-term debt
Maximum borrowing capacity	75,000
Outstanding amount	35,000
Amount drawn	10,000
Remaining borrowing capacity	$ 40,000
Interest rate	9.75%
Outstanding accrued interest and the final payment fee (as a percent)	5.25%
Prepayment charges due	$ 0
Future principal payments
Remainder of 2019		14,234
2020		20,766
Total principal payments		$ 35,000
Term loan \| 2019 Term Loan Agreement \| Prime rate
Long-term debt
Basis spread	5.50%
Term loan \| Minimum \| 2019 Term Loan Agreement
Long-term debt
Interest rate	9.75%
Term loan \| Maximum \| 2019 Term Loan Agreement
Long-term debt
Interest rate	12.00%
Term loan \| On or before April 30, 2020 \| 2019 Term Loan Agreement
Long-term debt
Net product revenue	$ 37,500
Term loan \| On or before June 30, 2020 \| 2019 Term Loan Agreement
Long-term debt
Net product revenue	50,000
Term loan \| Trailing six months prior to December 31, 2020 \| 2019 Term Loan Agreement
Long-term debt
Net product revenue	40,000
Term loan \| Company’s option through December 31, 2021 \| Maximum \| 2019 Term Loan Agreement
Long-term debt
Amount drawn	25,000
Term loan \| Plan \| Maximum \| 2019 Term Loan Agreement
Long-term debt
Amount drawn	$ 15,000

Stock-based compensation - Stock Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Shares
Outstanding at the beginning of the period (in shares)				12,522,867
Granted (in shares)				4,978,840
Exercised (in shares)				(46,803)
Forfeited/cancelled (in shares)				(819,147)
Outstanding at the end of the period (in shares)	16,635,757			16,635,757		12,522,867
Vested at the end of the period (in shares)				7,304,693
Vested and expected to vest at end of period (in shares)	15,922,757			15,922,757
Weighted-average exercise price per share
Outstanding at the beginning of the period (in dollars per share)				$ 5.42
Granted (in dollars per share)				2.58
Exercised (in dollars per share)				1.60
Forfeited/cancelled (in dollars per share)				4.31
Outstanding at the end of the period (in dollars per share)	$ 4.64			4.64		$ 5.42
Vested at the end of the period (in dollars per share)	5.55			5.55
Vested and expected to vest at end of the period (in dollars per share)	$ 4.69			$ 4.69
Weighted-average remaining contractual term
Outstanding at the end of the period				7 years 4 months 24 days		7 years 9 months 18 days
Vested at the end of the period				5 years 6 months
Vested and expected to vest at the end of the period				7 years 4 months 24 days
Aggregate intrinsic value
Outstanding at the beginning of the period (in dollars)				$ 6,909
Outstanding at the end of the period (in dollars)	$ 450			450		$ 6,909
Vested at the end of the period (in dollars)	334			334
Vested and expected to vest at end of the period (in dollars)	450			$ 450
Assumptions used to estimate fair value of each stock-based award on the grant date
Risk-free interest rate (as a percent)				2.16%	2.51%
Volatility (as a percent)				86.00%	81.00%
Expected term				5 years 9 months 18 days	6 years
Additional disclosures
Stock-based compensation expense	0	$ 200		$ 0	$ 500
Total unrecognized stock-based compensation expense (in dollars)	$ 21,400			$ 21,400
Weighted-average recognition period				4 years 22 days
Executives
Shares
Granted (in shares)			582,500

Stock-based compensation - Restricted Stock (Details) - Restricted Stock Units $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($) item $ / shares shares
Stock-based compensation
Number of shares holder to receive when RSU vests	1
Number of installments \| item	4
Number of anniversaries \| item	4
Vesting percentage	100.00%
Shares
Unvested at the beginning of the period (in shares)	306,750
Granted (in shares)	528,904
Vested (in shares)	(36,439)
Forfeited (in shares)	(60,098)
Unvested at the end of the period (in shares)	739,117
Weighted-average grant date fair value
Unvested at the beginning of the period (in dollars per share) \| $ / shares	$ 5.24
Granted (in dollars per share) \| $ / shares	3.12
Vested (in dollars per share) \| $ / shares	3.00
Forfeited/cancelled (in dollars per share) \| $ / shares	3.94
Unvested at the end of the period (in dollars per share) \| $ / shares	$ 3.98
Additional disclosures
Unrecognized stock-based compensation expense \| $	$ 2.0
Weighted-average recognition period	2 years 10 months 24 days

Stock-based compensation - Employee Stock Purchase Plan (Details) - 2018 ESPP		3 Months Ended	6 Months Ended
	Dec. 18, 2018 USD ($) shares	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($) shares
Stock-based compensation
Percent of common stock at market price to be purchased	85.00%
Shares reserved for issuance \| shares	2,000,000
Number of vesting periods \| $	2
Vesting period	6 months
Assumptions used to estimate fair value of each stock-based award on the grant date
Risk-free interest rate (as a percent)			2.46%
Volatility (as a percent)			79.00%
Expected term			4 months 24 days
Stock-based compensation expense \| $		$ 100,000	$ 300,000
Purchase of common stock under the plan \| shares			0

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Jun. 30, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	73,877	73,806
Common stock, shares outstanding	73,877	73,806

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2018	Mar. 31, 2018
Follow-on offerings
Issuance of common stock, issuance costs	$ 361
At-the-market equity offering program
Issuance of common stock, issuance costs	$ 0	$ 0

Nature of business	6 Months Ended
Nature of business	Jun. 30, 2019
Nature of business
Nature of business	1. Nature of business Verastem, Inc. (the Company) is a biopharmaceutical company focused on developing and commercializing medicines to improve the survival and quality of life of cancer patients. On September 24, 2018, the Company’s first commercial product, COPIKTRA™ (duvelisib), was approved by the U.S. Food and Drug Administration (the FDA) for the treatment of patients with certain hematologic cancers including chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL) and follicular lymphoma (FL). Both its marketed product, COPIKTRA, and most advanced product candidate, defactinib, utilize a multi-faceted approach designed to treat cancers originating either in the blood or major organ systems. The Company is currently developing its product candidates in both preclinical and clinical studies as potential therapies for certain cancers, including leukemia, lymphoma, lung cancer, ovarian cancer, colorectal cancer, head and neck cancer, mesothelioma, and pancreatic cancer. The Company believes that these compounds may be beneficial as therapeutics either as single agents or when used in combination with immuno-oncology agents or other current and emerging standard of care treatments in aggressive cancers that do not adequately respond to currently available therapies. The consolidated financial statements include the accounts of Verastem Securities Company, a wholly-owned subsidiary of the Company. All financial information presented has been consolidated and includes the accounts of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. On July 11, 2019 the Company completed the registration of Verastem Europe GmbH, wholly owned subsidiary. As of June 30, 2019, the Company had cash, cash equivalents and short-term investments of $187.3 million and accumulated deficit of $455.9 million. The Company is subject to the risks associated with other life science companies, including, but not limited to, possible failure of preclinical testing or clinical trials, competitors developing new technological innovations, market acceptance and the commercial success of COPIKTRA, or any of the Company’s investigational product candidates following receipt of regulatory approval, protection of proprietary technology and the continued ability to obtain adequate financing to fund the Company’s future operations. If the Company does not successfully commercialize COPIKTRA or any of its other product candidates, it will be unable to generate product revenue or achieve profitability and may need to raise additional capital. The Company has historical losses from operations and anticipates that it will continue to incur losses as it continues the commercialization of COPIKTRA and the research and development of its product candidates. The Company believes that it may have sufficient funds to meet its obligations within the next twelve months from the date of issuance of these condensed consolidated financial statements. However, COPIKTRA is the Company’s only approved product and the Company’s business currently depends heavily on its successful commercialization. Successful commercialization of an approved product is an expensive and uncertain process. These uncertainties and risk factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that the financial statements are issued. Certain elements of the Company’s operating plan to alleviate the conditions that raise substantial doubt are outside of the Company’s control and cannot be included in management’s evaluation under the requirements of Accounting Standards Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of the issuance of these condensed consolidated financial statements.

Convertible Senior Notes	6 Months Ended
Convertible Senior Notes	Jun. 30, 2019
Convertible Senior Notes
Convertible Senior Notes	12. Convertible Senior Notes On October 17, 2018, the Company closed a registered direct public offering of $150.0 million aggregate principal amount of the Company’s 5.00% Convertible Senior Notes due 2048 (the Notes). The Notes are governed by the terms of a base indenture for senior debt securities (the Base Indenture), as supplemented by the first supplemental indenture thereto (the Supplemental Indenture and together with the Base Indenture, the Indenture), each dated October 17, 2018, by and between the Company and Wilmington Trust, National Association, as trustee. The Notes are senior unsecured obligations of the Company and bear interest at a rate of 5.00% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2019. The Notes will mature on November 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms. The Notes are convertible into shares of the Company’s common stock, par value $0.0001 per share, together, if applicable, with cash in lieu of any fractional share, at an initial conversion rate of 139.5771 shares of common stock per $1,000 principal amount of the Notes, which corresponds to an initial conversion price of approximately $7.16 per share of common stock and represents a conversion premium of approximately 15.0% above the last reported sale price of the common stock of $6.23 per share on October 11, 2018. Upon conversion, converting noteholders will be entitled to receive accrued interest on their converted Notes. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends, but will not be adjusted for any accrued and unpaid interest. The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or certain of its subsidiaries after which the Notes become automatically due and payable. The Company assessed all terms and features of the Notes in order to identify any potential embedded features that would require bifurcation. As part of this analysis, the Company assessed the economic characteristics and risks of the Notes, including the conversion, put and call features. The conversion feature was initially bifurcated as an embedded derivative but subsequently qualified for a scope exception to derivative accounting upon the Company’s stockholders approving an increase in the number of authorized shares of Common Stock. The Company determined that all other features of the Notes were clearly and closely associated with the debt host and did not require bifurcation as a derivative liability, or the fair value of the feature was immaterial to the Company’s condensed consolidated financial statements. The Company reassesses the features on a quarterly basis to determine if they require separate accounting. There have been no changes to the Company’s original assessment through June 30, 2019.

Income taxes	6 Months Ended
Income taxes	Jun. 30, 2019
Income taxes
Income taxes	16. Income taxes The Company did not record a federal or state income tax provision or benefit for the three and six months ended June 30, 2019 and 2018, respectively, due to the expected loss before income taxes to be incurred for the years ended December 31, 2019 and 2018, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets.

Commitments and contingencies	6 Months Ended
Commitments and contingencies	Jun. 30, 2019
Commitments and contingencies
Commitments and contingencies	17. Commitments and contingencies The Company has entered into a lease agreement for approximately 27,810 square feet of office space in Needham, Massachusetts. Please refer to Note 10 for further details regarding the minimum aggregate future lease commitments as of June 30, 2019. In conjunction with the execution of the Amended Lease Agreement, the Company has provided a security deposit in the form of a letter of credit in the amount of $0.2 million as of June 30, 2019 and December 31, 2018. The amount is included in other assets on the condensed consolidated balance sheets as of June 30, 2019.

Subsequent events	6 Months Ended
Subsequent events	Jun. 30, 2019
Subsequent events.
Subsequent events	18. Subsequent events The Company reviews all activity subsequent to the end of the quarter but prior to issuance of the condensed consolidated financial statements for events that could require disclosure or that could impact the carrying value of assets or liabilities as of the balance sheet date. The Company is not aware of any material subsequent events other than the following: Verastem Europe GmbH On July 11, 2019, Verastem Europe GmbH, a wholly-owned subsidiary of Verastem, Inc., was registered in Munich, Germany. The Company is currently pursuing regulatory approval for COPIKTRA in the European Union and is evaluating potential commercialization strategies in the EU should it be successfully in achieving such approval. Sanofi Agreement On July 25, 2019, the Company entered into an exclusive license agreement with Sanofi under which the Company granted exclusive rights to Sanofi to develop and commercialize products containing COPIKTRA (duvelisib) in Russia, the Commonwealth of Independent States, Turkey, the Middle East and Africa. Under the terms of the agreement, the Company will receive an upfront payment of $5.0 million and will be eligible to receive up to an additional $42.0 million in development and sales milestone payments, plus double-digit percentage royalties based on future net sales of COPIKTRA in the licensed territories. Sanofi will receive exclusive rights to develop and commercialize COPIKTRA, and hold the marketing authorization and product license for COPIKTRA, in the licensed territories. Sanofi will also have the right to collaborate with the Company on certain global development and clinical trial activities.

Nature of business (Details) - USD ($) $ in Thousands	6 Months Ended
Nature of business (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Nature of business
Cash, cash equivalents, and short-term investments	$ 187,300
Accumulated deficit	$ (455,872)	$ (375,576)
Substantial doubt about the ability to continue as a going concern	true

Summary of significant accounting policies - Revenue Recognition and Accounts Receivable, Net (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Revenue Recognition
Practical expedient, incremental cost of obtaining contract		true
Incremental costs of obtaining a contract	$ 0	$ 0
Prior to product's expiration
Revenue Recognition
Period for eligible returns of expired product		3 months
After product's expiration date
Revenue Recognition
Period for eligible returns of expired product		6 months

Summary of significant accounting policies - Concentration of Credit Risk (Details) - customer	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Trade accounts receivable \| Credit Concentration Risk
Concentrations of credit risk and off-balance sheet risk
Off-balance sheet concentrations of credit risk description		As of June 30, 2019, the Company's cash, cash equivalents and short-term investments were deposited at two financial institutions and it has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.
Number of customer		2
Trade accounts receivable \| Credit Concentration Risk \| Minimum
Concentrations of credit risk and off-balance sheet risk
Percentage		60.00%
Revenue \| Customer Concentration Risk
Concentrations of credit risk and off-balance sheet risk
Number of customer	5
Revenue \| Customer Concentration Risk \| Minimum
Concentrations of credit risk and off-balance sheet risk
Percentage	10.00%

Summary of significant accounting policies - Recently Issued or Adopted Accounting Standards Updates (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Recently Adopted Accounting Standards Updates
Lease liability	$ 3,988
Right-of use asset	$ 3,225
ASU 2016-02
Recently Adopted Accounting Standards Updates
Derecognized deferred rent liability		$ 400
Derecognized lease incentive obligation		200
ASU 2016-02 \| Adjustment
Recently Adopted Accounting Standards Updates
Lease liability		4,000
Right-of use asset		$ 3,400

Cash, cash equivalents and restricted cash - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$ 113,080	$ 129,867
Restricted cash	741	741
Cash, cash equivalents and restricted cash	$ 113,821	$ 130,608	$ 169,095	$ 82,338

Cash, cash equivalents and restricted cash (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Operating lease
Restricted cash	$ 741	$ 741
Research and development agreement with the Leukemia and Lymphoma Society
Operating lease
Restricted cash	500	500
Letter of credit \| Office and Laboratory Space in Needham, Massachusetts
Operating lease
Restricted cash	$ 200	$ 200

Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Inventory
Work in process	$ 119	$ 63
Finished goods	175	264
Total inventories	$ 294	$ 327

Product revenue reserves and allowances (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2019	Mar. 31, 2019
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	$ 433	$ 276
Provision related to sales in the current year	471	390
Adjustments related to prior period sales	(44)	(32)
Credits and payments made	(448)	(201)
Product revenue reserves and allowances at ending	412	433
Trade discounts and allowances
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	43	29
Provision related to sales in the current year	111	75
Credits and payments made	(102)	(61)
Product revenue reserves and allowances at ending	52	43
Third-Party Payer chargebacks, discounts and fees
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	104	88
Provision related to sales in the current year	280	136
Credits and payments made	(231)	(120)
Product revenue reserves and allowances at ending	153	104
Government rebates and other incentives
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	282	157
Provision related to sales in the current year	76	177
Adjustments related to prior period sales	(44)	(32)
Credits and payments made	(115)	(20)
Product revenue reserves and allowances at ending	199	282
Returns
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	4	2
Provision related to sales in the current year	4	2
Product revenue reserves and allowances at ending	$ 8	$ 4

Leases - Leases (Details) - Office and Laboratory Space in Needham, Massachusetts $ in Millions	Feb. 15, 2018 USD ($) ft²	Apr. 15, 2014 ft²
Leases
Area of space \| ft²	27,810	15,197
Minimum
Leases
Operating lease expense	$ 0.7
Maximum
Leases
Operating lease expense	$ 1.1

Convertible Senior Notes (Details) $ / shares in Units, $ in Millions	Oct. 17, 2018 USD ($) $ / shares	Jun. 30, 2019 $ / shares	Dec. 31, 2018 $ / shares	Oct. 11, 2018 $ / shares
Convertible Notes
Common stock, par value (in dollars per share)		$ 0.0001	$ 0.0001
5.00% Convertible Senior Notes due 2048
Convertible Notes
Aggregate principal amount \| $	$ 150.0
Interest rate (as a percent)	5.00%
Common stock, par value (in dollars per share)	$ 0.0001
Initial conversion rate	0.1395771
Initial conversion price of Common Stock	$ 7.16
Conversion premium above the last reported sales price of the Common Stock (as a percent)	15.00%
Sale price of the Common Stock				$ 6.23

Net Loss per Share (Details) - shares	3 Months Ended		6 Months Ended
Net Loss per Share (Details) - shares	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	38,311,422	11,552,465	38,311,422	11,552,465
Stock options
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	16,635,757	11,390,340	16,635,757	11,390,340
Restricted Stock Units
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	739,117	162,125	739,117	162,125
Convertible senior notes
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	20,936,548		20,936,548

License and collaboration agreements - Yakult (Details) - The Agreement - Yakult - USD ($) $ in Millions		1 Months Ended
	Jun. 05, 2018	Jun. 30, 2018
License and collaboration agreements
Proceeds received		$ 10.0
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 90.0
Agreement obligations expire from first commercial sale of product (in years)	10 years
Number of days written prior notice required for other party to terminate agreement	180 days
Number of days written notice required to terminate agreement if fails to cure breach	60 days

License and collaboration agreements - CSPC (Details) - The Agreement - CSPC $ in Millions	Sep. 25, 2018 USD ($)
License and collaboration agreements
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 160.0
Agreement obligations expire from first commercial sale of product (in years)	10 years
Number of days written prior notice required for other party to terminate agreement	180 days
Number of days written notice required to terminate agreement if fails to cure breach	60 days

Commitments and contingencies (Details) - Office and Laboratory Space in Needham, Massachusetts $ in Millions	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Feb. 15, 2018 ft²	Apr. 15, 2014 ft²
Operating Leased Assets
Area of space \| ft²			27,810	15,197
Letter of credit
Operating Leased Assets
Security deposit \| $	$ 0.2	$ 0.2

Subsequent events - Sanofi Agreement (Details) - The Agreement - Sanofi [Member] $ in Millions	Jul. 25, 2019 USD ($)
License and collaboration agreements
Proceeds received	$ 5.0
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 42.0