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March 31, 2020

Estimated useful life

Acquired and in-licensed rights

Less: accumulated amortization

Total intangible assets, net

Product revenue reserves and allowances (Tables)

3 Months Ended

Mar. 31, 2020

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 months ended March 31, 2020 (in thousands):


			Third-Party
	Trade		Payer		Government
	discounts		chargebacks,		rebates and
	and		discounts		other
	allowances		and fees		incentives		Returns		Total
Balance at December 31, 2019	$	111	$	255	$	372	$	76	$	814
Provision related to sales in the current year		213		547		689		47		1,496
Adjustments related to prior period sales		—		—		—		—		—
Credits and payments made		(187)		(563)		(111)		—		(861)
Ending balance at March 31, 2020	$	137	$	239	$	950	$	123	$	1,449

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 135,061	$ 43,514
Short-term investments		31,992
Accounts receivable, net	3,326	2,524
Inventory	4,372	3,096
Prepaid expenses and other current assets	5,887	3,835
Total current assets	148,646	84,961
Property and equipment, net	866	947
Right-of-use asset, net	2,995	3,077
Intangible assets, net	19,616	20,008
Restricted Cash	35,241	35,241
Other assets	790	812
Total assets	208,154	145,046
Current liabilities:
Accounts payable	7,233	9,655
Accrued expenses	18,010	19,365
Lease liability, short-term	485	420
Derivative liability, short-term		450
Total current liabilities	25,728	29,890
Non-current liabilities:
Long-term debt	35,276	35,067
Convertible senior notes	19,938	68,556
Lease liability, long-term	3,359	3,489
Other non-current liabilities	870	870
Total liabilities	85,171	137,872
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
Common stock, $0.0001 par value; 200,000 shares authorized, 162,356 and 80,118 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	16	8
Additional paid-in capital	685,733	531,937
Accumulated other comprehensive income	9	14
Accumulated deficit	(562,775)	(524,785)
Total stockholders’ equity	122,983	7,174
Total liabilities and stockholders’ equity	$ 208,154	$ 145,046

CONDENSED 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, 2018	$ 7	$ 499,741	$ 127	$ (375,576)	$ 124,299
Balance (in shares) at Dec. 31, 2018	73,806,344
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 vesting of restricted stock units		(43)			(43)
Issuance of common stock resulting from vesting of restricted stock units (in shares)	23,792
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
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, 2019	$ 8	531,937	14	(524,785)	$ 7,174
Balance (in shares) at Dec. 31, 2019	80,117,531				80,118,000
Increase (Decrease) in Stockholders' Equity
Net loss				(37,990)	$ (37,990)
Unrealized (loss) gain on available-for-sale securities			(5)		(5)
Issuance of common stock resulting from vesting of restricted stock units		(51)			(51)
Issuance of common stock resulting from vesting of restricted stock units (in shares)	58,166
Issuance of common stock resulting from exercise of stock options		983			983
Issuance of common stock resulting from exercise of stock options (in shares)	645,628
Stock-based compensation expense		1,370			1,370
Issuance of common stock resulting from private investment in public equity offering, net of issuance costs of $6,171	$ 5	93,824			93,829
Issuance of common stock resulting from private investment in public equity offering, net of issuance costs of $6,171 (in shares)	46,511,628
Issuance of common stock under Employee Stock Purchase Plan		259			259
Issuance of common stock under Employee Stock Purchase Plan (in shares)	227,141
Conversion of 2019 Notes into common stock	$ 3	57,411			57,414
Conversion of 2019 Notes into common stock (in shares)	34,796,350
Balance at Mar. 31, 2020	$ 16	$ 685,733	$ 9	$ (562,775)	$ 122,983
Balance (in shares) at Mar. 31, 2020	162,356,444				162,356,000

Intangible assets (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
Intangible assets (Details) - USD ($) $ in Thousands	Nov. 30, 2018	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Intangible assets
Less: accumulated amortization		$ (2,384)
Intangible assets, net		19,616		$ 20,008
Amortization of acquired intangible asset		392	$ 392
Amortization for the remainder of year		1,200
Future amortization per year thereafter		1,600
Acquired and in-license rights
Intangible assets
Intangible assets, gross		$ 22,000
Estimated useful life		14 years
Milestone payment payable		$ 22,000
Payments for milestone payment	$ 22,000

Nature of business	3 Months Ended
Nature of business	Mar. 31, 2020
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 adult patients with certain hematologic cancers including relapsed or refractory chronic lymphocytic leukemia/ small lymphocytic lymphoma (CLL/SLL) after at least two prior therapies and relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies. Its marketed product, COPIKTRA, and most advanced product candidates, defactinib and VS-6766 (formerly known as CH5126766, CK127, and RO5126766), 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, head and neck cancer, ovarian cancer, colorectal cancer, lung cancer, pancreatic cancer, and mesothelioma. The Company believes that these compounds may be beneficial as therapeutics either as single agents or when used in combination with immuno-oncology agents, other pathway inhibitors or other current and emerging standard of care treatments in aggressive cancers that do not adequately respond to currently available therapies. The condensed consolidated financial statements include the accounts of Verastem Securities Company and Verastem Europe GmbH, wholly-owned subsidiaries of the Company. All financial information presented has been consolidated and includes the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 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, inability to obtain marketing approval of the Company’s product candidates, VS-6766 and defactinib, market acceptance and the commercial success of COPIKTRA, and the Company’s product candidates, VS-6766 and defactinib, following receipt of regulatory approval, and, protection of proprietary technology and the continued ability to obtain adequate financing to fund the Company’s future operations. If the Company does not obtain marketing approval and successfully commercialize its product candidates, VS-6766 and defactinib following regulatory approval, or successfully commercialize COPIKTRA, 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 research and development of its product candidates and commercialization of COPIKTRA. As of March 31, 2020, the Company had cash, cash equivalents, restricted cash and short-term investments of $170.7 million, inclusive of $35.7 million of restricted cash, and accumulated deficit of $562.8 million. The Company expects its existing cash resources, along with revenue the Company expects to generate from sales of COPIKTRA, will be sufficient to fund its planned operations through 12 months from the date of issuance of these condensed consolidated financial statements. The Company expects to finance the future development costs of its clinical product portfolio with its existing cash, cash equivalents and short-term investments, or through strategic financing opportunities that could include, but are not limited to collaboration agreements, future offerings of its equity, or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical studies and clinical trials and obtain approval of certain investigational product candidates from the FDA or foreign regulatory authorities.

License and collaboration agreements - CSPC (Details) - License And Collaboration Agreement - CSPC $ in Millions		3 Months Ended	12 Months Ended
	Sep. 25, 2018 USD ($)	Mar. 31, 2020 Milestone	Dec. 31, 2018 USD ($)
License and collaboration agreements
Proceeds received			$ 15.0
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 160.0
Number of additional milestones achieved \| Milestone		0

Fair value of financial instruments - Reconciliation of derivative liability (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Liability, Gain (Loss), Statement of Income [Extensible List]	Other Nonoperating Income (Expenses)
5.00% Convertible Senior Second Lien Notes due 2048
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	$ 450
Fair value adjustment	1,313
Derivative liability extinguished upon conversion	$ 1,763

Accrued expenses

3 Months Ended

Mar. 31, 2020

Accrued expenses

Accrued expenses

8. Accrued expenses

Accrued expenses consist of the following (in thousands):



	March 31, 2020		December 31, 2019
Compensation and related benefits		5,170		7,399
Contract research organization costs		5,453		5,467
Commercialization costs		3,086		3,028
Interest		884		897
Consulting fees		2,336		1,610
Professional fees		827		573
Other		254		391
Total accrued expenses	$	18,010	$	19,365

License and collaboration agreements - Sanofi (Details) - License And Collaboration Agreement				1 Months Ended		3 Months Ended	12 Months Ended
	Jul. 25, 2019 USD ($)	Sep. 25, 2018 USD ($)	Jun. 05, 2018 USD ($)	Aug. 31, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2020 Milestone USD ($)	Dec. 31, 2018 USD ($)
Sanofi
License and collaboration agreements
Proceeds received				$ 5,000,000
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 42,000,000
Number of additional milestones achieved						0
Yakult
License and collaboration agreements
Proceeds received					$ 10,000,000
Maximum aggregate payments entitled to receive if all milestones successfully achieved			$ 90,000,000
Number of additional milestones achieved \| Milestone						0
CSPC
License and collaboration agreements
Proceeds received							$ 15,000,000
Maximum aggregate payments entitled to receive if all milestones successfully achieved		$ 160,000,000
Number of additional milestones achieved \| Milestone						0

Accrued expenses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accrued expenses
Compensation and related benefits	$ 5,170	$ 7,399
Contract research organization costs	5,453	5,467
Commercialization costs	3,086	3,028
Interest	884	897
Consulting fees	2,336	1,610
Professional fees	827	573
Other	254	391
Total accrued expenses	$ 18,010	$ 19,365

Restructuring - Restructuring Reserve Activity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Restructuring Cost and Reserve [Line Items]
Amounts accrued at, December 31, 2019	$ 631
Charges	1,788
Amount Paid	(584)
Amounts accrued at, March 31, 2020	1,835
One-time Termination Benefits \| October 2019 Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Amounts accrued at, December 31, 2019	631
Amount Paid	(498)
Amounts accrued at, March 31, 2020	133
One-time Termination Benefits \| February 2020 Restructuring [Member]
Restructuring Cost and Reserve [Line Items]
Charges	1,788
Amount Paid	(86)
Amounts accrued at, March 31, 2020	$ 1,702

Income taxes	3 Months Ended
Income taxes	Mar. 31, 2020
Income taxes
Income Taxes	17. Income taxes The Company did not record a federal or state income tax provision or benefit for the three months ended March 31, 2020 and 2019, respectively, due to the expected loss before income taxes to be incurred for the years ended December 31, 2020 and 2019, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets.

Cash, cash equivalents and restricted cash - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Cash, cash equivalents and restricted cash
Cash and cash equivalents	$ 135,061	$ 43,514
Restricted cash	35,669	35,748
Total cash, cash equivalents and restricted cash	$ 170,730	$ 79,262	$ 92,266	$ 130,608

License and collaboration agreements - Yakult (Details) - License And Collaboration Agreement - Yakult $ in Millions		1 Months Ended	3 Months Ended
	Jun. 05, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2020 Milestone
License and collaboration agreements
Proceeds received		$ 10.0
Maximum aggregate payments entitled to receive if all milestones successfully achieved	$ 90.0
Number of additional milestones achieved \| Milestone			0

License and collaboration agreements	3 Months Ended
License and collaboration agreements	Mar. 31, 2020
License and collaboration agreements
License and collaboration agreements	16. License and collaboration agreements Chugai Pharmaceutical Co., Ltd (Chugai) On January 7, 2020, the Company entered into a license agreement with Chugai (the Chugai Agreement) whereby Chugai granted the Company an exclusive worldwide license for the development, commercialization and manufacture of products containing VS-6766, a dual RAF/MEK inhibitor. Under the terms of the Chugai Agreement, the Company received an exclusive right to develop and commercialize products containing VS-6766 at the Company’s own cost and expense. The Company is required to pay Chugai a non-refundable payment of $3.0 million which was paid in February 2020. The Company is further obligated to pay Chugai double-digit royalties on net sales of products containing VS-6766, subject to reduction in certain circumstances. Chugai also obtained opt back rights to develop and commercialize VS-6766 (a) in the European Union, which option may be exercised through the date the Company submits a NDA to the FDA for a product which contains VS-6766 as the sole active pharmaceutical ingredient and (b) in Japan and Taiwan, which option may be exercised through the date the Company receives marketing authorization from the FDA for a product which contains VS-6766 as the sole active pharmaceutical ingredient. As consideration for executing either option, Chugai would have to make a payment to the Company calculated on the Company’s development costs to date. Chugai and the Company have made customary representations and warranties and have agreed to certain customary covenants, including confidentiality and indemnification. Unless earlier terminated, the Chugai Agreement will expire upon the fulfillment of the Company’s royalty obligations to Chugai for the sale of any products containing the VS-6766, which royalty obligations expire on a product-by-product and country-by-country basis, upon the last to occur, in each specific country, of (a) expiration of valid patent claims covering such product or (b) 12 years from the first commercial sale of such product in such country. The Company may terminate the Chugai Agreement upon 180 days’ written notice. Subject to certain limitations, Chugai may terminate the Chugai Agreement upon written notice if the Company challenges any patent licensed by Chugai to the Company under the Chugai Agreement. Either party may terminate the license agreement in its entirety with 120 days’ written notice for the other party’s material breach if such party fails to cure the breach. Either party may also terminate the Chugai Agreement in its entirety upon certain insolvency events involving the other party. The Company evaluated the license agreement with Chugai under ASC Topic 805, Business Combinations and concluded that as the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets, the transaction did not meet the requirements to be accounted for as a business combination and therefore was accounted for as an asset acquisition. The Company recorded the up-front payment of $3.0 million as research and development expense within the condensed consolidated statement of operations for the three months ended March 31, 2020. Sanofi On July 25, 2019, the Company entered into a license and collaboration agreement with Sanofi (the Sanofi Agreement), under which the Company granted exclusive rights to Sanofi to develop and commercialize products containing duvelisib in Russia, the Commonwealth of Independent States (CIS), Turkey, the Middle East and Africa (collectively the “Sanofi Territory”) for the treatment, prevention, palliation or diagnosis of any oncology indication in humans or animals. Under the terms of the Sanofi Agreement, Sanofi received the exclusive right to develop and commercialize products containing duvelisib in the Sanofi Territory under mutually agreed upon development and commercialization plans at Sanofi’s own cost and expense. In addition, Sanofi received certain limited manufacturing rights in the event the Company is unable to manufacture or supply sufficient quantities of duvelisib or products containing duvelisib to Sanofi during the term of the Sanofi Agreement. The Company retained all rights to duvelisib outside the Sanofi Territory, except for those territories previously and exclusively licensed to other partners. Sanofi paid the Company an upfront, non-refundable payment of $5.0 million in August 2019. The Company is also entitled to receive aggregate payments of up to $42.0 million if certain regulatory and commercial milestones are successfully achieved. Sanofi is obligated to pay the Company double-digit royalties on net sales of products containing duvelisib in the Sanofi Territory, subject to reduction in certain circumstances. For the three months ended March 31, 2020, there have been no additional milestones achieved under the Sanofi Agreement. 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. 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 months ended March 31, 2020, 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. 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. CSPC paid the Company an aggregate upfront, non-refundable payment of $15.0 million in 2018. The Company is also 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 March 31, 2020 there have been no additional milestones achieved under the CSPC Agreement.

Investments (Details) $ in Thousands	3 Months Ended		12 Months Ended
Investments (Details) $ in Thousands	Mar. 31, 2020 USD ($) item	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) item
Investments
Cash, cash equivalents & restricted cash	$ 135,061		$ 43,514
Total cash, cash equivalents, restricted cash, gross unrealized gains			$ 14
Total cash, cash equivalents, restricted cash and investments, Fair Value	170,700
Realized gains or losses on investments	$ 0	$ 0
Number of investments in unrealized loss position \| item	0		2
Number of investments in unrealized loss position for more than 12 months \| item	0		0
Unrealized loss on fair value	$ 0		$ 5,800
Amortized Cost
Investments
Total cash, cash equivalents, restricted cash and investments			111,241
Fair Value
Investments
Total cash, cash equivalents, restricted cash and investments, Fair Value			111,255
Cash and cash equivalents
Investments
Gross unrealized gains	9
Cash and cash equivalents \| Amortized Cost
Investments
Cash, cash equivalents & restricted cash	170,721		79,262
Cash and cash equivalents \| Fair Value
Investments
Cash and cash equivalents, Fair value	170,730		79,262
Cash and money market accounts \| Amortized Cost
Investments
Cash, cash equivalents & restricted cash	157,730		77,764
Cash and money market accounts \| Fair Value
Investments
Cash and cash equivalents, Fair value	$ 157,730		$ 77,764
Corporate bonds, agency bonds and commercial paper
Investments
Original maturity period, cash and cash equivalents	90 days		90 days
Gross unrealized gains	$ 9
Corporate bonds, agency bonds and commercial paper \| Amortized Cost
Investments
Cash, cash equivalents & restricted cash	12,991		$ 1,498
Corporate bonds, agency bonds and commercial paper \| Fair Value
Investments
Cash and cash equivalents, Fair value	$ 13,000		1,498
Investments
Investments
Gross unrealized gains			14
Investments \| Amortized Cost
Investments
Investments			31,979
Investments \| Fair Value
Investments
Short-term investments			$ 31,993
Corporate bonds and commercial paper
Investments
Maximum maturity period, investments			1 year
Gross unrealized gains			$ 14
Corporate bonds and commercial paper \| Amortized Cost
Investments
Due within 1 year			31,979
Corporate bonds and commercial paper \| Fair Value
Investments
Due within 1 year			$ 31,993

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

Leases - Balance sheet and other information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Leases
Right-of use asset	$ 2,995	$ 3,077
Lease Expense
Operating lease expense	221
Total Lease Expense	221
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$ 204
Weighted average remaining lease term (in years)	5 years 3 months 18 days
Weighted average discount rate	14.60%
Maturity Analysis
2020	$ 751
2021	1,019
2022	1,039
2023	1,060
2024	1,081
Thereafter	546
Total	5,496
Less: Present value discount	(1,652)
Lease Liability	$ 3,844

Fair value of financial instruments - Fair value (Details) - Recurring basis - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial assets
Cash equivalents	$ 168,553	$ 77,176
Short-term investments		31,992
Total financial assets	168,553	109,168
Derivative liability		450
Level 1
Financial assets
Cash equivalents	155,553	75,678
Total financial assets	155,553	75,678
Level 2
Financial assets
Cash equivalents	13,000	1,498
Short-term investments		31,992
Total financial assets	$ 13,000	33,490
Level 3
Financial assets
Derivative liability		$ 450

Stock-based compensation - Employee Stock Purchase Plan (Details)		3 Months Ended
	Dec. 18, 2018 USD ($) shares	Mar. 31, 2020 USD ($) shares	Mar. 31, 2019 USD ($)
Assumptions used to estimate fair value of each stock-based award on the grant date
Proceeds from the issuance of common stock, net		$ 93,942,000
2018 ESPP
Stock-based compensation
Percent of common stock at market price to be purchased	85.00%
Number of vesting periods	2
Vesting period	6 months
Shares reserved for issuance \| shares	2,000,000
Assumptions used to estimate fair value of each stock-based award on the grant date
Risk-free interest rate (as a percent)		1.57%	2.52%
Volatility (as a percent)		78.00%	77.00%
Expected term		6 months	6 months
Stock-based compensation expense			$ 200,000
Issuance of common stock under ESPP \| shares		227,141
Proceeds from the issuance of common stock, net		$ 300,000
2018 ESPP \| Maximum
Assumptions used to estimate fair value of each stock-based award on the grant date
Stock-based compensation expense		$ 100,000

Long-term debt

3 Months Ended

Mar. 31, 2020

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). The Original Loan Agreement was amended on January 4, 2018, March 6, 2018, October 11, 2018, April 23, 2019, and November 14, 2019 (the Amended Loan Agreement) to increase the total borrowing limit under the Original Loan Agreement from up to $25.0 million to up to $75.0 million, pursuant to certain conditions of funding.

Per the terms of the Amended Loan Agreement, the Company may borrow up to an aggregate of $75.0 million, of which $35.0 million was outstanding immediately as of April 23, 2019 (Fourth Amendment Date) (Amended Term A Loan) as a result of the existing outstanding principal of term loans of $25.0 million being converted into the Amended Term A Loan, and an additional $10.0 million being drawn on the Fourth 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 Amended 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 (Amended 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 Amended Loan Agreement (the Amended Term C Loan, and together with the Amended Term A Loan and Amended Term B Loan, the Amended Term Loan). As of March 31, 2020, the Company has borrowed a total of $35.0 million in term loans.

The Company must maintain unrestricted and unencumbered cash in accounts subject to control agreements in favor of Hercules of an aggregate amount greater than or equal to 100% of the outstanding debt obligations under the Amended Term Loan Agreement, unless and until the Company’s receives of Net Product Revenues (as defined in the Amended Loan Agreement) of at least $20 million on or before December 31, 2020, measured on a trailing six month basis (Initial Net Product Revenue Threshold). As of March 31, 2020 the Company has not met the Initial Net Product Revenue Threshold and has recorded $35.0 million as non-current restricted cash on the condensed consolidated balance sheets. If the Initial Net Product Revenue Threshold is satisfied on or before December 31, 2020, then the Company must, on a monthly basis, either (a) maintain at all times during such month unrestricted and unencumbered cash in accounts subject to control agreements in favor of Hercules, in an aggregate amount greater than or equal to 50% of the outstanding debt obligations under the Amended Loan Agreement, or (b) show net product revenues of at least 80% of the amounts shown on the Company’s most recent board approved financial and business projections, measured on a trailing six month basis as of the end of such calendar month,

The Amended 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 (as defined in the Amended Loan Agreement) minus (B) 5.50%. The Amended Term Loan provides for interest-only payments until April 1, 2021, which may be extended to December 1, 2021 subject 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).

The Amended Term Loan is secured by a lien on substantially all of the Company’s assets, 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 Fourth 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, or $1.1 million. No prepayment charges were due as a result of executing the Fourth Amendment or conversion of the existing term loans into Amended Term A Loans.

The events of default under the Amended Loan Agreement include, without limitation, and subject to customary grace periods, (i) any failure by us to make any payments of principal or interest under the Amended Loan Agreement, any promissory notes or any other loan documents, (ii) any breach or default in the performance of any covenant under the Amended Loan Agreement, (iii) any making of false or misleading representations or warranties in any material respect, (iv) the Company’s insolvency or bankruptcy, (v) certain attachments or judgments on the assets of Verastem, Inc., or (vi) the occurrence of any material default under certain agreements or obligations of ours involving indebtedness, or (vii) the occurrence of a material adverse effect. If an event of default occurs, Hercules is entitled to take enforcement action, including acceleration of amounts due under the Amended Loan Agreement.

The Amended Loan Agreement also contains other customary provisions, such as expense reimbursement and confidentiality. Hercules has indemnification rights and the right to assign the Amended Term Loan.

The Company assessed all terms and features of the Amended 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 Amended Loan Agreement, including put and call features. The Company determined that all features of the Amended 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 March 31, 2020.

The future principal payments under the 2019 Term Loan are as follows as of March 31, 2020 (in thousands):


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

Fair value of financial instruments (Details)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Oct. 17, 2018
Financial liabilities
Debt, carrying value	$ 35,300,000	$ 35,100,000
5.00% Convertible Senior Notes due 2048
Financial liabilities
Interest rate (as a percent)			5.00%
Level 2 \| 5.00% Convertible Senior Notes due 2048
Financial liabilities
Interest rate (as a percent)	5.00%
Debt, fair value	$ 23,200,000
Level 3 \| Amended Term Loan Agreement
Financial liabilities
Debt, fair value	$ 37,100,000
Risk-adjusted discount rate \| 5.00% Convertible Senior Notes due 2048
Financial liabilities
Debt Instrument, Measurement Input		13.08
Cost Of Equity \| 5.00% Convertible Senior Notes due 2048
Financial liabilities
Debt Instrument, Measurement Input		16.54

Inventory

3 Months Ended

Mar. 31, 2020

Inventory

Inventory

6. Inventory

Inventory consists of the following (in thousands):



	March 31, 2020		December 31, 2019
Raw materials	$	909	$	955
Work in process		2,819		2,040
Finished goods		644		101
Total inventories	$	4,372	$	3,096

Stock-based compensation

3 Months Ended

Mar. 31, 2020

Stock-based compensation

Stock-based compensation

14. Stock‑based compensation

Stock options

A summary of the Company’s stock option activity and related information for the three months ended March 31, 2020 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, 2019	17,258,524	$	4.00	7.3	$	185
Granted	183,913	$	1.56
Exercised	(645,628)	$	1.52
Forfeited/cancelled	(2,594,379)	$	3.81
Outstanding at March 31, 2020	14,202,430	$	4.11	7.0	$	7,834
Vested at March 31, 2020	6,939,088	$	5.58	5.1	$	2,400
Vested and expected to vest at March 31, 2020(1)	14,092,430	$	4.12	7.0	$	7,834

(1)

This represents the number of vested options as of March 31, 2020, plus the number of unvested options expected to vest as of March 31, 2020.

The fair value of each stock option granted during the three months ended March 31, 2020 and 2019 was estimated on the grant date using the Black-Scholes option-pricing model using the following weighted-average assumptions:


	Three months ended March 31,
	2020		2019
Risk-free interest rate	1.58	%	2.56	%
Volatility	88	%	83	%
Dividend yield	—		—
Expected term (years)	6.1		6.0

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, (ii) 100 percent on the first anniversary of the vesting commencement date, (iii) thirty three and one-third percent (33 1/3%) on the first anniversary of the vesting commencement date and as to an additional eight and two-thirds percent (8.33%) at the end of each successive three-month period thereafter, or (iv) 100 percent after approximately 21 months from 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 three months ended March 31, 2020 is as follows:


	Shares	Weighted-average grant date fair value per share
Outstanding at December 31, 2019	678,089	$	2.36
Granted	1,050,525	$	2.18
Vested	(88,798)	$	3.32
Forfeited/cancelled	(25,032)	$	3.46
Outstanding at March 31, 2020	1,614,784	$	2.17

On March 27, 2020, the Company amended all outstanding stock options and RSUs awards held by employees (including executive officers), other than certain performance-based awards, to provide that, in the event of a change of control, such equity awards currently held by employees that are outstanding and unvested immediately prior to a change of control of the Company will become fully vested and, if applicable, exercisable immediately prior to, and subject to the consummation of, such change of control. The amendment was implemented to provide assurance to the Company’s existing employees and not in response to any change of control offer for the Company.

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 the Company’s board of directors. 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:


	Three Months ended March 31
	2020		2019
Risk-free interest rate	1.57	%	2.52	%
Volatility	78	%	77	%
Dividend yield	—		—
Expected term (years)	0.5		0.5

For the three months ended March 31, 2020 and 2019, the Company has recognized less than $0.1 million and $0.2 million of stock-based compensation under the Amended and Restated 2018 ESPP. During the three months ended March 31, 2020, the Company issued 227,141 shares of common stock for proceeds of $0.3 million under the Amended and Restated 2018 ESPP.

Intangible assets

3 Months Ended

Mar. 31, 2020

Intangible assets

Intangible assets

7. Intangible assets

The Company’s intangible assets consist of the following (in thousands):

Acquired and in-licensed rights as of March 31, 2020 consist of a $22.0 million milestone payment which became payable upon the FDA marketing approval on September 24, 2018, pursuant to the amended and restated license agreement with Infinity Pharmaceuticals, Inc. (Infinity). The Company made the milestone payment of $22.0 million to Infinity in November 2018.

The Company recorded approximately $0.4 million in amortization expense related to finite-lived intangible assets during the three months ended March 31, 2020 using the straight-line methodology. Estimated future amortization expense for finite-lived intangible assets as of March 31, 2020 is approximately $1.2 million for the remainder of 2020 and approximately $1.6 million per year thereafter.

Product revenue reserves and allowances (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	$ 814
Provision related to sales in the current year	1,496
Credits and payments made	(861)
Product revenue reserves and allowances at ending	1,449
Trade discounts and allowances
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	111
Provision related to sales in the current year	213
Credits and payments made	(187)
Product revenue reserves and allowances at ending	137
Third-Party Payer chargebacks, discounts and fees
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	255
Provision related to sales in the current year	547
Credits and payments made	(563)
Product revenue reserves and allowances at ending	239
Government rebates and other incentives
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	372
Provision related to sales in the current year	689
Credits and payments made	(111)
Product revenue reserves and allowances at ending	950
Returns
Product revenue reserves and allowances
Product revenue reserves and allowances at beginning	76
Provision related to sales in the current year	47
Product revenue reserves and allowances at ending	$ 123

Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2020

Net Loss per Share

Schedule of potentially anti-dilutive securities excluded from calculation of diluted net loss per share


	Three months ended March 31,
	2020	2019
Outstanding stock options	14,202,430	14,177,238
Outstanding restricted stock units	1,614,784	688,194
2018 Notes	3,950,032	20,936,548
Total potentially dilutive securities	19,767,246	35,801,980

Accrued expenses (Tables)

3 Months Ended

Mar. 31, 2020

Accrued expenses

Schedule of accrued expenses

Accrued expenses consist of the following (in thousands):



	March 31, 2020		December 31, 2019
Compensation and related benefits		5,170		7,399
Contract research organization costs		5,453		5,467
Commercialization costs		3,086		3,028
Interest		884		897
Consulting fees		2,336		1,610
Professional fees		827		573
Other		254		391
Total accrued expenses	$	18,010	$	19,365

Nature of business (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Nature of business
Cash, cash equivalents, restricted cash and short-term investments	$ 170,700
Restricted Cash and Cash Equivalents	35,669	$ 35,748
Accumulated deficit	$ (562,775)	$ (524,785)

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2020	May 06, 2020
Cover [Abstract]
Entity Registrant Name	Verastem, Inc.
Entity Central Index Key	0001526119
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		162,533,959
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1

Investments (Tables)

3 Months Ended

Mar. 31, 2020

Investments

Schedule of cash, cash equivalents and investments

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


	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts	$	157,730	$	—	$	—	$	157,730
Corporate bonds, agency bonds and commercial paper (due within 90 days)		12,991		9		—		13,000
Total cash, cash equivalents & restricted cash:	$	170,721	$	9	$	—	$	170,730


	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts	$	77,764	$	—	$	—	$	77,764
Corporate bonds, agency bonds and commercial paper (due within 90 days)		1,498	$	—	$	—	$	1,498
Total cash, cash equivalents & restricted cash:	$	79,262	$	—	$	—	$	79,262
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	31,979	$	14	$	—	$	31,993
Total investments	$	31,979	$	14	$	—	$	31,993
Total cash, cash equivalents, restricted cash and investments	$	111,241	$	14	$	—	$	111,255

Common stock	3 Months Ended
Common stock	Mar. 31, 2020
Common stock.
Common stock	13. Common stock Private Investment in Public Equity (PIPE) On February 27, 2020, the Company entered into a Securities Purchase Agreement (Purchase Agreement) with certain institutional investors in which the Company agreed to sell 46,511,628 shares of common stock at a purchase price of $2.15 per share, which represents 12.6% premium to the last reported sale price of the Company’s common stock of $1.91 per share on February 27, 2020. On March 3, 2020, the closing occurred. The aggregate proceeds net of underwriting discounts and offering costs, were approximately $93.8 million, of which $0.1 million of offering costs are within accounts payable as of March 31, 2020.

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2020	Dec. 31, 2019
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	162,356	80,118
Common stock, shares outstanding	162,356	80,118

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities
Net loss	$ (37,990)	$ (38,102)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	94	113
Amortization of acquired intangible asset	392	392
Amortization of right-of-use asset and lease liability	17	57
Stock-based compensation expense	1,370	2,248
Amortization of deferred financing costs, debt discounts and premiums and discounts on available-for-sale marketable securities	8,779	1,608
Change in fair value of interest make whole provision for 2019 Notes	1,313
Changes in operating assets and liabilities:
Accounts receivable, net	(802)	(252)
Inventory	(1,276)	21
Prepaid expenses, other current assets and other assets	(2,109)	(1,094)
Accounts payable	(2,535)	(1,660)
Accrued expenses and other liabilities	(1,256)	(2,111)
Net cash used in operating activities	(34,003)	(38,780)
Investing activities
Purchases of investments		(37,637)
Maturities of investments	32,050	38,000
Net cash provided by investing activities	32,050	363
Financing activities
Proceeds from the exercise of stock options and employee stock purchase program	1,242	75
Interest make-whole payments on the 2019 Notes	(1,763)
Proceeds from the issuance of common stock, net	93,942
Net cash provided by financing activities	93,421	75
Increase (decrease) in cash, cash equivalents and restricted cash	91,468	(38,342)
Cash, cash equivalents and restricted cash at beginning of period	79,262	130,608
Cash, cash equivalents and restricted cash at end of period	170,730	92,266
Supplemental disclosure of non-cash investing and financing activities
Common stock issuance costs included in accounts payable and accrued expenses	128	$ 15
Conversion of 2019 Notes into common stock	57,414
Purchases of property and equipment included in accounts payable and accrued expenses	13
Settlement of restricted stock units for tax withholdings included in accrued expenses	$ 51

Stock-based compensation (Tables)

3 Months Ended

Mar. 31, 2020

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, 2019	17,258,524	$	4.00	7.3	$	185
Granted	183,913	$	1.56
Exercised	(645,628)	$	1.52
Forfeited/cancelled	(2,594,379)	$	3.81
Outstanding at March 31, 2020	14,202,430	$	4.11	7.0	$	7,834
Vested at March 31, 2020	6,939,088	$	5.58	5.1	$	2,400
Vested and expected to vest at March 31, 2020(1)	14,092,430	$	4.12	7.0	$	7,834

(1)

This represents the number of vested options as of March 31, 2020, plus the number of unvested options expected to vest as of March 31, 2020.

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


	Three months ended March 31,
	2020		2019
Risk-free interest rate	1.58	%	2.56	%
Volatility	88	%	83	%
Dividend yield	—		—
Expected term (years)	6.1		6.0

Schedule of restricted stock units


	Shares	Weighted-average grant date fair value per share
Outstanding at December 31, 2019	678,089	$	2.36
Granted	1,050,525	$	2.18
Vested	(88,798)	$	3.32
Forfeited/cancelled	(25,032)	$	3.46
Outstanding at March 31, 2020	1,614,784	$	2.17

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


	Three Months ended March 31
	2020		2019
Risk-free interest rate	1.57	%	2.52	%
Volatility	78	%	77	%
Dividend yield	—		—
Expected term (years)	0.5		0.5

Commitments and contingencies	3 Months Ended
Commitments and contingencies	Mar. 31, 2020
Commitments and contingencies
Commitments and contingencies	18. Commitments and contingencies The Company has no other commitments other than minimum lease payments as disclosed in Note 10, Leases.

Intangible assets (Tables)

3 Months Ended

Mar. 31, 2020

Intangible assets

Schedule of intangible assets

The Company’s intangible assets consist of the following (in thousands):

Leases

3 Months Ended

Mar. 31, 2020

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 Accounting Standards Codification (ASC) 842, Leases of January 1, 2019. 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 March 31, 2020, a right-of-use asset of $3.0 million and lease liability of $3.8 million are reflected on the condensed consolidated balance sheets. The elements of lease expense were as follows (dollar amounts in thousands):


	Three months ended
	March 31, 2020
Lease Expense
Operating lease expense	$	221
Total Lease Expense	$	221
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$	204


		March 31, 2020
Other Balance Sheet Information - Operating Leases
Weighted average remaining lease term (in years)		5.3
Weighted average discount rate		14.6%
Maturity Analysis
2020	$	751
2021		1,019
2022		1,039
2023		1,060
2024		1,081
Thereafter		546
Total	$	5,496
Less: Present value discount		(1,652)
Lease Liability	$	3,844

Restructuring

3 Months Ended

Mar. 31, 2020

Restructuring

Restructurings

19. Restructurings

On October 28, 2019, the Company committed to an operational plan to reduce overall operating expenses, including the elimination of approximately 40 positions across the Company and other cost-saving measures (the “October 2019 Restructuring”). The October 2019 Restructuring was designed to streamline operations, speed execution, and reflect the focused, account-based approach in the field. The Company recorded $1.2 million of costs in the fourth quarter of 2019, for one-time termination benefits to the affected employees, including cash severance payments, healthcare benefits, and outplacement assistance.

On February 27, 2020, following further analysis of the Company’s strategy, the Company committed to an operational plan to reduce overall operating expenses, including the elimination of approximately 31 positions across the Company and other cost-saving measures (the “February 2020 Restructuring”). The February 2020 Restructuring is designed to streamline operations, speed execution of the Company’s clinical development of defactinib and CH5126766, and reflect a focused, account-based approach in the field.

During the three months ended March 31, 2020, the Company recorded an aggregate expense of $1.8 million, which is reflected in the condensed consolidated statements of operation and comprehensive loss as selling general, and administrative expense and research and development expense for $1.3 million and $0.5 million, respectively, for the February 2020 Restructuring for one-time termination benefits for employee severance, benefits, and related costs.

The following table summarizes the accrued liabilities activity recorded in connection with the restructurings for the three months ended March 31, 2020 (in thousands):


Employee severance, benefits and related costs	Amounts accrued at December 31, 2019		Charges		Amount Paid		Adjustments		Amounts accrued at March 31, 2020
October 2019 Restructuring		631		—		(498)		—		133
February 2020 Restructuring		—		1,788		(86)		—		1,702
Total	$	631	$	1,788	$	(584)	$	—	$	1,835

Product revenue reserves and allowances

3 Months Ended

Mar. 31, 2020

Product revenue reserves and allowances

Product revenue reserves and allowances

9. Product revenue reserves and allowances

As of March 31, 2020, 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 months ended March 31, 2020 (in thousands):


			Third-Party
	Trade		Payer		Government
	discounts		chargebacks,		rebates and
	and		discounts		other
	allowances		and fees		incentives		Returns		Total
Balance at December 31, 2019	$	111	$	255	$	372	$	76	$	814
Provision related to sales in the current year		213		547		689		47		1,496
Adjustments related to prior period sales		—		—		—		—		—
Credits and payments made		(187)		(563)		(111)		—		(861)
Ending balance at March 31, 2020	$	137	$	239	$	950	$	123	$	1,449

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.

Net Loss per Share

3 Months Ended

Mar. 31, 2020

Net Loss per Share

Net Loss per Share

15. Net loss per share

Basic net loss per common share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is calculated by increasing the denominator by the weighted-average number of additional shares that could have been outstanding from securities convertible into common stock, such as stock options and restricted stock units (using the “treasury stock” method), and the 2018 Notes and 2019 Notes (using the “if-converted” method), unless their effect on net loss per share is anti-dilutive.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:


	Three months ended March 31,
	2020	2019
Outstanding stock options	14,202,430	14,177,238
Outstanding restricted stock units	1,614,784	688,194
2018 Notes	3,950,032	20,936,548
Total potentially dilutive securities	19,767,246	35,801,980

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue:
Total revenue	$ 5,056	$ 1,671
Operating expenses:
Cost of sales - product	495	158
Cost of sales - intangible amortization	392	392
Research and development	10,924	9,758
Selling, general and administrative	19,604	26,033
Total operating expenses	31,415	36,341
Loss from operations	(26,359)	(34,670)
Other expense	(1,313)
Interest income	356	1,497
Interest expense	(10,674)	(4,929)
Net loss	$ (37,990)	$ (38,102)
Net loss per share—basic and diluted	$ (0.35)	$ (0.52)
Weighted average common shares outstanding used in computing:
Weighted average common shares outstanding used in computing net loss per share - basic and diluted	108,153	73,854
Net loss	$ (37,990)	$ (38,102)
Unrealized (loss) gain on available-for-sale securities	(5)	(17)
Comprehensive loss	(37,995)	(38,119)
Product revenue, net
Revenue:
Total revenue	5,034	$ 1,671
License and collaboration revenue
Revenue:
Total revenue	$ 22

Convertible Senior Notes (Details) $ / shares in Units, $ in Thousands					3 Months Ended
	Dec. 23, 2019 USD ($) D $ / shares	Nov. 14, 2019 USD ($) D $ / shares	Oct. 17, 2018 USD ($) $ / shares	Jul. 17, 2018 D	Mar. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares	Nov. 11, 2019 $ / shares	Oct. 11, 2018 $ / shares
Convertible Notes
Common stock, par value (in dollars per share) \| $ / shares					$ 0.0001	$ 0.0001
Change in fair value of conversion feature					$ (1,313)
Other Nonoperating Income (Expenses)					(1,313)
Interest make-whole payments on the 2019 Notes					1,763
Other Nonoperating Income (Expense)
Convertible Notes
Change in fair value of conversion feature					1,300
5.00% Convertible Senior Notes due 2048
Convertible Notes
Aggregate principal amount			$ 150,000
Debt Conversion, Original Debt, Amount	$ 7,400	$ 114,300
Repayments of Convertible Debt	700	11,400
Interest rate (as a percent)			5.00%
Common stock, par value (in dollars per share) \| $ / shares			$ 0.0001
Initial conversion rate			0.1395771
Initial conversion price of Common Stock \| $ / shares			$ 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 \| $ / shares								$ 6.23
Percentage of stock price trigger for conversion				130.00%
Trading days \| D				20
Consecutive trading days \| D				30
5.00% Convertible Senior Second Lien Notes due 2048
Convertible Notes
Debt Conversion, Converted Instrument, Amount	$ 4,000	$ 62,900			57,400
Interest rate (as a percent)	5.00%	5.00%
Gains (Losses) on Restructuring of Debt					0
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001
Initial conversion rate	0.6060606	0.6060606
Initial conversion price of Common Stock \| $ / shares	$ 1.65	$ 1.65
Conversion premium above the last reported sales price of the Common Stock (as a percent)	52.80%	52.80%
Sale price of the Common Stock \| $ / shares							$ 1.08
Percentage of stock price trigger for conversion	121.00%	121.00%
Trading days \| D	20	20
Consecutive trading days \| D	30	30
Debt discount	$ 200
Derivative liability	$ 200
Fair value of 2019 Interest Make-Whole Provision						$ 500
Debt conversion, Converted Instrument, Cash					$ 1,800
Debt Conversion, Converted Instrument, Shares Issued \| shares					34,796,350

Convertible Senior Notes	3 Months Ended
Convertible Senior Notes	Mar. 31, 2020
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 2018 Notes). The 2018 Notes are governed by the terms of a base indenture for senior debt securities (the 2018 Base Indenture), as supplemented by the first supplemental indenture thereto (the Supplemental Indenture and together with the 2018 Base Indenture, the 2018 Indenture), each dated October 17, 2018, by and between the Company and Wilmington Trust, National Association, as trustee. The 2018 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 2018 Notes will mature on November 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms. The 2018 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 2018 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 2018 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 Company has the right, exercisable at its option, to cause all Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2018 Indenture) per share of the Company’s common stock equals or exceeds 130% of the conversion price on each of at least 20 VWAP Trading Days (as defined in the 2018 Indenture), whether or not consecutive, during any 30 consecutive VWAP Trading Day period commencing on or after the date the Company first issued the 2018 Notes. The 2018 Indenture includes customary covenants and sets forth certain events of default after which the 2018 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 2018 Notes become automatically due and payable. The Company assessed all terms and features of the 2018 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 2018 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 in December 2018. The Company determined that all other features of the 2018 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 March 31, 2020. On November 14, 2019 and December 23, 2019, the Company entered into privately negotiated agreements to exchange approximately $114.3 million and $7.4 million, respectively, aggregate principal amount of the 2018 Notes for (i) approximately $62.9 million and $4.0 million, respectively, aggregate principal amount of 5.00% Convertible Senior Second Lien Notes due 2048 (the 2019 Notes), (ii) an aggregate of approximately $11.4 million and $0.7 million in 2018 Notes principal repayment and (iii) accrued interest on the 2018 Notes through November 14, 2019 and December 23, 2019, respectively. The 2019 Notes are governed by the terms of an indenture (the 2019 Indenture). The 2019 Notes are senior secured obligations of the Company and bear interest at 5.00% per annum, payable semi-annually in arrears on May 1 and November 1 of each year. The 2019 Notes will mature on November 1, 2048, unless earlier repurchased, redeemed or converted in accordance with the terms thereof. The 2019 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 606.0606 shares of common stock per $1,000 principal amount of the 2019 Notes, which corresponds to an initial conversion price of approximately $1.65 per share of common stock and represents a conversion premium of approximately 52.8% above the last reported sale price of the Company’s common stock of $1.08 per share on November 11, 2019. 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 Company has the right, exercisable at the Company’s option, to cause all 2019 Notes then outstanding to be converted automatically if the “Daily VWAP” (as defined in the 2019 Indenture) per share of the Company’s common stock equals or exceeds 121% of the conversion price on each of at least 20 VWAP Trading Days (as defined in the 2019 Indenture), whether or not consecutive, during any 30 consecutive VWAP Trading Days period commencing on or after the date the Company first issued the 2019 Notes. (Company’s Mandatory Conversion Option). Upon conversion, converting noteholders will be entitled to receive accrued interest on their converted 2019 Notes. In addition, if the 2019 Notes are converted with a conversion date that is on or prior to November 1, 2020, other than in connection with the Company’s exercise of the Company’s Mandatory Conversion Option then the consideration due upon any such conversion will also include a cash interest make-whole payment for all future scheduled interest payments on the converted 2019 Notes through November 1, 2020 (2019 Notes Interest Make-Whole Provision). The company assessed all terms and features of the 2019 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 2019 Notes, including the conversion, put and call features. In consideration of the 2019 Notes Interest Make-Whole Provision, the Company concluded the provision required bifurcation as a derivative. It was determined that the fair value of the derivative upon the November 14, 2019 and December 23, 2019 issuance of the 2019 Notes was $0.2 million in the aggregate; and the Company recorded this amount as a derivative liability and the offsetting amount as a debt discount as a reduction to the carrying value of the 2019 Notes on the closing dates. It was determined that the fair value of the derivative at December 31, 2019 was $0.5 million. During the three months ended March 31, 2020, 2019 Note holders converted $57.4 million aggregate principal of 2019 Notes in exchange for 34,796,350 shares of common stock and $1.8 million of cash for the 2019 Note Interest Make-Whole Provision. The Company recorded the change in fair value of the 2019 Notes Interest Make-Whole Provision of $1.3 million for the three months ended March 31, 2020 as other expense in the condensed consolidated statement of operations and comprehensive loss.. The Company determined that all other features of the 2019 Notes 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. As of March 31, 2020, all 2019 Notes have converted into shares of common stock.

Stock-based compensation - Stock Options (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Shares
Outstanding at the beginning of the period (in shares)	17,258,524
Granted (in shares)	183,913
Exercised (in shares)	(645,628)
Forfeited/cancelled (in shares)	(2,594,379)
Outstanding at the end of the period (in shares)	14,202,430		17,258,524
Vested at the end of the period (in shares)	6,939,088
Vested and expected to vest at end of period (in shares)	14,092,430
Weighted-average exercise price per share
Outstanding at the beginning of the period (in dollars per share)	$ 4.00
Granted (in dollars per share)	1.56
Exercised (in dollars per share)	1.52
Forfeited/cancelled (in dollars per share)	3.81
Outstanding at the end of the period (in dollars per share)	4.11		$ 4.00
Vested at the end of the period (in dollars per share)	5.58
Vested and expected to vest at end of the period (in dollars per share)	$ 4.12
Weighted-average remaining contractual term
Outstanding at the end of the period	7 years		7 years 3 months 18 days
Vested at the end of the period	5 years 1 month 6 days
Vested and expected to vest at the end of the period	7 years
Aggregate intrinsic value
Outstanding at the beginning of the period (in dollars)	$ 185
Outstanding at the end of the period (in dollars)	7,834		$ 185
Vested at the end of the period (in dollars)	2,400
Vested and expected to vest at end of the period (in dollars)	$ 7,834
Assumptions used to estimate fair value of each stock-based award on the grant date
Risk-free interest rate (as a percent)	1.58%	2.56%
Volatility (as a percent)	88.00%	83.00%
Expected term	6 years 1 month 6 days	6 years

Summary of significant accounting policies (Policies)

3 Months Ended

Mar. 31, 2020

Summary of significant accounting policies

Basis of presentation

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 months ended March 31, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2020. 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, 2019, as filed with the Securities and Exchange Commission (SEC) on March 11, 2020.

Significant Accounting Policies

The significant accounting policies identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 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 three months ended March 31, 2020 there were no material changes to the significant accounting policies.

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 months ended March 31, 2020, 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 months ended March 31, 2020.

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 months ended March 31, 2020.

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.

As of March 31, 2020, the Company has not received any returns.

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 months ended March 31, 2020.

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 March 31, 2020 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 March 31, 2020 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 three months ended March 31, 2020, there were four 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

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. In November 2019, the FASB issued ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives (Topic 815), and Leases (Topic 842). This ASU delayed the required adoption for SEC filers that are smaller reporting companies as of their determination on November 15, 2019, until annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company has determined that as of November 15, 2019, it is a smaller reporting company and has not elected to early adopt this standard. The Company is currently evaluating the impact the adoption of the standard will have on its condensed consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No 2019-12, Simplifying Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocations, calculating income taxes in interim periods, and adds certain guidance to remove complexity in certain areas. ASU 2019-12 is effective for all entities for annual and interim periods beginning after December 15, 2020. 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.

Recently Adopted 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. This guidance requires entities to adopt on a retrospective basis to the to the date the Company adopted Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers. The Company adopted ASU 2018-18 as of January 1, 2020 on a retrospective basis to January 1, 2018, the date at which the Company adopted ASU 606, and it did not have a material impact on the Company’s condensed consolidated financial statements or 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 adopted this standard effective January 1, 2020 on a prospective basis. The adoption of this ASU did not have an effect on the Company’s financial statements of 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. The Company adopted this standard effective January 1, 2020 on a prospective basis. The adoption of this ASU did not have an effect on the Company’s financial statements of disclosures.

Summary of significant accounting policies

3 Months Ended

Mar. 31, 2020

Summary of significant accounting policies

Summary of significant accounting policies

2. Summary of significant accounting policies

Basis of Presentation

Significant Accounting Policies

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.

As of March 31, 2020, the Company has not received any returns.

Concentrations of credit risk and off-balance sheet risk

For the three months ended March 31, 2020, there were four customers who each individually accounted for greater than 10% of the Company’s total revenues.

Recently Issued Accounting Standards Updates

Recently Adopted Accounting Standards Updates

Fair value of financial instruments

3 Months Ended

Mar. 31, 2020

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):




	March 31, 2020
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	168,553	$	155,553	$	13,000	$	—
Short-term investments		—		—		—		—
Total financial assets	$	168,553	$	155,553	$	13,000	$	—




	December 31, 2019
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	77,176	$	75,678	$	1,498	$	—
Short-term investments		31,992		—		31,992		—
Total financial assets	$	109,168	$	75,678	$	33,490	$	—
Derivative liability	$	450		—		—	$	450

The Company’s cash equivalents and short-term investments consist of U.S. Government money market funds, corporate bonds, agency 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 March 31, 2020 and December 31, 2019.

During 2019, a derivative liability was recorded as a result of the issuance of the 2019 Notes (see note 12). The fair value measurement of the derivative liability is classified as Level 3 under the fair value hierarchy and it has been valued using unobservable inputs. These inputs include: (1) a simulated share price at the time of conversion of the 2019 Notes, (2) assumed timing of conversion of the 2019 Notes, (3) risk-adjusted discount rate to present value the probability-weighted cash flows, and (4) entity specific cost of equity. Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher fair value measurement.

The fair value of the derivative liability was determined using a Monte-Carlo simulation by calculating fair value of the 2019 Interest Make-Whole Payment to 2019 Note holders based on assumed timing of conversion of the 2019 Notes. At December 31, 2019, the risk-adjusted discount rate was determined to be 13.08% and entity specific cost of equity was determined to be 16.54%.

The following table represents a reconciliation of the derivative liability recorded in connection with the issuance of the 2019 Notes (in thousands):


January 1, 2020	$	450
Fair value adjustment		1,313
Derivative liability extinguished upon conversion		(1,763)
March 31, 2020	$	—

During the three months ended March 31, 2020 the derivative liability has been settled upon conversion of all 2019 Notes into shares of common stock (see note 12).

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 March 31, 2020 and December 31, 2019 was approximately $35.3 million and $35.1 million, respectively. At March 31, 2020, 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 2018 Notes) as of March 31, 2020 was approximately $23.2 million, which differs from the carrying value of the 2018 Notes. The fair value of the 2018 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

Common stock (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended
	Mar. 03, 2020	Feb. 27, 2020	Mar. 31, 2020
Subsidiary, Sale of Stock [Line Items]
Proceeds from the issuance of common stock, net			$ 93,942
Private Investment in Public Equity (PIPE)
Subsidiary, Sale of Stock [Line Items]
Shares issued (in shares)		46,511,628
Share price (in dollars per share)		$ 2.15
Share price premium (as percentage)		12.60%
Share price, prior to premium price (in dollars per share)		$ 1.91
Proceeds from the issuance of common stock, net	$ 93,800
Accounts Payable \| Private Investment in Public Equity (PIPE)
Subsidiary, Sale of Stock [Line Items]
Offering cost payable			$ 100

Cash, cash equivalents and restricted cash (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	$ 35,241	$ 35,241
Research and development agreement with the Leukemia and Lymphoma Society \| Prepaid Expenses and Other Current Assets
Property, Plant and Equipment [Line Items]
Restricted Cash and Cash Equivalents, Current	500	500
Amended Term Loan Agreement
Property, Plant and Equipment [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	35,000	35,000
Letter of credit \| Office and Laboratory Space in Needham, Massachusetts
Property, Plant and Equipment [Line Items]
Restricted Cash and Cash Equivalents, Noncurrent	$ 200	$ 200

Cash, cash equivalents and restricted cash (Tables)

3 Months Ended

Mar. 31, 2020

Cash, cash equivalents and restricted cash

Schedule of reconciliation of cash, cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):


	March 31, 2020		December 31, 2019
Cash and cash equivalents	$	135,061	$	43,514
Restricted cash		35,669		35,748
Total cash, cash equivalents and restricted cash	$	170,730	$	79,262

Long-term debt - Hercules term loan facility (Details) - USD ($)			3 Months Ended
	Nov. 14, 2019	Apr. 23, 2019	Mar. 31, 2020	Dec. 31, 2019	Apr. 22, 2019	Mar. 21, 2017
Long-term debt
Restricted Cash			$ 35,241,000	$ 35,241,000
Amended Term Loan Agreement
Long-term debt
Restricted Cash			$ 35,000,000	$ 35,000,000
Amended Term Loan Agreement \| Trailing six months prior to December 31, 2020
Long-term debt
Debt Covenant Percentage Related To Outstanding Debt Obligations			50.00%
Debt Covenant Percentage Related To Net Product Revenue Minimum			80.00%
Medium-term Notes [Member] \| Original Loan Agreement
Long-term debt
Maximum borrowing capacity						$ 25,000,000
Medium-term Notes [Member] \| Amended Term Loan Agreement
Long-term debt
Maximum borrowing capacity	$ 75,000,000	$ 75,000,000
Outstanding amount		35,000,000	$ 35,000,000		$ 25,000,000
Amount drawn		10,000,000
Remaining borrowing capacity		$ 40,000,000
Outstanding accrued interest and the final payment fee (as a percent)		4.50%
Outstanding accrued interest and the final payment fee		$ 1,100,000
Prepayment charges due		$ 0
Future principal payments
2021			14,234,000
2022			20,766,000
Total principal payments			$ 35,000,000
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Prime rate
Long-term debt
Basis spread		5.50%
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Minimum
Long-term debt
Interest rate		9.75%
Basis spread		9.75%
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Maximum
Long-term debt
Interest rate		12.00%
Medium-term Notes [Member] \| Amended Term Loan Agreement \| On or before April 30, 2020
Long-term debt
Net product revenue		$ 37,500,000
Medium-term Notes [Member] \| Amended Term Loan Agreement \| On or before June 30, 2020
Long-term debt
Net product revenue		50,000,000
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Trailing six months prior to December 31, 2020
Long-term debt
Net product revenue	$ 20,000,000	40,000,000
Percentage of restricted cash, collateral			100.00%
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Company’s option through December 31, 2021
Long-term debt
Amount drawn		25,000,000
Medium-term Notes [Member] \| Amended Term Loan Agreement \| Plan \| Maximum
Long-term debt
Amount drawn		$ 15,000,000

Subsequent events	3 Months Ended
Subsequent events	Mar. 31, 2020
Subsequent events.
Subsequent events	20. 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.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Issuance of common stock, issuance costs	$ 6,171

Restructuring (Tables)

3 Months Ended

Mar. 31, 2020

Restructuring

Schedule of accrued restructuring liabilities

The following table summarizes the accrued liabilities activity recorded in connection with the restructurings for the three months ended March 31, 2020 (in thousands):


Employee severance, benefits and related costs	Amounts accrued at December 31, 2019		Charges		Amount Paid		Adjustments		Amounts accrued at March 31, 2020
October 2019 Restructuring		631		—		(498)		—		133
February 2020 Restructuring		—		1,788		(86)		—		1,702
Total	$	631	$	1,788	$	(584)	$	—	$	1,835

Inventory (Tables)

3 Months Ended

Mar. 31, 2020

Inventory

Schedule of inventory

Inventory consists of the following (in thousands):



	March 31, 2020		December 31, 2019
Raw materials	$	909	$	955
Work in process		2,819		2,040
Finished goods		644		101
Total inventories	$	4,372	$	3,096

Summary of significant accounting policies - Revenue Recognition and Accounts Receivable, Net (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Revenue recognition
Practical expedient, incremental cost of obtaining contract	true
Incremental costs of obtaining a contract	$ 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

License and collaboration agreements - Chugai Pharmaceutical Co., Ltd (Chugai) (Details) - Chugai Pharmaceutical Co., Ltd. [Member] - License And Collaboration Agreement - USD ($) $ in Millions		1 Months Ended	3 Months Ended
	Jan. 07, 2020	Feb. 29, 2020	Mar. 31, 2020
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative Arrangements One Time Cash Payment		$ 3.0
Agreement obligations expire from first commercial sale of product (in years)	12 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	120 days
Research and development
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaborative Arrangements One Time Cash Payment			$ 3.0

Lease (Tables)

3 Months Ended

Mar. 31, 2020

Leases

Summary of elements of lease expenses

The elements of lease expense were as follows (dollar amounts in thousands):


	Three months ended
	March 31, 2020
Lease Expense
Operating lease expense	$	221
Total Lease Expense	$	221
Other Information - Operating Leases
Operating cash flows paid for amounts included in measurement of lease liabilities	$	204


		March 31, 2020
Other Balance Sheet Information - Operating Leases
Weighted average remaining lease term (in years)		5.3
Weighted average discount rate		14.6%
Maturity Analysis
2020	$	751
2021		1,019
2022		1,039
2023		1,060
2024		1,081
Thereafter		546
Total	$	5,496
Less: Present value discount		(1,652)
Lease Liability	$	3,844

Inventory (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventory
Raw materials	$ 909	$ 955
Work in process	2,819	2,040
Finished goods	644	101
Total inventories	$ 4,372	$ 3,096

Stock-based compensation - Restricted Stock (Details) - Restricted Stock Units	3 Months Ended
	Mar. 31, 2020 item $ / shares shares
Stock-based compensation
Number of shares holder to receive when RSU vests	1
Shares
Unvested at the beginning of the period (in shares)	678,089
Granted (in shares)	1,050,525
Vested (in shares)	(88,798)
Forfeited (in shares)	(25,032)
Unvested at the end of the period (in shares)	1,614,784
Weighted-average grant date fair value
Unvested at the beginning of the period (in dollars per share) \| $ / shares	$ 2.36
Granted (in dollars per share) \| $ / shares	2.18
Vested (in dollars per share) \| $ / shares	3.32
Forfeited/cancelled (in dollars per share) \| $ / shares	3.46
Unvested at the end of the period (in dollars per share) \| $ / shares	$ 2.17
Four Annual Payments
Stock-based compensation
Number of installments \| item	4
Number of anniversaries \| item	4
First Anniversary Payment
Stock-based compensation
Vesting percentage	100.00%
First Anniversary Payment and Each Successive Quarter Thereafter
Stock-based compensation
Award vesting rights, first anniversary, percentage	33.33%
Award vesting rights, successive quarters after anniversary, percentage	8.33%
Vesting approximately 21 months from the commencement date
Stock-based compensation
Vesting percentage	100.00%

Cash, cash equivalents and restricted cash

3 Months Ended

Mar. 31, 2020

Cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash

3. Cash, cash equivalents and restricted cash


	March 31, 2020		December 31, 2019
Cash and cash equivalents	$	135,061	$	43,514
Restricted cash		35,669		35,748
Total cash, cash equivalents and restricted cash	$	170,730	$	79,262

Amounts included in restricted cash as of March 31, 2020 and December 31, 2019 represent (i) cash that the Company is contractually obligated to maintain in accordance with the terms of the 2019 Term Loan Agreement, (ii) cash received pursuant to a funded research and development agreement with the Leukemia and Lymphoma Society (the “LLS Research Funding Agreement”) which is restricted for future expenditures for specific R&D studies and (iii) cash held to collateralize outstanding letters of credit provided as a security deposit for the Company’s office space located in Needham, Massachusetts in the amount of approximately $35.0 million, $0.5 million, and $0.2 million respectively, at March 31, 2020 and December 31, 2019. Restricted cash related to 2019 Term Loan Agreement and letters of credit are included in non-current restricted cash on the condensed consolidated balance sheets, while cash related to the LLS Research Funding Agreement is included in prepaid and other current assets on the condensed consolidated balance sheet.

Long-term debt (Tables)

3 Months Ended

Mar. 31, 2020

Long-term debt

Schedule of future principal payments under the Loan Agreement

The future principal payments under the 2019 Term Loan are as follows as of March 31, 2020 (in thousands):


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

Restructuring (Details) - One-time Termination Benefits			3 Months Ended
Restructuring (Details) - One-time Termination Benefits	Feb. 27, 2020 USD ($)	Oct. 28, 2019 USD ($)	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
October 2019 Restructuring [Member]
Restructuring Costs
Restructuring and Related Cost, Number of Positions Eliminated		40
Restructuring Costs				$ 1,200,000
February 2020 Restructuring [Member]
Restructuring Costs
Restructuring and Related Cost, Number of Positions Eliminated	31
Restructuring Costs			$ 1,800,000
February 2020 Restructuring [Member] \| Selling, General and Administrative Expenses [Member]
Restructuring Costs
Restructuring Costs			1,300,000
February 2020 Restructuring [Member] \| Research and development
Restructuring Costs
Restructuring Costs			$ 500,000

Net Loss per share (Details) - shares	3 Months Ended
Net Loss per share (Details) - shares	Mar. 31, 2020	Mar. 31, 2019
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	19,767,246	35,801,980
Stock options
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	14,202,430	14,177,238
Restricted Stock Units
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	1,614,784	688,194
Convertible senior notes
Net loss per share
Potentially anti-dilutive securities excluded from calculation of diluted net loss per share (in shares)	3,950,032	20,936,548

Fair value of financial instruments (Tables)

3 Months Ended

Mar. 31, 2020

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):




	March 31, 2020
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	168,553	$	155,553	$	13,000	$	—
Short-term investments		—		—		—		—
Total financial assets	$	168,553	$	155,553	$	13,000	$	—




	December 31, 2019
Description	Total		Level 1		Level 2		Level 3
Financial assets
Cash equivalents	$	77,176	$	75,678	$	1,498	$	—
Short-term investments		31,992		—		31,992		—
Total financial assets	$	109,168	$	75,678	$	33,490	$	—
Derivative liability	$	450		—		—	$	450

Schedule of derivative liability reconciliation

The following table represents a reconciliation of the derivative liability recorded in connection with the issuance of the 2019 Notes (in thousands):


January 1, 2020	$	450
Fair value adjustment		1,313
Derivative liability extinguished upon conversion		(1,763)
March 31, 2020	$	—

Investments

3 Months Ended

Mar. 31, 2020

Investments

Investments

5. Investments

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


	March 31, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts	$	157,730	$	—	$	—	$	157,730
Corporate bonds, agency bonds and commercial paper (due within 90 days)		12,991		9		—		13,000
Total cash, cash equivalents & restricted cash:	$	170,721	$	9	$	—	$	170,730


	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash, cash equivalents & restricted cash:
Cash and money market accounts	$	77,764	$	—	$	—	$	77,764
Corporate bonds, agency bonds and commercial paper (due within 90 days)		1,498	$	—	$	—	$	1,498
Total cash, cash equivalents & restricted cash:	$	79,262	$	—	$	—	$	79,262
Investments:
Corporate bonds and commercial paper (due within 1 year)	$	31,979	$	14	$	—	$	31,993
Total investments	$	31,979	$	14	$	—	$	31,993
Total cash, cash equivalents, restricted cash and investments	$	111,241	$	14	$	—	$	111,255

There were no realized gains or losses on investments for the three months ended March 31, 2020 or 2019, respectively. There were zero and two investments in an unrealized loss position as of March 31, 2020 and December 31, 2019, respectively. None of these investments had been in an unrealized loss position for more than 12 months as of March 31, 2020 and December 31, 2019, respectively. The fair value of these securities as of March 31, 2020 and December 31, 2019 was $0 and $5.8 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 March 31, 2020 and December 31, 2019, respectively.

Summary of significant accounting policies - Concentration of Credit Risk (Details)	3 Months Ended
	Mar. 31, 2020 customer
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 March 31, 2020 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 financial institutions in which cash, cash equivalents and investments were deposited	2
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	4
Revenue \| Customer Concentration Risk \| Minimum
Concentrations of credit risk and off-balance sheet risk
Percentage	10.00%