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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	May 04, 2012
Document and Entity Information
Entity Registrant Name	Verastem, Inc.
Entity Central Index Key	0001526119
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		21,059,116
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 25,470	$ 20,954
Short-term investments	15,597	26,857
Prepaid expenses and other current assets	490	130
Total current assets	41,557	47,941
Property and equipment, net	793	709
Long-term investments	68,269	8,994
Other assets		1,307
Restricted cash	86	86
Total assets	110,705	59,037
Current liabilities:
Accounts payable	1,936	2,273
Accrued expenses	1,001	873
Total current liabilities	2,937	3,146
Deferred rent	66	74
Liability for shares subject to repurchase	27	36
Obligation to issue warrant		406
Stockholders' equity (deficit)
Preferred stock, $0.0001 par value; 5,000 shares authorized; none issued
Common stock, $0.0001 par value; 100,000 and 53,093, shares authorized at March 31, 2012 and December 31, 2011, respectively, 19,791 and 1,559 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	2	1
Additional paid-in capital	129,056	1,702
Accumulated other comprehensive loss	(45)	(2)
Deficit accumulated during the development stage	(21,338)	(14,467)
Total stockholders' equity (deficit)	107,675	(12,766)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	110,705	59,037
Series A redeemable convertible preferred stock
Current liabilities:
Redeemable convertible preferred stock	0	15,939
Series B redeemable convertible preferred stock
Current liabilities:
Redeemable convertible preferred stock	0	31,948
Series C redeemable convertible preferred stock
Current liabilities:
Redeemable convertible preferred stock	$ 0	$ 20,254

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands	Mar. 31, 2012	Dec. 31, 2011
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
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000	53,093
Common stock, shares issued	19,791	1,559
Common stock, shares outstanding	19,791	1,559
Series A redeemable convertible preferred stock
Redeemable convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized	0	16,000
Redeemable convertible preferred stock, shares issued	0	16,000
Redeemable convertible preferred stock, shares outstanding	0	16,000
Series B redeemable convertible preferred stock
Redeemable convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized		16,025
Redeemable convertible preferred stock, shares issued		16,025
Redeemable convertible preferred stock, shares outstanding		16,025
Series C redeemable convertible preferred stock
Redeemable convertible preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Redeemable convertible preferred stock, shares authorized		9,068
Redeemable convertible preferred stock, shares issued		9,068
Redeemable convertible preferred stock, shares outstanding		9,068

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		20 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Operating expenses:
Research and development	$ 4,803	$ 675	$ 15,086
General and administrative	2,125	471	6,324
Total operating expenses	6,928	1,146	21,410
Loss from operations	(6,928)	(1,146)	(21,410)
Interest income	57		72
Net loss	(6,871)	(1,146)	(21,338)
Accretion of preferred stock	(6)	(4)	(40)
Net loss applicable to common stockholders	$ (6,877)	$ (1,150)	$ (21,378)
Net loss per share applicable to common stockholders-basic and diluted (in dollars per share)	$ (0.47)	$ (1.06)	$ (6.62)
Weighted-average number of common shares used in net loss per share applicable to common stockholders-basic and diluted (in shares)	14,693	1,089	3,228
Comprehensive loss	$ (6,914)	$ (1,146)	$ (21,383)

CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		20 Months Ended
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012
Operating activities
Net loss	$ (6,871)	$ (1,146)	$ (21,338)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	46		129
Stock-based compensation expense	1,529	54	3,216
Common stock issued in exchange for license			46
Obligation to issue a warrant in exchange for license			439
Change in fair value of obligation to issue warrant	431		398
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(360)	(8)	(490)
Accounts payable	(337)	134	1,936
Accrued expenses and deferred rent	667	99	1,067
Net cash used in operating activities	(4,895)	(867)	(14,597)
Investing activities
Purchases of property and equipment	(130)		(923)
Purchases of investments	(72,758)		(108,609)
Maturities of investments	24,700		24,700
Increase in restricted cash			(86)
Net cash used in investing activities	(48,188)	0	(84,918)
Financing activities
Proceeds from issuance of redeemable convertible preferred stock			68,107
Net proceeds from the issuance of common stock and restricted common stock	57,599		56,878
Net cash provided by financing activities	57,599	0	124,985
Increase (decrease) in cash and cash equivalents	4,516	(867)	25,470
Cash and cash equivalents at beginning of period	20,954	3,584
Cash and cash equivalents at end of period	25,470	2,717	25,470
Supplemental disclosure of non-cash financing activity
Accretion of redeemable convertible preferred stock to redemption value	6	$ 4	40
Conversion of redeemable convertible preferred stock upon initial public offering	68,148		68,148
Reclassification of obligation to issue warrant for liabilities to equity	$ 837		$ 837

Summary of significant accounting policies

3 Months Ended

Mar. 31, 2012

Significant accounting policies

Significant accounting policies

1. Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. 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 of assets, liabilities, revenues, expenses 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, 2012 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2012. 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, 2011 as filed with the Securities and Exchange Commission ("SEC") on March 30, 2012.

Subsequent Events

In preparing the financial statements included in this Form 10-Q, the Company has evaluated all subsequent events that occurred after March 31, 2012 through the date of the filing of this Form 10-Q. On May 11, 2012, the Company acquired from S*Bio Pte Ltd, or S*Bio, compounds identified as dual inhibitors of PI3K and mTOR, including related patent rights. PI3K and mTOR are members of a network of proteins, or signaling pathway, that promotes cancer cell proliferation and survival. Under the agreement, the Company paid S*Bio an upfront fee of $350,000 and has agreed to pay S*Bio milestone payments of up to an aggregate of approximately $21.0 million upon the achievement of specified development and regulatory milestones. In addition, the Company agreed to pay to S*Bio tiered, low to mid single digit royalties as a percentage of annual net sales of each product containing an acquired compound as an ingredient. The obligation to pay royalties continues on a product by product and country by country basis until the expiration of all acquired patent rights covering the product in such country. If the Company obtains a license from a third party in order to commercialize an acquired compound contained in a product in a particular country, then the Company may deduct up to 50% of the amount paid to such third party from the royalty payments that Company owes to S*Bio for such product. The deduction is subject to specified limitations, including that in no event will any such deduction reduce a royalty payment owed to S*Bio by more than 50% as a result of all such deductions in the aggregate. The Company did not have any other material recognizable or unrecognizable subsequent events during this period.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, "Fair Value Measurement." This ASU clarifies the concepts related to highest and best use and valuation premise, blockage factors and other premiums and discounts, the fair value measurement of financial instruments held in a portfolio and of those instruments classified as a component of stockholders' deficit. The guidance includes enhanced disclosure requirements about recurring Level 3 fair value measurements, the use of nonfinancial assets and the level in the fair value hierarchy of assets and liabilities not recorded at fair value. The Company adopted the ASU on January 1, 2012. The adoption did not have a significant impact on the financial statements.

In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income." This ASU enhances comparability and transparency of other comprehensive income components. The guidance provides an option to present total comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement or two separate but consecutive statements. This ASU eliminates the option to present other comprehensive income components as part of the statement of changes in shareholder's equity (deficit). The Company adopted this ASU on January 1, 2012. The adoption of this standard did not have a significant impact on the financial statements, but it did impact the presentation of comprehensive loss in the financial statements.

Fair value of financial instruments

3 Months Ended

Mar. 31, 2012

Fair value of financial instruments

Fair value of financial instruments

2. Fair value of financial instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. The fair value hierarchy is now established that 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
	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

The following table presents information about the Company's financial assets that have been measured at fair value at March 31, 2012 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).

Description	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

Financial assets
Cash equivalents	$	9,037	$	9,037	$	—	$	—
Short-term investments		15,597		—		15,597		—
Long-term investments		68,269		—		68,269		—

Total financial assets	$	92,903	$	9,037	$	83,866	$	—

The following table presents information about the Company's financial assets that have been measured at fair value at December 31, 2011 and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands).

Description	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)

Financial assets
Cash equivalents	$	4,102	$	3,102	$	1,000	$	—
Short-term investments		26,857		—		26,857		—
Long-term investments		8,994		—		8,994		—

Total financial assets	$	39,953	$	3,102	$	36,851	$	—

Financial liabilities
Obligation to issue warrant	$	406	$	—	$	—	$	406

Total financial liabilities	$	406	$	—	$	—	$	406

The Company's cash equivalents and investments are comprised of money market accounts, government-sponsored enterprise securities and commercial paper of publicly traded companies secured by the U.S. government. These investments 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, 2012.

In connection with the license with Poniard Pharmaceuticals Inc., the Company is obligated to issue a warrant to Poniard for the purchase of the Company's common stock upon the first patient dosing using a product licensed under the agreement with Poniard; such warrant will have a three year term from the date of issuance. Prior to an initial public offering, the exercise price of the warrant is equal to the fair value of the common stock on the date of the most recent preferred stock financing prior to the issuance of the warrant. Upon the completion of the Company's initial public offering in January 2012, the exercise price of the warrant is equal to the average closing price of the Company's common stock during the five trading days preceding the issuance of the warrant.

Prior to January 2012, the obligation to issue the warrant is a level 3 liability because its value measurement is based, in part, on significant inputs not observed in the market and reflects the Company's assumptions as to the expected warrant exercise price and the expected volatility of the Company's common stock. The obligation to issue the warrant was initially recorded at fair value and, prior to the Company's initial public offering, was revalued at the end of each reporting period, with the change in the fair value reported in research and development expense within the statement of operations. Upon the completion of the Company's initial public offering, the obligation to issue the warrant met the definition of an equity-classified derivative instrument since the remaining variable inputs were consistent with those in a fixed for fixed forward option agreement, and was therefore revalued as of January 26, 2012 with the change in fair value reported in research and development expense within the statement of operations. The fair value of the obligation to issue the warrant was then reclassified from liabilities to additional paid-in-capital on the Company's balance sheet. The Company will reassess the equity classification of the obligation to issue the warrant upon a change in facts and circumstances in future reporting periods.

As of December 31, 2011, the most recent issuance of the Company's Preferred Stock had been the issuance of the Series C Preferred Stock in November 2011. The Company estimated the value of the obligation to issue the warrant using a probability-weighted scenario analysis that incorporated the probability of the completion of an initial public offering. The analysis included estimating the stock price on each measurement date assuming that achievement of the milestone would be 100% probable. The estimated stock price contingent upon milestone achievement was determined by analyzing the post-announcement returns for public companies that progressed to Phase 1 clinical trials. The following inputs were used to determine the fair value of the obligation to issue the warrant:

				December 31, 2011

	January 26, 2012			December 31, 2011
	January 26, 2012			Non-IPO			IPO
Exercise price	$	11.09		$	6.86		$	10.00
Estimated stock price contingent upon milestone achievement	$	12.60		$	3.22		$	8.54
Expected term		4.0 years			4.1 years			4.1 years
Volatility		75	%		70	%		70	%
Dividend yield		0.00	%		0.00	%		0.00	%
Risk-free rate		0.54	%		0.60	%		0.60	%
Probability of achieving milestone		80	%		80	%		80	%
Probability of scenario		100	%		20	%		80	%

As of December 31, 2011, the fair value of the obligation to issue the warrant was recorded at $406,000. As a result of the change in inputs to the valuation model, the fair value of the obligation to issue the warrant increased by $431,000 to $837,000 at January 26, 2012. Reasonable changes in the assumptions used to calculate the fair value of the obligation to issue the warrant would not result in significant changes in the fair value.

- 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

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Number 107
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
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-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Investments

3 Months Ended

Mar. 31, 2012

Investments

Investments

3. Investments

The Company's investments are classified as available-for-sale pursuant to Accounting Standards Codification (ASC) 320, Investments—Debt and Equity Securities. The Company classifies investments available to fund current operations as current assets on its balance sheets. Investments are classified as long-term assets on the balance sheets if (i) the Company has the intent and ability to hold the investments for a period of at least one year and (ii) the contractual maturity date of the investments is greater than one year.

Investments are carried at fair value with unrealized gains and losses included as a component of accumulated other comprehensive loss, until such gains and losses are realized. If a decline in the fair value is considered other-than-temporary, based on available evidence, the unrealized loss is transferred from other comprehensive loss to the statement of operations. There were no charges taken for other-than-temporary declines in fair value of short-term or long-term investments during the three months ended March 31, 2012 and 2011. Realized gains and losses are included in interest income in the statement of operations. There were no realized gains or losses recognized during the three months ended March 31, 2012 or 2011. The Company utilizes the specific identification method as a basis to determine the cost of securities sold.

The Company reviews investments for other-than-temporary impairment whenever the fair value of an investment is less than the amortized cost and evidence indicates that an investment's carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers the intent to sell, or whether it is more likely than not that the Company will be required to sell, the investment before recovery of the investment's amortized cost basis. Evidence considered in this assessment includes reasons for the impairment, compliance with the Company's investment policy, the severity and the duration of the impairment and changes in value subsequent to year end. As of March 31, 2012, there were no investments with a fair value that was significantly lower than the amortized cost basis or any investments that had been in an unrealized loss position for a significant period.

Cash, cash equivalents and investments at March 31, 2012 and December 31, 2011 consist of the following (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

March 31, 2012
Cash and cash equivalents:
Cash and money market accounts	$	25,470	$	—	$	—		$	25,470

Investments:
Government-sponsored enterprise securities (due within 1 year)	$	2,500	$	—	$	—		$	2,500
Government-sponsored enterprise securities (due within 1 – 2 years)		68,315		8		(54	)		68,269
Commercial paper secured by the U.S. government (due within 1 year)		13,097		—		—			13,097

Total investments	$	83,912	$	8	$	(54	)	$	83,866

Total cash, cash equivalents, and investments	$	109,382	$	8	$	(54	)	$	109,336

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

December 31, 2011
Cash and cash equivalents:
Cash and money market accounts	$	19,954	$	—	$	—		$	19,954
Government-sponsored enterprise securities		1,000		—		—			1,000

Total cash and cash equivalents	$	20,954	$	—	$	—		$	20,954
Investments:
Government-sponsored enterprise securities (due within 1 year)	$	10,900	$	2	$	(1	)	$	10,901
Government-sponsored enterprise securities (due within 1 – 2 years)		8,998		1		(5	)		8,994
Commercial paper secured by the U.S. government (due within 1 year)		15,954		3		(1	)		15,956

Total investments	$	35,852	$	6	$	(7	)	$	35,851

Total cash, cash equivalents, and investments	$	56,806	$	6	$	(7	)	$	56,805

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-SubTopic 10
-Section 50
-Paragraph 2
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 3, 19, 20, 21, 22, 137
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Prepaid expenses and other current assets

3 Months Ended

Mar. 31, 2012

Prepaid expenses and other current assets

Prepaid expenses and other current assets

4. Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following (in thousands):

	March 31, 2012		December 31, 2011

Prepaid insurance	$	311	$	—
Prepaid other expense		80		77
Interest receivable		99		53

	$	490	$	130

Accrued expenses

3 Months Ended

Mar. 31, 2012

Accrued expenses

Accrued expenses

5. Accrued expenses

Accrued expenses consist of the following (in thousands):

	March 31, 2012		December 31, 2011

Compensation and related benefits	$	367	$	86
Contract research organizations		349		217
Professional fees		180		520
Other expenses		76		23
Deferred rent		29		27

	$	1,001	$	873

Net loss per share

3 Months Ended

Mar. 31, 2012

Net loss per share

Net loss per share

6. Net loss per share

Basic and diluted 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, without consideration for common stock equivalents. The Company's potentially dilutive shares, which include redeemable convertible preferred stock, outstanding stock options and unvested restricted stock are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. The following table reconciles net loss to net loss applicable to common shareholders (in thousands, except per share data):

							Period from August 4, 2010 (inception) to March 31, 2012

	Three Months ended
	March 31, 2012			March 31, 2011
Net loss	$	(6,871	)	$	(1,146	)	$	(21,338	)
Accretion of redeemable convertible preferred stock		(6	)		(4	)		(40	)

Net loss applicable to common stockholders	$	(6,877	)	$	(1,150	)	$	(21,378	)

Weighted-average number of common shares used in net loss per share applicable to common stockholders—basic and diluted		14,693			1,089			3,228
Net loss per share applicable to common stockholders—basic and diluted	$	(0.47	)	$	(1.06	)	$	(6.62	)

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect (in thousands):



	Three Months ended
	March 31, 2012		March 31, 2011
Preferred stock		—		1,143	—
Outstanding stock options		486		199	486
Unvested restricted stock		1,268		1,709	1,268
Unvested restricted stock units		600		—	600

Redeemable convertible preferred stock

3 Months Ended

Mar. 31, 2012

Redeemable convertible preferred stock

Redeemable convertible preferred stock

7. Redeemable convertible preferred stock

In November 2010, the Company sold 4 million shares of Series A redeemable convertible preferred stock (Series A Preferred Stock) at a price of $1.00 per share for gross proceeds of $4 million. In accordance with the terms of the Series A Stock Purchase Agreement, the Company sold an additional 12 million shares at $1.00 per share in a second subsequent closing. The milestones necessary to achieve the subsequent closing were met in April 2011 and the Company sold 12 million shares of Series A Preferred Stock for gross proceeds of $12 million. The Company incurred approximately $79,000 of issuance costs as part of the first closing of the Series A Preferred Stock. No additional issuance costs were incurred as part of the second closing.

In July 2011, the Company sold approximately 16 million shares of series B redeemable convertible preferred stock (Series B Preferred Stock) at a price of $2.00 per share for gross proceeds of approximately $32 million. The Company incurred approximately $113,000 of issuance costs as part of the closing of the Series B Preferred Stock.

In November 2011, the Company sold approximately 9.1 million shares of Series C redeemable convertible preferred stock (Series C Preferred Stock) at a price of $2.25 per share for gross proceeds of $20.4 million. The Company incurred approximately $153,000 of issuance costs as part of the closing of the Series C Preferred Stock. The issuance costs associated with the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (collectively, the Preferred Stock) were accreted through the earliest redemption date.

In connection with the Company's initial public offering, as discussed below, all shares of the Company's Preferred Stock were converted into 11,740,794 shares of common stock.

Common stock

3 Months Ended

Mar. 31, 2012

Common stock

Common stock

8. Common stock

Reverse Stock Split

In January 2012, the Company's board of directors and stockholders approved a one-for-3.5 reverse stock split of the Company's common stock. The reverse stock split became effective on January 10, 2012. All share and per share amounts in the financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

Initital Public Offering

In February 2012, the Company closed the initial public offering (IPO) of its common stock pursuant to a registration statement on Form S-1, as amended. An aggregate of 6,325,000 shares of common stock registered under the registration statement were sold at a public offering price of $10.00 per share, including the over-allotment option. Net proceeds of the IPO were $56.8 million.

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(d),(e))
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
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Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
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-Number 210
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-Paragraph d
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Reference 18: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
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Reference 19: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 4
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Reference 20: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
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Reference 21: http://www.xbrl.org/2003/role/presentationRef
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Reference 22: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 23: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
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-Article 3

+ Details

Stock-based compensation

3 Months Ended

Mar. 31, 2012

Stock-based compensation

Stock-based compensation

9. Stock-based compensation

In December 2011, the Company adopted the 2012 Incentive Plan (the 2012 Plan). The 2012 Plan became effective upon the closing of the Company's IPO in February 2012. The 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based and cash awards. Upon effectiveness, the number of shares of common stock that are reserved under the 2012 Plan is the sum of 3,428,571 shares plus the number of shares available under the 2010 Plan. The number of shares reserved under the 2012 Plan is increased by the number of shares of common stock (up to a maximum of 571,242 shares) subject to outstanding awards under the 2010 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased. The 2012 Plan includes an "evergreen provision" that allows for an annual increase in the number of shares of common stock available for issuance under the 2012 Plan. The annual increase will be added on the first day of each year beginning in 2013 and each subsequent anniversary until the expiration of the 2012 Plan, equal to the lowest of 1,285,714 shares of common stock, 4.0% of the number of shares of common stock outstanding and an amount determined by the board of directors.

Restricted stock

A summary of the Company's nonvested restricted stock as of March 31, 2012 and changes during the three months ended March 31, 2012 is as follows (in thousands, except per share data):

			Weighted- average purchase price per share

Nonvested at December 31, 2011	1,435		$	0.025
Vested	(167	)		0.054

Nonvested at March 31, 2012	1,268		$	0.021

As of March 31, 2012, there was $9.6 million of total unrecognized stock-based compensation expense related to non-vested restricted stock. The expense is expected to be recognized over a weighted average period 2.5 years.

A summary of the Company's nonvested restricted stock units (RSUs) as of March 31, 2012 and changes during the three months ended March 31, 2012 is as follows (in thousands, except per share data):

		Weighted- average grant date fair value

Nonvested at December 31, 2011	—	$	—
Granted	600		11.10

Nonvested at March 31, 2012	600	$	11.10

As of March 31, 2012, there was $6.3 million of total unrecognized stock-based compensation expense related to non-vested RSUs granted under the 2012 Plan. The expense is expected to be recognized over a weighted-average period of 3.8 years.

Stock options

A summary of the Company's stock option activity and related information follows (in thousands, except per share data):

		Weighted- average price per share			Aggregate intrinsic value

Outstanding at December 31, 2011	405	$	0.75	9.9	$	176
Granted	81		11.10

Outstanding at March 31, 2012	486	$	2.47	9.2	$	4,125

Exercisable at March 31, 2012	63	$	0.28	8.7	$	669

Vested and expected to vest at March 31, 2012	486	$	2.47	9.2	$	4,125

The fair value of each stock-based award is estimated on the grant date using the Black-Scholes option-pricing model using the following assumptions:

	Three Months ended March 31,

	2012			2011
Risk-free interest rate		0.9-2.7	%		2.0-2.7	%
Dividend yield		—			—
Volatility		69-72	%		67-69	%
Expected term (years)		5.3-6.1			6.1

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
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-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details