false
--12-31
Q1
2016
2016-03-31
10-Q
0001626878
32350565
Yes
Non-accelerated Filer
XBiotech Inc.
No
No
xbit
4846000
4825000
12000
1717000
1466000
-164000
-201000
598000
456000
1219000
766000
1817000
1222000
5083160
4838540
208333
5083160
5046873
101262000
109358000
79839000
93041000
0
0
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Basis of Presentation </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or US GAAP.</div></div></div></div></div></div></div></div></div></div></div>
405283000
404028000
78225000
91051000
57329000
52236000
-12826000
-5093000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Cash and Cash Equivalents </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consisted primarily of cash on deposit in U.S., German, Swiss and Canadian banks. Cash and cash equivalents are stated at cost which approximates fair value.</div></div></div></div></div></div></div></div></div></div></div>
15
0
0
32292106
32279106
235751000
233902000
-10219000
-8212000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Comprehensive Income (Loss)</div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">ASC Topic 220, <div style="display: inline; font-style: italic;">Comprehensive Income</div>, requires that all components of comprehensive income (loss), including net income (loss), be reported in the financial statements in the period in which they are recognized. Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources, including unrealized gains and losses on investments and foreign currency translation adjustments.</div></div></div></div></div></div></div></div></div></div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Concentrations of Credit Risk </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Financial instruments that potentially subject the Company to credit risk consist primarily of cash and cash equivalents. The Company holds these investments in highly-rated financial institutions, and limits the amounts of credit exposure to any one financial institution. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.</div></div></div></div></div></div></div></div></div></div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Basis of Consolidation </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">These interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements for interim financial statements. In the Company’s opinion, the accompanying unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 30, 2016. The results of operations for the three month period ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other period.</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation.</div></div></div></div></div></div></div></div></div>
1962917000
13708000
10371000
20000
17000
179000
165000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">5. Common Stock Options </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">On November 11, 2005, the board of directors of the Company adopted a stock option plan (“the Plan”) pursuant to which the Company may grant incentive stock options to directors, officers, employees or consultants of the Company or an affiliate or other persons as the Compensation Committee may approve.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">All options will be non-transferable and may be exercised only by the participant, or in the event of the death of the participant, a legal representative until the earlier of the options’ expiry date or the first anniversary of the participant’s death, or such other date as may be specified by the Compensation Committee.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The term of the options is at the discretion of the Compensation Committee, but may not exceed 10 years from the grant date. The options expire on the earlier of the expiration date or the date three months following the day on which the participant ceases to be a director, officer or employee of or consultant to the Company, or in the event of the termination of the participant with cause, the date of such termination.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The number of common shares reserved for issuance to any one person pursuant to this Plan shall not, in aggregate, exceed 5% of the total number of outstanding common shares. The exercise price per common share under each option will be the fair market value of such shares at the time of the grant. Upon stock option exercise, the Company issues new shares of common stock.</div> <!-- Field: Page; Sequence: 15 --> <!-- Field: /Page --> <div style=" font-size: 10pt; margin: 0pt 0">A summary of changes in common stock options issued under the Plan is as follows:</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; font-weight: bold; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Options</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Exercise Price</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Weighted-Average<br /> Exercise Price</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%; font-size: 10pt">Options outstanding at December 31, 2015</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">4,786,577</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 5%; font-size: 10pt; text-align: right">$0.53</td> <td style="width: 4%; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="width: 5%; font-size: 10pt; text-align: left">$21.99</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">8.02</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-left: 20pt">Granted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">357,833</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">7.71</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">9.45</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">8.01</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-left: 20pt">Exercised</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">(13,000</td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">2.50</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">2.50</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1.1pt; padding-left: 20pt">Forfeitures</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">(48,250</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">0.55</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left">16.91</td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">11.50</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.25pt">Options outstanding at March 31, 2016</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,083,160</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">$0.55</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$21.99</td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">8.00</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">As of March 31, 2016, there was approximately $4.6 million of unrecognized compensation cost, related to stock options granted under the Plan which will be amortized to stock compensation expense over the next 2.16 years.</div></div>
-0.32
-0.29
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Net Loss Per Share </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Net loss per share (“EPS”) is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted EPS is computed by dividing net loss by the weighted average number of common shares and common share equivalents outstanding (if dilutive) during each period. The number of common share equivalents, which include stock options, is computed using the treasury stock method.</div></div></div></div></div></div></div></div></div></div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">6. Net Loss Per Share</div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The following summarizes the computation of basic and diluted net loss per share for the three months ended March 31, 2016 and 2015 (in thousands, except share and per share data):</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Net loss</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">(10,257</td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">(8,114</td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt; padding-left: 10pt; text-indent: -10pt">Weighted-average number of common shares—basic and diluted</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">32,292,106</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">27,641,565</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.25pt">Net loss per share—basic and diluted</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">(0.32</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">(0.29</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">)</td> </tr> </table> </div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The following potentially dilutive securities outstanding, prior to the use of the treasury stock method or if-converted method, have been excluded from the computation of diluted weighted-average common shares outstanding, because including them would have had an anti-dilutive effect due to the losses reported.</div> <div style=" font-size: 10pt; margin: 0pt 0; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Month Ended March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Stock options</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">5,083,160</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">4,838,540</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt">Warrants to purchase common stock</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">-</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">208,333</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.25pt">Total</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,083,160</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,046,873</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table> </div></div>
38000
-98000
P2Y58D
4600000
0
0
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Fair Value Measurements </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company follows ASC Topic 820, <div style="display: inline; font-style: italic;">Fair Value Measurements and Disclosures</div>, which establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market date (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><table cellpadding="0" cellspacing="0" style="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; width: 700px;"> <tr style="vertical-align: top"> <td style="width: 30.6pt"></td> <td style="width: 18.35pt">•</td> <td>Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities.</td> </tr> </table><div style=" margin-top: 0pt; margin-bottom: 0pt; font-size: 10pt"> </div><table cellpadding="0" cellspacing="0" style="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; width: 700px;"> <tr style="vertical-align: top"> <td style="width: 30.6pt"></td> <td style="width: 18.35pt">•</td> <td>Level 2—Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.</td> </tr> </table><table cellpadding="0" cellspacing="0" style="font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; width: 700px;"> <tr style="vertical-align: top"> <td style="width: 30.6pt"></td> <td style="width: 18.35pt">•</td> <td>Level 3—Unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.</td> </tr> </table><div style=" margin-top: 0pt; margin-bottom: 0pt; font-size: 10pt"> </div><div style=" font-size: 10pt; margin: 0pt 0">At March 31, 2016 and December 31, 2015, the Company did not have any assets or liabilities that are measured at fair value on a recurring basis. The carrying amounts reflected in the balance sheets for cash and cash equivalents, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their fair values at March 31, 2016 and December 31, 2015, due to their short-term nature.</div></div></div></div></div></div></div></div></div></div></div>
-9000
91000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Foreign Currency Transactions </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Certain transactions are denominated in a currency other than the Company’s functional currency of the U.S. dollar, and the Company generates assets and liabilities that are fixed in terms of the amount of foreign currency that will be received or paid. At each balance sheet, the Company adjusts the assets and liabilities to reflect the current exchange rate, resulting in a translation gain or loss. Transaction gains and losses are also realized upon a settlement of a foreign currency transaction in determining net loss for the period in which the transaction is settled.</div></div></div></div></div></div></div></div></div></div></div>
2436000
1421000
0
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Impairment of Long-Lived Assets </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, <div style="display: inline; font-style: italic;">Property, Plant and Equipment</div>. Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment through March 31, 2016.</div></div></div></div></div></div></div></div></div></div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">3. Income Taxes</div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; text-align: justify; margin: 0pt 0">The Company did not provide for income taxes in 2016 because the Company has projected net loss for all jurisdictions for the full year 2016. The Company has recorded a full valuation allowance for its net deferred tax assets in 2016 and 2015.</div></div>
0
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Income Taxes </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company makes estimates and judgments in determining the need for a provision for income taxes, including the estimation of its taxable income or loss for the each full fiscal year. The Company has accumulated significant deferred tax assets that reflect the tax effects of net operating loss and tax credit carryovers and temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance. The Company may in the future determine that certain deferred tax assets will likely be realized, in which case the Company will reduce its valuation allowance in the period in which such determination is made. If the valuation allowance is reduced, the Company may recognize a benefit from income taxes in its statement of operations in that period. The Company classifies interest recognized pursuant to its deferred tax assets as interest expense, when appropriate.</div></div></div></div></div></div></div></div></div></div></div>
-2348000
883000
250000
-607000
4000
2000
-408000
82000
22000
6583000
6308000
101262000
109358000
6563000
6291000
0
0
2107000
-2917000
-571000
-9947000
-6531000
-10257000
-8114000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Recent Accounting Pronouncements </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">In August 2014 the FASB issued ASU 2014-15<div style="display: inline; font-style: italic;">, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</div>. The ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities, the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core change with ASU 2016-2 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect that the adoption of ASU 2016-02 will have on its financial statements.</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” or ASU 2016-09, which amends ASC Topic 718, “Compensation – Stock Compensation.” ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 31, 2016, and interim periods within those years and early adoption is permitted. The Company is currently evaluating how the adoption of this standard will impact its consolidated financial statements.</div></div></div></div></div></div></div></div></div></div></div>
-9000
91000
1
10248000
8205000
-10248000
-8205000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">1. Organization </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">XBiotech, Inc. (“XBiotech” or “the Company”) was incorporated in Canada on March 22, 2005. XBiotech USA Inc., a wholly-owned subsidiary of the Company, was incorporated in Delaware, United States (“U.S.”) in November 2007. XBiotech Schweiz AG, a wholly-owned subsidiary of the Company, was incorporated in Zug, Switzerland in August 2010. XBiotech Japan KK, a wholly-owned subsidiary of the Company, was incorporated in Tokyo, Japan in March 2013. XBiotech GmbH, a wholly-owned subsidiary of the Company, was incorporated in Germany in January 2014.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">Since its inception, XBiotech has focused on advancing technology to rapidly identify and clone antibodies from individuals that have resistance to disease. At the heart of the Company is a proprietary technical knowhow to translate natural human immunity into therapeutic product candidates.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">In 2005, the Company began to develop a new framework for commercial manufacturing, using technology that required less capital, fewer operators and provided greater flexibility than standard industry practices.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">With the manufacturing capability to produce its True Human<div style="display: inline; bottom:.33em; font-size: 82%; position: relative; vertical-align: baseline;">TM</div> antibody therapy, in 2010 the Company began a clinical trial program. The first clinical trial program at MD Anderson Cancer Center began treating the sickest cancer patients irrespective of tumor type. Soon thereafter, the Company used the same antibody therapy in various clinical studies at treatment centers around the U.S. and abroad to investigate the antibody effect in patients that had vascular disease, leukemia, type 2 diabetes, psoriasis or acne.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The Company’s headquarters are located in Austin, Texas.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The Company continues to be subject to a number of risks common to companies in similar stages of development. Principal among these risks are the uncertainties of technological innovations, dependence on key individuals, development of the same or similar technological innovations by the Company’s competitors and protection of proprietary technology. The Company’s ability to fund its planned clinical operations, including completion of its planned trials, is expected to depend on the amount and timing of cash receipts from future collaboration or product sales and/or financing transactions.</div></div>
38000
-98000
1374000
419000
712000
1543000
152000
0
0
0
0
0
0
1614000
1990000
70600000
8000
2401000
8000
700000
30000
639253
2500000
3100000
7715000
5946000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Property and Equipment </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Property and equipment, which consists of land, construction in process, furniture and fixtures, computers and office equipment, scientific equipment, leasehold improvements and vehicles are stated at cost and depreciated over the estimated useful lives of the assets, with the exception of land and construction in process which are not depreciated, using the straight line method. The useful lives are as follows:</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><table cellspacing="0" cellpadding="0" style="font-size: 10pt; border-collapse: collapse; width: 700px;"> <tr> <td style="vertical-align: top; font-size: 10pt; padding-left: 20pt; width: 38%"><div style="display: inline; font-size: 10pt">• Furniture and fixtures (years)</div></td> <td style="vertical-align: bottom; font-size: 10pt; width: 62%"><div style="display: inline; font-size: 10pt">7 </div></td> </tr> <tr> <td> </td> <td> </td> </tr> <tr> <td style="vertical-align: top; font-size: 10pt; padding-left: 20pt"><div style="display: inline; font-size: 10pt">• Office equipment (years)</div></td> <td style="vertical-align: bottom; font-size: 10pt"><div style="display: inline; font-size: 10pt">5 </div></td> </tr> <tr> <td> </td> <td> </td> </tr> <tr> <td style="vertical-align: top; font-size: 10pt; padding-left: 20pt"><div style="display: inline; font-size: 10pt">• Leasehold improvements</div></td> <td style="vertical-align: bottom; font-size: 10pt"><div style="display: inline; font-size: 10pt">Shorter of asset’s useful life or remaining lease term</div></td> </tr> <tr> <td> </td> <td> </td> </tr> <tr> <td style="vertical-align: top; font-size: 10pt; padding-left: 20pt"><div style="display: inline; font-size: 10pt">• Scientific equipment (years)</div></td> <td style="vertical-align: bottom; font-size: 10pt"><div style="display: inline; font-size: 10pt">5 </div></td> </tr> <tr> <td> </td> <td> </td> </tr> <tr> <td style="vertical-align: top; font-size: 10pt; padding-left: 20pt"><div style="display: inline; font-size: 10pt">• Vehicles (years)</div></td> <td style="vertical-align: bottom; font-size: 10pt"><div style="display: inline; font-size: 10pt">5</div></td> </tr> </table><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Costs of major additions and betterments are capitalized; maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense as incurred. Upon retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and the resulting gain or loss is recognized.</div></div></div></div></div></div></div></div></div></div></div>
P7Y
P5Y
P5Y
P5Y
0
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">7. Related-Party Transactions </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">Legal fees of approximately $22,000 were incurred to a law firm for legal services rendered in which a former director of the Company is a senior partner in the three months ended March 31, 2015. The Company had outstanding accounts payable to the same firm in the amount of approximately $12,000 as at March 31, 2015. No related-party transaction incurred in the three months ended March 31, 2016.</div></div>
7812000
6784000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Research and Development Costs </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">All research and development costs are charged to expense as incurred. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract research services, the costs of laboratory equipment and facilities, license fees and other external costs. Costs incurred to acquire licenses for intellectual property to be used in research and development activities with no alternative future use are expensed as incurred as research and development.</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.</div></div></div></div></div></div></div></div></div></div></div>
-140908000
-130651000
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse;; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Month Ended March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Stock options</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">5,083,160</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">4,838,540</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt">Warrants to purchase common stock</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">-</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">208,333</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.25pt">Total</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,083,160</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,046,873</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse;; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Net loss</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">(10,257</td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">(8,114</td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt; padding-left: 10pt; text-indent: -10pt">Weighted-average number of common shares—basic and diluted</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">32,292,106</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">27,641,565</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.25pt">Net loss per share—basic and diluted</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">(0.32</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">(0.29</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">)</td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse;; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended<br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Research and development</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">598</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">456</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt">General and administrative</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">1,219</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">766</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.25pt">Total share-based compensation expense</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,817</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,222</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse;; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; font-weight: bold; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Options</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Exercise Price</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid; text-align: center">Weighted-Average<br /> Exercise Price</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%; font-size: 10pt">Options outstanding at December 31, 2015</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right">4,786,577</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 5%; font-size: 10pt; text-align: right">$0.53</td> <td style="width: 4%; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="width: 5%; font-size: 10pt; text-align: left">$21.99</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">8.02</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-left: 20pt">Granted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">357,833</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">7.71</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">9.45</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">8.01</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-left: 20pt">Exercised</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">(13,000</td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">2.50</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right">2.50</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1.1pt; padding-left: 20pt">Forfeitures</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">(48,250</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">0.55</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left">16.91</td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">11.50</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.25pt">Options outstanding at March 31, 2016</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">5,083,160</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">$0.55</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$21.99</td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">8.00</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse;; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended <br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Dividend yield</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 62%; font-size: 10pt; text-align: left">Expected volatility</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right">65%</td> <td style="width: 5%; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="width: 6%; font-size: 10pt; text-align: left">68%</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right"> </td> <td style="width: 5%; font-size: 10pt; text-align: center">68%</td> <td style="width: 6%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Risk-free interest rate</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-size: 10pt">1.31%</div></td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left">1.82%</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">1.39%</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">2.12%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left">Expected life (in years)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt">Weighted-average grant date fair value per share</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$8.01</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$9.56</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Segment and Geographic Information </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the Chief Executive Officer. The Company and the chief operating decision maker view the Company’s operations and manage its business as one operating segment. Substantially all of the Company’s operations are in the U.S. geographic segment.</div></div></div></div></div></div></div></div></div></div></div>
1817000
1222000
0.65
0.68
0.68
0.0131
0.0182
0.0139
0.0212
48250
357833
4786577
5083160
0.53
21.99
8.02
0.55
21.99
8
0.05
0.55
2.50
0.53
10
2.50
2.50
0.55
16.91
11.50
7.71
9.45
8.01
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Share-Based Compensation </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company accounts for its share-based compensation awards in accordance with ASC Topic 718, <div style="display: inline; font-style: italic;">Compensation-Stock Compensation</div> (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statements of operations based on their grant date fair values. For stock options granted to employees and to members of the board of directors for their services on the board of directors, the Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, the Company recognizes share-based compensation expense, equal to the grant date fair value of stock options on a straight-line basis over the requisite service period.</div><div style=" font-size: 10pt; margin: 0pt 0">Share-based compensation expense recognized for the three months ended March 31, 2016 and 2015 was included in the following line items on the Consolidated Statement of Operations (in thousands).</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended<br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Research and development</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">598</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">456</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt">General and administrative</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">1,219</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">766</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.25pt">Total share-based compensation expense</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,817</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,222</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table> </div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The fair value of each option is estimated on the date of grant using the Black-Scholes method with the following assumptions:</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended <br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Dividend yield</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 62%; font-size: 10pt; text-align: left">Expected volatility</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right">65%</td> <td style="width: 5%; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="width: 6%; font-size: 10pt; text-align: left">68%</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right"> </td> <td style="width: 5%; font-size: 10pt; text-align: center">68%</td> <td style="width: 6%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Risk-free interest rate</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-size: 10pt">1.31%</div></td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left">1.82%</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">1.39%</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">2.12%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left">Expected life (in years)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt">Weighted-average grant date fair value per share</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$8.01</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$9.56</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table> </div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">No related tax benefits were recognized for the three months ended March 31, 2016 and 2015.</div></div></div></div></div></div></div></div></div></div></div>
19
P10Y
P5Y
P10Y
P5Y
P10Y
8.01
9.56
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">2. Significant Accounting Policies </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Basis of Presentation </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States, or US GAAP.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Basis of Consolidation </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">These interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP, and Securities and Exchange Commission, or SEC, requirements for interim financial statements. In the Company’s opinion, the accompanying unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting of normal, recurring adjustments, necessary for a fair presentation. Certain information and disclosures normally included in the notes to the annual consolidated financial statements prepared in accordance with GAAP have been omitted from these interim unaudited consolidated financial statements pursuant to the rules and regulations of the SEC. Accordingly, these interim unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the accompanying notes for the fiscal year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K, filed with the SEC on March 30, 2016. The results of operations for the three month period ended March 31, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016 or for any other period.</div> <!-- Field: Page; Sequence: 10 --> <!-- Field: /Page --> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated upon consolidation.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Use of Estimates </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported values of amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">Prior to the completion of it initial public offering in April 2015, the Company utilized significant estimates and assumptions in determining the fair value of its common stock. The board of directors determined the estimated fair value of the Company’s common stock based on a number of objective and subjective factors, including the prices at which the Company sold shares of its common stock to third parties and external market conditions affecting the biotechnology industry sector.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Research and Development Costs </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">All research and development costs are charged to expense as incurred. Research and development costs include salaries and personnel-related costs, consulting fees, fees paid for contract research services, the costs of laboratory equipment and facilities, license fees and other external costs. Costs incurred to acquire licenses for intellectual property to be used in research and development activities with no alternative future use are expensed as incurred as research and development.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Income Taxes </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The Company makes estimates and judgments in determining the need for a provision for income taxes, including the estimation of its taxable income or loss for the each full fiscal year. The Company has accumulated significant deferred tax assets that reflect the tax effects of net operating loss and tax credit carryovers and temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of certain deferred tax assets is dependent upon future earnings. The Company is uncertain about the timing and amount of any future earnings. Accordingly, the Company offsets these deferred tax assets with a valuation allowance. The Company may in the future determine that certain deferred tax assets will likely be realized, in which case the Company will reduce its valuation allowance in the period in which such determination is made. If the valuation allowance is reduced, the Company may recognize a benefit from income taxes in its statement of operations in that period. The Company classifies interest recognized pursuant to its deferred tax assets as interest expense, when appropriate.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Share-Based Compensation </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The Company accounts for its share-based compensation awards in accordance with ASC Topic 718, <div style="display: inline; font-style: italic;">Compensation-Stock Compensation</div> (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statements of operations based on their grant date fair values. For stock options granted to employees and to members of the board of directors for their services on the board of directors, the Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. For awards subject to service-based vesting conditions, the Company recognizes share-based compensation expense, equal to the grant date fair value of stock options on a straight-line basis over the requisite service period.</div> <!-- Field: Page; Sequence: 11 --> <!-- Field: /Page --> <div style=" font-size: 10pt; margin: 0pt 0">Share-based compensation expense recognized for the three months ended March 31, 2016 and 2015 was included in the following line items on the Consolidated Statement of Operations (in thousands).</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended<br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 68%; font-size: 10pt; text-align: left">Research and development</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">598</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right">456</td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1.1pt">General and administrative</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">1,219</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 1.1pt solid"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: right">766</td> <td style="border-bottom: Black 1.1pt solid; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.25pt">Total share-based compensation expense</td> <td style="font-size: 10pt"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,817</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; border-bottom: Black 2.25pt double"> </td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: right">1,222</td> <td style="border-bottom: Black 2.25pt double; font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The fair value of each option is estimated on the date of grant using the Black-Scholes method with the following assumptions:</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="7" style="font-size: 10pt; font-weight: bold; text-align: center">Three Months Ended <br /> March 31,</td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; font-weight: bold"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2016</td> <td style="font-size: 10pt; font-weight: bold; border-bottom: Black 1.1pt solid"> </td> <td colspan="3" style="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1.1pt solid">2015</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Dividend yield</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 62%; font-size: 10pt; text-align: left">Expected volatility</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right">65%</td> <td style="width: 5%; font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="width: 6%; font-size: 10pt; text-align: left">68%</td> <td style="width: 2%; font-size: 10pt"> </td> <td style="width: 6%; font-size: 10pt; text-align: right"> </td> <td style="width: 5%; font-size: 10pt; text-align: center">68%</td> <td style="width: 6%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left">Risk-free interest rate</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-size: 10pt">1.31%</div></td> <td style="font-size: 10pt; text-align: center">-</td> <td style="font-size: 10pt; text-align: left">1.82%</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">1.39%</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">2.12%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left">Expected life (in years)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right">5</td> <td style="font-size: 10pt; text-align: center"><div style="display: inline; font-size: 10pt">-</div></td> <td style="font-size: 10pt; text-align: left">10</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt">Weighted-average grant date fair value per share</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$8.01</td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: center">$9.56</td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">No related tax benefits were recognized for the three months ended March 31, 2016 and 2015.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Cash and Cash Equivalents </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">The Company considers highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. 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The Company has evaluated subsequent events through the date the consolidated financial statements were available for issuance for potential recognition or disclosure in its consolidated financial statements.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Recent Accounting Pronouncements </div></div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">In August 2014 the FASB issued ASU 2014-15<div style="display: inline; font-style: italic;">, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern</div>. The ASU is intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. For all entities, the ASU is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.</div> <div style=" font-size: 10pt; margin: 0pt 0"> </div> <div style=" font-size: 10pt; margin: 0pt 0">In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The core change with ASU 2016-2 is the requirement for the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. 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<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Subsequent Events </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements. The Company has evaluated subsequent events through the date the consolidated financial statements were available for issuance for potential recognition or disclosure in its consolidated financial statements.</div></div></div></div></div></div></div></div></div></div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; margin: 0pt 0"><div style="display: inline; font-weight: bold;">Use of Estimates </div></div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported values of amounts in the financial statements and accompanying notes. Actual results could differ from those estimates.</div><div style=" font-size: 10pt; margin: 0pt 0"> </div><div style=" font-size: 10pt; margin: 0pt 0">Prior to the completion of it initial public offering in April 2015, the Company utilized significant estimates and assumptions in determining the fair value of its common stock. The board of directors determined the estimated fair value of the Company’s common stock based on a number of objective and subjective factors, including the prices at which the Company sold shares of its common stock to third parties and external market conditions affecting the biotechnology industry sector.</div></div></div></div></div></div></div></div></div></div></div>
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