Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies [Abstract]

Revenue Recognition, Sales of Goods [Policy Text Block]

Revenue recognition

The Company applies the guidance in ASC 606 to all contracts with customers within the scope of the standard. The Company sells its products primarily to pharmaceutical wholesalers. These wholesalers then resell the Company’s products to their retail customers, such as pharmacies and mass merchandisers. In addition, the Company enters into arrangements with payors, group purchasing organizations, and health care providers that provide for government-mandated or privately-negotiated discounts and allowances related to the Company’s products.

Revenue is recognizedwhen the Company's customer (e.g., a wholesaler) obtains control of promised goods or services, based on the consideration the Company expects to receive in exchange for those goods or services. The estimated net sales price is generally based upon a list or fixed price less estimates of variable consideration (e.g., patient co-pay assistance, prompt payment discounts, payor rebates, chargebacks, service fees and product returns). The estimates of variable consideration are subject to a constraint such that some or all of the estimated amount of variable consideration will only be included in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of significant management judgment and other market data.

Net sales represent gross product sales less estimated allowances for patient co-pay assistance programs, prompt payment discounts, payor rebates, chargebacks, service fees, and product returns, all of which are recorded at the time of sale to pharmaceutical wholesalers. The Company applies significant judgments and estimates in determining some of these allowances. If actual results differ from its estimates, the Company will be required to make adjustments to these allowances in the future.

Patient Co-Pay Assistance Program

The Company offers a savings program to commercially insured patients under which the cost of a prescription to a patient is discounted. The Company reimburses pharmacies for this discount through a third-party vendor. The Company records an accrual to reduce gross sales for the estimated co-pay on units sold to distributors. The estimate is based on estimated percentages of products that will be prescribed to qualified patients, expected patient utilization of the discount program, average assistance paid based on reporting from the third-party vendor as well as industry data and levels of inventory in the distribution channel. Accrued co-pay fees are recorded as a reduction of revenue and included in accrued trade discounts and rebates on the consolidated balance sheets.

Prompt Payment Discounts

As an incentive for prompt payment, the Company offers a discount to most customers. The Company expects that all eligible customers will comply with the contractual terms to earn the discount. and, therefore, accrues the discount on all eligible sales. The Company records the discount as an allowance against trade accounts receivable on the consolidated balance sheets and as a reduction of revenue.

Commercial Rebates

The Company contracts with certain commercial entities to provide rebates. The Company accrues estimated rebates based on contract rates, estimated percentages of products that will be prescribed to qualified patients and estimated levels of inventory in the distribution channel and records the rebate as a reduction of revenue. Accrued commercial rebates are included in accrued trade discounts and rebates on the consolidated balance sheets.

Government Rebates and Discounts

The Company participates in certain federal and state government rebate programs such as the Medicaid Drug Rebate Program, TRICARE Retail Refunds Program, and Medicare Part D Coverage Gap Discount Program. The Company accrues estimated rebates and discounts based on estimated percentages of product sold to qualified patients, estimated rebate or discount percentages and estimated levels of inventory in the distribution channel that will be prescribed to qualified patients and records the rebates or discounts as a reduction of revenue. Accrued government rebates and discounts are included in accrued trade discounts and rebates on the consolidated balance sheets.

Chargebacks

The Company's products are subject to certain programs whereby pricing on products is discounted below wholesaler list price to participating commercial or government entities. These entities purchase products through wholesalers at the discounted price, and the wholesalers charge the difference between their acquisition cost and the discounted price back to the Company. The Company accrues estimated chargebacks based on contract prices, sales data obtained from third-party information and estimated levels of inventory in the distribution channel and records the chargebacks as a reduction of revenue. Accrued chargebacks are included in accrued trade discounts and rebates on the consolidated balance sheets.

Service Fees

The Company records service fees paid to its customers for distribution and inventory management services as a reduction to revenue. The Company accrues estimated service fees based on contractually determined amounts. Accrued service fees are included in accrued trade discounts and rebates on the consolidated balance sheets.

Product Returns

Consistent with industry practice, the Company maintains a return goods policy that allows customers to return product due to order or shipment errors, overstock, dating, recall or other changes in regulatory guidelines. Generally, product may be returned for a period beginning six months prior to its expiration date and up to one year after its expiration date. To determine the estimate of the provision for returns, the Company analyzes branded product return history of comparable products and other market data. In a reporting period, the Company may decide to constrain revenue for product returns based on information from various sources, including channel inventory levels, inventory dating, prescription data, the expiration dates of product currently being shipped, price changes of competitive products and introductions of generic products. At December 31, 2019, the Company increased its returns reserve above the level indicated by the return history of comparable products due to factors related to the initial stocking of inventory for the launch of our new product. The Company records estimated sales returns in accrued returns reserve on the consolidated balance sheets and as a reduction of revenue.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Bad debt expense

The Company’s products are primarily sold to wholesalers. The Company monitors its accounts receivable balances to determine the impact, if any, of such factors as changes in customer concentration, credit risk and the realizability of its accounts receivable, and records a bad debt reserve when applicable.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of credit risk

For the year ended December 31, 2019, three customers accounted for 94% of the Company’s gross sales. These same three customers accounted for 97% of the trade accounts receivable at December 31, 2019.

Cost of Goods and Service [Policy Text Block]

Cost of Goods Sold

Cost of goods sold includes primarily product costs, which include all costs directly related to the purchase of raw materials, charges from our contract manufacturing organizations, and manufacturing overhead costs, as well as shipping and distribution charges.  Cost of goods sold also includes losses on excess, slow-moving or obsolete inventory and inventory purchase commitments, if any. Manufacturing costs for Gvoke incurred prior to approval and commercialization were expensed as research and development expenses.

Segment Reporting, Policy [Policy Text Block]

Segment reporting

Operating segments are identified as components of an enterprise for which separate discrete financial information is available and utilized by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. The Company operates in one segment and, other than conducting certain clinical trials outside the United States, all of the Company’s operations are in the United States.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents

The Company considers all demand deposits with financial institutions and highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Inventory, Policy [Policy Text Block]

Inventories

Inventories are stated at the lower of cost or net realizable value, using the first-in, first-out convention.  Inventories consist of raw materials, work in process and finished goods. The Company has entered into manufacturing and supply agreements for the manufacture or purchase of raw materials and production supplies. The Company’s inventories include the direct purchase cost of materials and supplies, charges from our contract manufacturing organizations and manufacturing overhead costs. The Company reviews its inventory balance quarterly to assess if it has obsolete or excess inventory and records a charge to cost of goods sold if and when applicable. Manufacturing costs for Gvoke prior to approval and commercialization were expensed as research and development expenses.

Investment, Policy [Policy Text Block]

Investments

The Company classifies its investments in debt securities as available-for-sale investments. Investments classified as short-term on the balance sheets have original maturities of greater than 90 days but less than one year.

Investments in available-for-sale securities are reported at estimated fair value. Available-for-sale securities consist primarily of agency securities, corporate securities, U.S. government securities and commercial paper. Unrealized gains and losses related to changes in the fair value of debt securities are recognized in accumulated other comprehensive loss on the Company's balance sheets. Changes in the fair value of available-for-sale securities impact the statements of operations and comprehensive loss only when such securities are sold or an other-than-temporary impairment is recognized. Realized gains and losses on the sale of securities are determined by specific identification of each security’s cost basis. The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require an impairment charge to be recorded in the period any such determination is made. The Company considers factors such as the duration, severity of and reason for the decline in value, the financial condition of the issuer and any changes thereto, the potential recovery period and intent to sell.

Fair Value Measurement, Policy [Policy Text Block]

Fair value of financial instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a non-recurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, and accounts payable, are shown at cost, which approximates fair value due to the short-term nature of these instruments. The debt outstanding under the Amended and Restated Loan and Security Agreement (the "Amended Loan Agreement") approximates fair value due to the variable interest rate on the debt. Items measured at fair value on a recurring basis include the Company’s investments and warrants.

Property, Plant and Equipment, Policy

Property and equipment

Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated utilizing the straight-line method over the estimated useful lives of the respective assets:

Lab equipment	5 years
Computer equipment	3 years
Leasehold improvements	Lesser of useful life or lease term
Software	3-5 years
Furniture and fixtures	5 years
Office equipment	5 years

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of long-lived assets

The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment. 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 recognized no material impairment charges for the years ended December 31, 2019 and 2018, respectively.

Research and Development Expense, Policy [Policy Text Block]

Research and development expenses

Research and development expenses are expensed as incurred. Research and development expenses include salaries, stock compensation and other personnel-related costs, consulting fees, fees paid for contract research and development services including those for preclinical and clinical trials, laboratory equipment and facilities costs, and other external costs. In addition, manufacturing costs of products prior to approval and commercial salability are expensed as research and development costs.

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 received, the services are performed or the arrangement is terminated.

Share-based Payment Arrangement [Policy Text Block]

Stock-based compensation expense

The Company accounts for our stock-based compensation awards in accordance with ASC Topic 718, Compensation-Stock Compensation, or ASC 718. ASC 718 requires all stock-based payments, including stock options, restricted stock units and employee stock purchases, to be recognized in the statements of operations based on their grant date fair values. 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, the risk-free interest rate and the expected dividend yield of the common stock. Restricted stock units are valued based on the fair market value of the Company’s common stock on the date they were granted. The Company recognizes stock-based compensation expense equal to the grant date fair value of stock options, restricted stock units and employee stock purchases on a straight-line basis over the requisite service period.

Income Tax, Policy [Policy Text Block]

Income taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company policy is to include interest and penalties related to uncertain tax positions, if any, within the provision for taxes in the statements of operations and comprehensive loss. For the years ended December 31, 2019 and 2018, the Company did not accrue any interest or penalties on uncertain tax positions.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

Our functional currency is the United States Dollar. Monetary assets and liabilities of our non-US subsidiary are remeasured using the exchange rate in effect at the end of the period. Costs in local currency are remeasured using the average exchange rate for the period. The resulting remeasurement gains and losses are included in other comprehensive gain (loss).

Comprehensive Income, Policy [Policy Text Block]

Comprehensive loss

Comprehensive loss is defined as the change in equity during a period from transactions and other events, excluding changes resulting from investments from owners and distributions to owners. Comprehensive loss includes net loss, unrealized (gains) losses on debt securities classified as available-for-sale investments and foreign currency translation adjustments.

Reclassification, Policy [Policy Text Block]

Reclassifications

In the fourth quarter of 2019, in conjunction with the recognition of product sales and related cost of sales, the Company reclassified grant income, service revenue and the related cost of revenue to other income (expense) on the Company's consolidated statements of operations and comprehensive loss. There was no impact to net loss. Prior periods have been revised to conform to the current year presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

New accounting pronouncements

Recently issued accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to record a right-of-use asset and a lease liability for all leases with a term of greater than twelve months regardless of their classification. Leases will be classified as either operating or finance leases under the new guidance. Operating leases will result in straight-line expense in the income statement, similar to current operating leases, and finance leases will result in more expense being recognized in the earlier years of the lease term, similar to current capital leases. The FASB has recently extended the effective date of this standard for certain companies. This standard will be effective for the Company for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact the adoption of this new standard will have on the financial statements and related disclosures; however, since the Company is a lessee to certain leases for property whose terms exceed twelve months, it expects, once adopted, to report assets and liabilities related to these leases on its balance sheet.