Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2017	Feb. 01, 2018	Jun. 30, 2017
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	VNDA
Entity Registrant Name	Vanda Pharmaceuticals Inc.
Entity Central Index Key	0001347178
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		45,437,938
Entity Public Float			$ 715.2

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 33,627	$ 40,426
Marketable securities	109,786	100,914
Accounts receivable, net	17,601	20,268
Inventory	840	779
Prepaid expenses and other current assets	8,003	11,788
Total current assets	169,857	174,175
Property and equipment, net	5,306	5,015
Intangible assets, net	26,069	27,819
Non-current inventory and other	4,193	3,365
Total assets	205,425	210,374
Current liabilities:
Accounts payable and accrued liabilities	20,335	16,196
Accrued government and other rebates	23,028	34,124
Milestone obligations under license agreements	27,000
Total current liabilities	70,363	50,320
Milestone obligations under license agreements		25,000
Other non-current liabilities	3,675	3,724
Total liabilities	74,038	79,044
Commitments and contingencies (Notes 11 and 16)
Stockholders' equity:
Preferred stock, $0.001 par value; 20,000,000 shares authorized, and no shares issued or outstanding
Common stock, $0.001 par value; 150,000,000 shares authorized; 44,938,133 and 44,000,614 shares issued and outstanding at December 31, 2017 and 2016, respectively	45	44
Additional paid-in capital	492,802	477,087
Accumulated other comprehensive income (loss)	(34)	58
Accumulated deficit	(361,426)	(345,859)
Total stockholders' equity	131,387	131,330
Total liabilities and stockholders' equity	$ 205,425	$ 210,374

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	44,938,133	44,000,614
Common stock, shares outstanding	44,938,133	44,000,614

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Net product sales	$ 165,083	$ 146,017	$ 109,925
Total revenues	165,083	146,017	109,925
Operating expenses:
Cost of goods sold, excluding amortization	17,848	24,712	23,462
Research and development	38,547	29,156	29,145
Selling, general and administrative	123,841	99,787	84,531
Intangible asset amortization	1,750	10,933	12,972
Total operating expenses	181,986	164,588	150,110
Loss from operations	(16,903)	(18,571)	(40,185)
Other income	1,472	665	320
Loss before income taxes	(15,431)	(17,906)	(39,865)
Provision for income taxes	136	104
Net loss	$ (15,567)	$ (18,010)	$ (39,865)
Net loss per share:
Basic	$ (0.35)	$ (0.41)	$ (0.94)
Diluted	$ (0.35)	$ (0.41)	$ (0.94)
Weighted average shares outstanding:
Basic	44,735,146	43,449,441	42,250,254
Diluted	44,735,146	43,449,441	42,250,254

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net loss	$ (15,567)	$ (18,010)	$ (39,865)
Other comprehensive income:
Net foreign currency translation gain (loss)	30	(1)
Change in net unrealized gain (loss) on marketable securities	(122)	20	23
Tax provision on other comprehensive income	0	0	0
Other comprehensive income (loss), net of tax	(92)	19	23
Comprehensive loss	$ (15,659)	$ (17,991)	$ (39,842)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Other Comprehensive Income (Loss)	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2014		41,486,361
Beginning balance at Dec. 31, 2014	$ 160,817	$ 41	$ 448,744	$ 16	$ (287,984)
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	4,374	$ 2	4,372
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares)		1,353,877
Shares withheld upon settlement of equity awards	(283)		(283)
Shares withheld upon settlement of equity awards(in shares)		(24,947)
Stock-based compensation expense	7,961		7,961
Net loss	(39,865)				(39,865)
Other comprehensive income (loss), net of tax	23			23
Ending balance (in shares) at Dec. 31, 2015		42,815,291
Ending balance at Dec. 31, 2015	133,027	$ 43	460,794	39	(327,849)
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	7,751	$ 1	7,750
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares)		1,185,323
Stock-based compensation expense	8,543		8,543
Net loss	(18,010)				(18,010)
Other comprehensive income (loss), net of tax	$ 19			19
Ending balance (in shares) at Dec. 31, 2016	44,000,614	44,000,614
Ending balance at Dec. 31, 2016	$ 131,330	$ 44	477,087	58	(345,859)
Issuance of common stock from the exercise of stock options and settlement of restricted stock units	5,251	$ 1	5,250
Issuance of common stock form the exercise of stock options and settlement of restricted stock awards (in shares)		937,519
Stock-based compensation expense	10,465		10,465
Net loss	(15,567)				(15,567)
Other comprehensive income (loss), net of tax	$ (92)			(92)
Ending balance (in shares) at Dec. 31, 2017	44,938,133	44,938,133
Ending balance at Dec. 31, 2017	$ 131,387	$ 45	$ 492,802	$ (34)	$ (361,426)

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net loss	$ (15,567)	$ (18,010)	$ (39,865)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation of property and equipment	1,234	935	582
Stock-based compensation	10,465	8,543	7,961
Amortization of (discounts) premiums on marketable securities	(426)	62	677
Intangible asset amortization	1,750	10,933	12,972
Other non-cash adjustments, net	587	542	483
Changes in operating assets and liabilities:
Accounts receivable	2,525	(4,298)	(12,677)
Prepaid expenses and other assets	3,652	(6,159)	(2,558)
Inventory	(1,060)	200	387
Accounts payable and other liabilities	5,953	575	9,432
Accrued government and other rebates	(11,096)	(1,426)	35,055
Net cash provided by (used in) operating activities	(1,983)	(8,103)	12,449
Cash flows from investing activities
Purchases of property and equipment	(1,664)	(1,407)	(2,527)
Purchases of marketable securities	(148,135)	(165,405)	(193,111)
Proceeds from sale of marketable securities			999
Maturities of marketable securities	139,568	156,787	168,041
Other investing activities	124	(46)
Net cash used in investing activities	(10,107)	(10,071)	(26,598)
Cash flows from financing activities
Proceeds from exercise of employee stock options	5,251	7,751	4,374
Tax obligations paid in connection with settlement of restricted stock units			(283)
Net cash provided by financing activities	5,251	7,751	4,091
Effect of exchange rate changes on cash and cash equivalents	40	6
Net decrease in cash and cash equivalents	(6,799)	(10,417)	(10,058)
Cash and cash equivalents
Beginning of year	40,426	50,843	60,901
End of year	$ 33,627	$ 40,426	$ 50,843

Business Organization and Presentation

12 Months Ended

Dec. 31, 2017

Business Organization and Presentation

1. Business Organization and Presentation

Business organization

Vanda Pharmaceuticals Inc. (the Company) is a global biopharmaceutical company focused on the development and commercialization of innovative therapies to address high unmet medical needs and improve the lives of patients. The Company commenced its operations in 2003 and operates in one reporting segment. The Company’s portfolio includes the following products:

•

HETLIOZ^® (tasimelteon), a product for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24), was approved by the U.S. Food and Drug Administration (FDA) in January 2014 and launched commercially in the U.S. in April 2014. In July 2015, the European Commission (EC) granted centralized marketing authorization with unified labeling for HETLIOZ^® for the treatment of Non-24 in totally blind adults. HETLIOZ^® was commercially launched in Germany in August 2016. HETLIOZ^® has potential utility in a number of other circadian rhythm disorders and is presently in clinical development for the treatment of Pediatric Non-24, Jet Lag Disorder and Smith-Magenis Syndrome (SMS).

•

Fanapt^® (iloperidone), a product for the treatment of schizophrenia, the oral formulation of which was approved by the FDA in May 2009 and launched commercially in the U.S. by Novartis Pharma AG (Novartis) in January of 2010. Novartis transferred all the U.S. and Canadian commercial rights to the Fanapt^® franchise to the Company on December 31, 2014. Additionally, the Company’s distribution partners launched Fanapt^® in Israel and Mexico in 2014. Fanapt^® has potential utility in a number of other disorders. An assessment of new Fanapt^® clinical opportunities is ongoing.

•

Tradipitant (VLY-686), a small molecule neurokinin-1 receptor (NK-1R) antagonist, which is presently in clinical development for the treatment of chronic pruritus in atopic dermatitis and the treatment of gastroparesis.

•

VTR-297 (formerly Trichostatin A), a small molecule histone deacetylase (HDAC) inhibitor.

•

VQW-765 (formerly AQW-051), a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.

•

Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors.

Basis of presentation

The accompanying consolidated financial statements includes the accounts of Vanda Pharmaceuticals Inc. and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.). All intercompany accounts and transactions have been eliminated in consolidation.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses during the reporting period. Management continually re-evaluates its estimates, judgments and assumptions, and management’s evaluation could change. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the consolidated balance sheets and consolidated statements of cash flows, cash equivalents represent highly-liquid investments with a maturity date of three months or less at the date of purchase. Cash and cash equivalents includes investments in money market funds with commercial banks and financial institutions, and commercial paper of high-quality corporate issuers. Restricted cash of $0.7 million and $0.8 million relating primarily to leases for office space is included in other current and other non-current assets at December 31, 2017 and 2016.

Marketable Securities

The Company classifies all of its marketable securities as available-for-sale securities. The Company’s investment policy requires the selection of high-quality issuers, with bond ratings of AAA to A1+/P1. Available-for-sale securities are carried at fair market value, with unrealized gains and losses reported as a component of stockholders’ equity in accumulated other comprehensive income/loss. At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the unrealized loss is other-than-temporary. If declines in the value of available-for-sale securities are determined to be other-than-temporary, a loss is recorded in earnings in the current period. Interest and dividend income is recorded when earned and included in interest income. Premiums and discounts on marketable securities are amortized and accreted, respectively, to maturity and included in interest income. The Company uses the specific identification method in computing realized gains and losses on the sale of investments, which would be included in the consolidated statements of operations when generated. Marketable securities with a maturity of more than one year as of the balance sheet date and which the Company does not intend to sell within the next twelve months are classified as non-current. All other marketable securities are classified as current.

Inventory

Inventory, which is recorded at the lower of cost or net realizable value, includes the cost of third-party manufacturing and other direct and indirect costs and is valued using the first-in, first-out method. The Company capitalizes inventory costs associated with its products upon regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized; otherwise, such costs are expensed as research and development. Inventory not expected to be sold within 12 months following the balance sheet date are classified as non-current.

Intangible Assets

Costs incurred for products not yet approved by the FDA and for which no alternative future use exists are recorded as expense. Obligations for milestone payments to other pharmaceutical companies that may result in a capitalized intangible asset are recognized when it is deemed probable that the milestone event will occur. In the event a product has been approved by the FDA or an alternative future use exists for a product, patent and license costs are capitalized and amortized on a straight-line basis over the estimated useful economic life of the of the related product patents. For intangible assets related to HETLIOZ^®, the estimated useful life is based on the U.S. method of use patent that expires in May 2034. Intangible assets related Fanapt^® have been fully amortized on a straight-line basis to November 2016. The useful life estimate for Fanapt^® was based on the market participant methodology prescribed by ASC 805, and therefore does not reflect the impact of additional Fanapt^® patents solely owned by the Company with varying expiration dates, the latest of which is December 2031.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. The costs of leasehold improvements funded by or reimbursed by the lessor are capitalized and amortized as leasehold improvements along with a corresponding deferred rent liability. Depreciation of most property and equipment is provided on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized using a straight-line basis over the lesser of the estimated useful lives of the assets or the terms of the related leases. The costs of additions and improvements are capitalized, and repairs and maintenance costs are charged to operations in the period incurred. Upon retirement or disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the statement of operations for that period.

Accounts Payable and Accrued Liabilities

The Company’s management is required to estimate accrued liabilities as part of the process of preparing financial statements. The estimation of accrued liabilities involves identifying services that have been performed on the Company’s behalf, and then estimating the level of service performed and the associated cost incurred for such services as of each balance sheet date in the financial statements. Accrued liabilities include research and development expenses, such as accrued costs under contracts with clinical monitors, data management organizations and investigators in conjunction with clinical trials, fees to contract manufacturers in conjunction with the production of clinical materials, consulting and professional fees, such as lawyers and fees for marketing and other commercialization activities, accrued compensation and employee benefits, such as accrued bonus, royalties payable under licensing agreements, and other accrued fees. Pursuant to management’s assessment of the services that have been performed on clinical trials and other contracts, the Company recognizes these expenses as the services are provided. Such management assessments include, but are not limited to: (i) an evaluation by the project manager of the work that has been completed during the period, (ii) measurement of progress prepared internally and/or provided by the third-party service provider, (iii) analyses of data that justify the progress, and (iv) management’s judgment. In the event that the Company does not identify certain costs that have begun to be incurred or the Company under- or over-estimates the level of services performed or the costs of such services, the Company’s reported expenses for such period would be too low or too high.

Net Product Sales

The Company’s net product sales consist of sales of HETLIOZ^® and Fanapt^®. Net sales by product for the years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
(*in thousands*)	2017		2016		2015
HETLIOZ^® product sales, net	$	89,978	$	71,671	$	44,302
Fanapt^® product sales, net		75,105		74,346		65,623

	$	165,083	$	146,017	$	109,925

The Company applies the revenue recognition guidance in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 605-15, Revenue Recognition—Products. The Company recognizes revenue from product sales when there is persuasive evidence that an arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collectability is reasonably assured and the Company has no further performance obligations.

Major Customers

HETLIOZ^® is only available in the U.S. for distribution through a limited number of specialty pharmacies, and is not available in retail pharmacies. Fanapt^® is available in the U.S. for distribution through a limited number of wholesalers and is available in retail pharmacies. The Company invoices and records revenue when its customers, specialty pharmacies and wholesalers, receive product from the third-party logistics warehouse. Revenues and accounts receivable are concentrated with these customers. The following table presents each major customer that represented more than 10% of total revenues for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
Percent of Net Product Sales	2017			2016			2015
Distributor A		32	%		23	%		14	%
Distributor B		15	%		16	%		18	%
Distributor C		15	%		16	%		19	%
Distributor D		12	%		15	%		17	%
Distributor E		11	%		16	%		14	%
Distributor F		10	%		1	%		0	%
Distributor G		—			9	%		12	%

The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016:


	December 31,
Percent of Accounts Receivable, Net	2017			2016
Distributor A		28	%		22	%
Distributor B		18	%		19	%
Distributor C		10	%		15	%
Distributor D		21	%		25	%
Distributor E		8	%		11	%

Product Sales Discounts and Allowances

The Company’s product sales are recorded net of applicable discounts, rebates, chargebacks, service fees, co-pay assistance and product returns estimates that are applicable for various government and commercial payors. Reserves established for discounts and returns are classified as reductions of accounts receivable if the amount is payable to direct customers, with the exception of service fees. Service fees are classified as a liability. Reserves established for rebates, chargebacks or co-pay assistance are classified as a liability if the amount is payable to a party other than customers. The Company currently records sales allowances for the following:

Prompt-pay: Specialty pharmacies and wholesalers are offered discounts for prompt payment. The Company expects that the specialty pharmacies and wholesalers will earn prompt payment discounts and, therefore, deducts the full amount of these discounts from total product sales when revenues are recognized.

Rebates: Allowances for rebates include mandated and supplemental discounts under the Medicaid Drug Rebate Program as well as contracted rebate programs with other payors. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contracted discount rates and expected utilization. Estimates for the expected utilization of rebates are based on historical activity and, where available, actual and pending prescriptions for which the Company has validated the insurance benefits. Rebates are generally invoiced and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter’s unpaid rebates. If actual future invoicing varies from estimates, the Company may need to adjust accruals, which would affect net revenue in the period of adjustment.

Chargebacks: Chargebacks are discounts that occur when contracted indirect customers purchase directly from specialty pharmacies and wholesalers. Contracted indirect customers, which currently consist primarily of Public Health Service institutions, non-profit clinics, and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty pharmacy or wholesaler, in turn, charges back the difference between the price initially paid by the specialty pharmacy or wholesaler and the discounted price paid to the specialty pharmacy or wholesaler by the contracted customer. The allowance for chargebacks is based on historical activity and, where available, actual and pending prescriptions for which the Company has validated the insurance benefits.

Medicare Part D Coverage Gap: Medicare Part D prescription drug benefit mandates manufacturers to fund approximately 50% of the Medicare Part D insurance coverage gap for prescription drugs sold to eligible patients. Vanda accounts for the Medicare Part D coverage gap using a point of sale model. Estimates for expected Medicare Part D coverage gap are based in part on historical activity and, where available, actual and pending prescriptions for which the Company has validated the insurance benefits. Funding of the coverage gap is generally invoiced and paid in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known prior quarter activity. If actual future funding varies from estimates, the Company may need to adjust accruals, which would affect net revenue in the period of adjustment.

Service Fees: The Company incurs specialty pharmacy and wholesaler fees for services and their data. These fees are based on contracted terms and are known amounts. The Company accrues service fees at the time of revenue recognition, resulting in a reduction of product sales and the recognition of an accrued liability, unless it receives an identifiable and separate benefit for the consideration and it can reasonably estimate the fair value of the benefit received. In which case, service fees are recorded as selling, general and administrative expense.

Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. Co-pay assistance utilization is based on information provided by the Company’s third-party administrator. The allowance for co-pay assistance is based on actual sales and an estimate for pending sales based on either historical activity or pending sales for which the Company has validated the insurance benefits.

Product Returns: Consistent with industry practice, the Company generally offers direct customers a limited right to return as defined within the Company’s returns policy. The Company considers several factors in the estimation process, including historical return activity, expiration dates of product shipped to specialty pharmacies, inventory levels within the distribution channel, product shelf life, prescription trends and other relevant factors. The following table summarizes activity for product returns as of and for the years ended December 31, 2017, 2016 and 2015:


*(in thousands)*
Balance at December 31, 2014	$	85
Additions		986
Credits/payments		(12	)

Balance at December 31, 2015		1,059
Additions		2,507
Credits/payments		(486	)

Balance at December 31, 2016		3,080
Additions		5,978
Credits/payments		(4,939	)

Balance at December 31, 2017	$	4,119

Cost of Goods Sold

Cost of goods sold includes royalties payable, the cost of inventory sold, manufacturing and supply chain costs and product shipping and handling costs related to sales of HETLIOZ^® and Fanapt^® to the Company’s distribution partners.

Research and Development Expenses

Research and development expenses consist primarily of fees for services provided by third parties in connection with the clinical trials, costs of contract manufacturing services, milestone payments, costs of materials used in clinical trials and research and development, costs for regulatory consultants and filings, depreciation of capital resources used to develop products, related facilities costs, and salaries, other employee-related costs and stock-based compensation for research and development personnel. The Company expenses research and development costs as they are incurred for products in the development stage, including manufacturing costs and milestone payments made under license agreements prior to FDA approval. Upon and subsequent to FDA approval, manufacturing and milestone payments related to license agreements are capitalized. Milestone payments are accrued when it is deemed probable that the milestone event will be achieved. Costs related to the acquisition of intellectual property are expensed as incurred if the underlying technology is developed in connection with the Company’s research and development efforts and has no alternative future use.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of salaries, stock-based compensation, facilities and third party expenses. Selling, general and administrative expenses are associated with the activities of the executive, finance, accounting, information technology, business development, commercial support, trade and distribution, sales, marketing, legal, medical affairs and human resource functions. Additionally, selling, general and administrative expenses included an estimate for the annual Patient Protection and Affordable Care fee.

Stock-Based Compensation

Compensation costs for all stock-based awards to employees and directors are measured based on the grant date fair value of those awards and recognized over the period during which the employee or director is required to perform service in exchange for the award. The Company recognizes the expense over the award’s vesting period. The fair value of stock options granted and restricted stock units (RSUs) awarded are amortized using the straight-line method. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Advertising Expense

The Company expenses the costs of advertising, including branded promotional expenses, as incurred. Branded advertising expenses, recorded in selling, general and administrative expenses, were $1.3 million, $1.4 million and $3.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Foreign Currency

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company’s international subsidiaries is the local currency. Assets and liabilities, including inter-company balances for which settlement is anticipated in the foreseeable future, denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Foreign currency equity balances are translated at historical rates. Revenues and expenses denominated in foreign currencies are translated at average exchange rates for the respective periods. Foreign currency translation adjustments are recorded in accumulated other comprehensive income.

Transactions denominated in currencies other than subsidiaries’ functional currencies are recorded based on exchange rates at the time such transactions arise. Changes in exchange rates with respect to amounts recorded in the consolidated balance sheets related to these items will result in unrealized foreign currency transaction gains and losses based upon period-end exchange rates. The Company also records realized foreign currency transaction gains and losses upon settlement of the transactions. Foreign currency transaction gains and losses are included in other income and amounted to income of $0.1 million, a loss of $0.2 million, and zero for the years ended December 31, 2017, 2016 and 2015, respectively.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, current income tax expense or benefit is the amount of income taxes expected to be payable or refundable for the current year. A deferred income tax asset or liability is recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted. Changes in ownership may limit the amount of NOL carryforwards that can be utilized in the future to offset taxable income.

Non-Cash Investing and Financing Activities

Purchases of property and equipment accrued in current liabilities amounted to zero, $0.2 million and $0.2 million for each of the years ended December 31, 2017, 2016 and 2015, respectively. The acquisition of an intangible asset relating to HETLIOZ^® accrued in non-current liabilities amounted to $25.0 million for the year ended December 31, 2015.

Certain Risks and Uncertainties

The Company’s products under development require approval from the FDA or other international regulatory agencies prior to commercial sales. There can be no assurance the products will receive the necessary clearance. If the Company is denied clearance or clearance is delayed, it may have a material adverse impact on the Company.

The Company’s products are concentrated in rapidly-changing, highly-competitive markets, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. Any failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer requirements or changes in regulatory requirements or industry standards or any significant delays in the development or introduction of products or services could have a material adverse effect on the Company’s business, operating results and future cash flows.

The Company depends on single source suppliers for critical raw materials for manufacturing, as well as other components required for the administration of its products. The loss of these suppliers could delay the clinical trials or prevent or delay commercialization of the products.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist primarily of cash, cash equivalents and marketable securities. The Company places its cash, cash equivalents and marketable securities with highly-rated financial institutions. At December 31, 2017, the Company maintained all of its cash, cash equivalents and marketable securities in three financial institutions. Deposits held with these institutions may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand, and the Company believes there is minimal risk of losses on such balances.

Segment and Geographic Information

The Company operates in one reporting segment and, accordingly, no segment disclosures are presented herein. Foreign sales were not material for each of the years ended December 31, 2017, 2016 and 2015.

Recent Accounting Pronouncements

In November 2016, the FASB issued Accounting Standards Update (ASU) 2016-18, Restricted Cash. The new standard requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2017. The Company will adopt this new standard in the first quarter of 2018. Under the new standard, the Company will reclassify its restricted cash amounts within the consolidated statements of cash flows and include footnote disclosures to be able to reconcile amounts per the consolidated balance sheets to the statement of cash flows.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments, to clarify guidance on the classification of certain cash receipts and cash payments in the statement of cash flow. The standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2017. The Company will adopt this new standard in the first quarter of 2018. Adoption of this new standard is not expected to have a material impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses, related to the measurement of credit losses on financial instruments. The standard will require the use of an “expected loss” model for instruments measured at amortized cost. The standard is effective for years beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2019. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The ASU provides that all of the tax effects related to share-based payments are recorded as part of the provision for income taxes, allows entities to withhold an amount up to the employees’ maximum individual tax rate in the relevant jurisdiction, allows entities to estimate the effect of forfeitures or recognized forfeitures when they occur, and other improvements to the accounting for share-based awards. The new standard was effective for annual periods beginning after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. The Company adopted this new standard in the first quarter of 2017. As a result of adoption of the new guidance, the Company recognized deferred tax assets related to the previously unrecognized tax benefits, fully reduced by a valuation allowance as it is more likely than not that such benefits will not be realized. The Company will recognize excess tax benefits arising from share-based payments in the Company’s provision for income taxes as opposed to additional paid-in capital on a prospective basis. Additionally, the Company elected to continue to estimate the impact of forfeitures when determining the amount of compensation cost to be recognized each period rather than to account for them as they occur. The remaining updates required by this standard did not have a material impact to the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases. The new standard requires that lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability subject to certain adjustments. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). The new standard is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating this standard to determine if adoption will have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This new standard requires companies to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. Under the new standard, revenue is recognized when a customer obtains control of a good or service. The standard allows for two transition methods—entities can either apply the new standard (i) retrospectively to each prior reporting period presented, or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial adoption. In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which defers the effective date by one year to December 15, 2017 for fiscal years, and interim periods within those fiscal years, beginning after that date. Early adoption of the standard is permitted, but not before the original effective date of December 15, 2016. In March 2016, the FASB issued ASU 2016-08 Revenue from Contracts with Customers, Principal versus Agent Considerations (Reporting Revenue versus Net), in April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers, identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, which provide additional clarification on certain topics addressed in ASU 2014-09. ASU 2016-08, ASU 2016-10, and ASU 2016-12 follow the same implementation guidelines as ASU 2014-09 and ASU 2015-14. The analysis identifying areas that will be impacted by the new guidance as well as the impacts to the consolidated financial statements and related disclosures is substantially complete. As part of the analysis, the Company completed an analysis of existing contracts with its customers and assessed the differences in accounting for such contracts under this guidance compared with current revenue accounting standards. Based on its review of customer contracts, adoption of the new standard is not expected to have a material impact on the Company’s revenue from product sales. The Company will adopt the new standard on January 1, 2018 using the modified retrospective method.

Earnings per Share

12 Months Ended

Dec. 31, 2017

Earnings per Share

3. Earnings per Share

Basic earnings per share (EPS) is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing the net loss by the weighted average number of shares of common stock outstanding, plus potential outstanding common stock for the period. Potential outstanding common stock includes stock options and shares underlying RSUs, but only to the extent that their inclusion is dilutive.

The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the years ended December 31, 2017, 2016, and 2015:


	Year Ended December 31,
*(in thousands, except for share and per share amounts)*	2017			2016			2015
Numerator:
Net loss	$	(15,567	)	$	(18,010	)	$	(39,865	)

Denominator:
Weighted average shares outstanding, basic and diluted		44,735,146			43,449,441			42,250,254

Net loss per share, basic and diluted:
Basic	$	(0.35	)	$	(0.41	)	$	(0.94	)

Diluted	$	(0.35	)	$	(0.41	)	$	(0.94	)

Antidilutive securities excluded from calculations of diluted net income (loss) per share		3,136,515			4,943,797			5,660,199

The Company incurred a net loss for each of the years ended December 31, 2017, 2016 and 2015 causing inclusion of any potentially dilutive securities to have an anti-dilutive effect, resulting in dilutive loss per share and basic loss per share attributable to common stockholders being equivalent.

Marketable Securities

12 Months Ended

Dec. 31, 2017

Marketable Securities

4. Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2017, all of which have contract maturities of less than one year:


			Gross		Gross			Fair
December 31, 2017	Amortized		Unrealized		Unrealized			Market
*(in thousands)*	Cost		Gains		Losses			Value
U.S. Treasury and government agencies	$	60,681	$	—	$	(63	)	$	60,618
Corporate debt		49,168		12		(12	)		49,168

	$	109,849	$	12	$	(75	)	$	109,786

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2016:


			Gross		Gross			Fair
December 31, 2016	Amortized		Unrealized		Unrealized			Market
*(in thousands)*	Cost		Gains		Losses			Value
U.S. Treasury and government agencies	$	50,661	$	3	$	(17	)	$	50,647
Corporate debt		50,194		89		(16	)		50,267

	$	100,855	$	92	$	(33	)	$	100,914

Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value Measurements

5. Fair Value Measurements

Authoritative guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

•

Level 1 — defined as observable inputs such as quoted prices in active markets

•

Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable

•

Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions

Marketable securities classified in Level 1 and Level 2 as of December 31, 2017 and 2016 consist of cash equivalents and available-for-sale marketable securities. The valuation of Level 1 instruments is determined using a market approach, and is based upon unadjusted quoted prices for identical assets in active markets. The valuation of investments classified in Level 2 also is determined using a market approach based upon quoted prices for similar assets in active markets, or other inputs that are observable for substantially the full term of the financial instrument. Level 2 securities include certificates of deposit, commercial paper and corporate notes that use as their basis readily observable market parameters. The Company did not transfer any assets between Level 2 and Level 1 during the years ended December 31, 2017 and 2016.

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2017, as follows:


			Fair Value Measurement as of December 31, 2017 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
*(in thousands)*	2017		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies		60,618		60,618		—		—
Corporate debt		53,164		—		53,164		—

	$	113,782	$	60,618	$	53,164	$	—

Total assets measured at fair value as of December 31, 2017 include $4.0 million of cash equivalents.

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2016, as follows:


			Fair Value Measurement as of December 31, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
*(in thousands)*	2016		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	50,647	$	50,647	$	—	$	—
Corporate debt		50,267		—		50,267		—

	$	100,914	$	50,647	$	50,267	$	—

The Company also has financial assets and liabilities, not required to be measured at fair value on a recurring basis, which primarily consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, the carrying value of which materially approximate their fair values.

- Definition

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

+ References + Details

Inventory

12 Months Ended

Dec. 31, 2017

Inventory

6. Inventory

The Company evaluates expiry risk by evaluating current and future product demand relative to product shelf life. The Company builds demand forecasts by considering factors such as, but not limited to, overall market potential, market share, market acceptance and patient usage. Inventory levels are evaluated for the amount of inventory that would be sold within one year. At certain times, the level of inventory can exceed the forecasted level of cost of goods sold for the next twelve months. The Company classifies the estimate of such inventory as non-current. Inventory consisted of the following as of December 31, 2017 and 2016:


	December 31,		December 31,
*(in thousands)*	2017		2016
Current assets
Work-in-process	$	80	$	17
Finished goods		760		762

	$	840	$	779

Non-Current assets
Raw materials	$	87	$	127
Work-in-process		2,821		2,225
Finished goods		408		83

	$	3,316	$	2,435

Property and Equipment

12 Months Ended

Dec. 31, 2017

Property and Equipment

8. Property and Equipment

The following is a summary of the Company’s property and equipment, at cost, as of December 31, 2017 and 2016:


	Estimated
	Useful Life		December 31,
*(in thousands)*	(Years)		2017			2016
Computer and other equipment		3	$	3,342		$	2,426
Furniture and fixtures		5 - 7		1,929			1,412
Leasehold improvements		5 - 11		4,515			4,408

				9,786			8,246
Accumulated depreciation and amortization				(4,480	)		(3,231	)

			$	5,306		$	5,015

Depreciation expense was $1.2 million, $0.9 million and $0.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Intangible Assets

12 Months Ended

Dec. 31, 2017

Intangible Assets

9. Intangible Assets

HETLIOZ^®. In January 2014, the Company announced that the FDA had approved the New Drug Application (NDA) for HETLIOZ^®. As a result of this approval, the Company met a milestone under its license agreement with Bristol-Myers Squibb (BMS) that required the Company to make a license payment of $8.0 million to BMS. The $8.0 million is being amortized on a straight-line basis over the estimated economic useful life of the related product patents which is the remaining life of the U.S. method of use patent for HETLIOZ^®that expires in May 2034.

The Company is obligated to make a future milestone payment to BMS of $25.0 million when cumulative worldwide sales of HETLIOZ^® reach $250.0 million, which is expected to occur in the first half of 2018. The future obligation of $25.0 million was recorded as a current liability as of December 31, 2017 and as a non-currentliability as of December 31, 2016. The $25.0 million was determined to be additional consideration for the acquisition of the HETLIOZ^® intangible asset. The intangible asset of $25.0 million is being amortized on a straight-line basis over the estimated economic useful life of the related product patents which is the remaining life of the U.S. method of use patent for HETLIOZ^® that expires in May 2034.

Fanapt^®. In 2009, the Company announced that the FDA had approved the NDA for Fanapt^®. As a result of this approval, the Company met a milestone under its original sublicense agreement with Novartis that required the Company to make a license payment of $12.0 million to Novartis. The $12.0 million was amortized on a straight-line basis over the remaining life of the U.S. composition of matter patent for Fanapt^® to November 2016.

Pursuant to a settlement agreement in December 2014, Novartis transferred all U.S. and Canadian rights in the Fanapt^® franchise to the Company. As a result, the Company recognized an intangible asset of $15.9 million on December 31, 2014 related to the reacquired rights to Fanapt^®, which was fully amortized on a straight-line basis as of November 2016. The useful life estimation for the Fanapt^® intangible asset was based on the market participant methodology prescribed by ASC 805, and therefore does not reflect the impact of additional Fanapt^® patents solely owned by the Company with varying expiration dates, the latest of which is December 2031.

The following is a summary of the Company’s intangible assets as of December 31, 2017:


			December 31, 2017
	Estimated		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying
*(in thousands)*	(Years)		Amount		Amortization		Amount
HETLIOZ^®		May 2034	$	33,000	$	6,931	$	26,069
Fanapt^®		November 2016		27,941		27,941		—

			$	60,941	$	34,872	$	26,069

The following is a summary of the Company’s intangible assets as of December 31, 2016:


			December 31, 2016
	Estimated		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying
*(in thousands)*	(Years)		Amount		Amortization		Amount
HETLIOZ^®		January 2033	$	33,000	$	5,181	$	27,819
Fanapt^®		November 2016		27,941		27,941		—

			$	60,941	$	33,122	$	27,819

Intangible assets are amortized over their estimated useful economic life using the straight-line method. Amortization expense for the years ended December 31, 2017, 2016 and 2015 was as follows:


	Year Ended December 31,
*(in thousands)*	2017		2016		2015
HETLIOZ^®	$	1,750	$	1,721	$	2,922
Fanapt^®		—		9,212		10,050

	$	1,750	$	10,933	$	12,972

The following is a summary of the future intangible asset amortization schedule as of December 31, 2017:


*(in thousands)*	Total		2018		2019		2020		2021		2022		Thereafter
HETLIOZ^®	$	26,069	$	1,545	$	1,591	$	1,591	$	1,591	$	1,591	$	18,160

Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2017

Accounts Payable and Accrued Liabilities

10. Accounts Payable and Accrued Liabilities

The following is a summary of the Company’s accounts payable and accrued liabilities as of December 31, 2017 and 2016:


	December 31,		December 31,
*(in thousands)*	2017		2016
Research and development expenses	$	4,663	$	3,024
Consulting and other professional fees		3,961		3,192
Compensation and employee benefits		5,323		4,291
Royalties payable		4,394		4,555
Other		1,994		1,134

	$	20,335	$	16,196

Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies

11. Commitments and Contingencies

Operating Leases

Commitments relating to operating leases represent the minimum annual future payments under operating leases and subleases for a total of 40,188 square feet of office space for the Company’s headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. that expire in 2026, the operating lease for 2,880 square feet of office space for the Company’s European headquarters in London that has a noncancellable lease term ending in 2021, and 1,249 square feet of office space in Berlin under a short-term operating lease. The following is a summary of the minimum annual future payments under operating leases and subleases for office space as of December 31, 2017:


	Cash payments due by year
*(in thousands)*	Total		2018		2019		2020		2021		2022		Thereafter
Operating leases	$	19,789	$	2,311	$	2,295	$	2,351	$	2,174	$	2,187	$	8,471

In 2011, the Company entered into an operating lease for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. for 21,400 square feet of office space. A lease amendment in 2014 increased the office space under lease to 30,260 square feet, and a lease amendment in June 2016 extended the lease term from April 2023 to September 2026. Subject to the prior rights of other tenants, the Company has the right to renew the lease for five years following its expiration. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions. The lease may be terminated early by the Company or the landlord under certain circumstances.

In June 2016, the Company entered into a sublease under which the Company leases 9,928 square feet of office space for its headquarters at 2200 Pennsylvania Avenue, N.W. in Washington, D.C. The sublease term began in January 2017 and ends in July 2026, but may be terminated earlier by either party under certain circumstances. The Company has the right to sublease or assign all or a portion of the premises, subject to standard conditions.

Rent expense under operating leases and subleases, was $3.2 million, $2.5 million and $1.9 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Guarantees and Indemnifications

The Company has entered into a number of standard intellectual property indemnification agreements in the ordinary course of its business. Pursuant to these agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with any U.S. patent or any copyright or other intellectual property infringement claim by any third party with respect to the Company’s products. The term of these indemnification agreements is generally perpetual from the date of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Since inception, the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. The Company also indemnifies its officers and directors for certain events or occurrences, subject to certain conditions.

License Agreements

The Company’s rights to develop and commercialize its products are subject to the terms and conditions of licenses granted to the Company by other pharmaceutical companies.

HETLIOZ^®. In February 2004, the Company entered into a license agreement with BMS under which it received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize HETLIOZ^®. As a result of the FDA’s approval of the HETLIOZ^® NDA in January 2014, the Company made an $8.0 million milestone payment to BMS in the first quarter of 2014 under the license agreement that was capitalized as an intangible asset and is being amortized over the estimated economic useful life of the related product patents which is the remaining life of the U.S. method of use patent for HETLIOZ^® in the U.S. The Company is obligated to make a future milestone payment to BMS of $25.0 million when cumulative worldwide sales of HETLIOZ^® reach $250.0 million, which is expected to occur in the first half of 2018. The probable future $25.0 million milestone obligation was capitalized as an intangible asset in the first quarter of 2015 and is being amortized over the estimated economic useful life of the related product patents which is the remaining life of the U.S. method of use patent for HETLIOZ^® in the U.S. Additionally, the Company is obligated to make royalty payments on HETLIOZ^® net sales to BMS in any territory where the Company commercializes HETLIOZ^® for a period equal to the greater of 10 years following the first commercial sale in the territory or the expiry of the new chemical entity patent in that territory. During the period prior to the expiry of the new chemical entity patent in a territory, the Company is obligated to pay a 10% royalty on net sales in that territory. The royalty rate is decreased by half for countries in which no new chemical entity patent existed or for the remainder of the 10 years after the expiry of the new chemical entity patent. The Company is also obligated under the license agreement to pay BMS a percentage of any sublicense fees, upfront payments and milestone and other payments (excluding royalties) that it receives from a third party in connection with any sublicensing arrangement, at a rate which is in the mid-twenties. The Company has agreed with BMS in the license agreement for HETLIOZ^® to use its commercially reasonable efforts to develop and commercialize HETLIOZ^®.

Fanapt ^®. Pursuant to the terms of a settlement agreement with Novartis, Novartis transferred all U.S. and Canadian rights in the Fanapt^® franchise to the Company on December 31, 2014. The Company was obligated to make royalty payments to Sanofi S.A. (Sanofi) and Titan Pharmaceuticals Inc. (Titan) at a percentage rate equal to 23% on annual U.S. net sales of Fanapt^® up to $200.0 million, and at a percentage rate in the mid-twenties on sales over $200.0 million through November 2016. In February 2016, the Company amended the agreement with Sanofi and Titan to remove Titan as the entity through which royalty payments from the Company are directed to Sanofi following the expiration of the new chemical entity patent for Fanapt^® in the U.S. on November 15, 2016. Under the amended agreement, the Company pays directly to Sanofi a fixed royalty of 3% of net sales from November 16, 2016 through December 31, 2019 related to manufacturing know-how. The Company made a $2.0 million payment during the year ended December 31, 2016 that applied to this 3% manufacturing know-how royalty. No further royalties on manufacturing know-how are payable by the Company after December 31, 2019. This amended agreement did not alter Titan’s obligation under the license agreement to make royalty payments to Sanofi prior to November 16, 2016 or the Company’s obligations to pay Sanofi a fixed royalty on Fanapt^® net sales equal up to 6% on Sanofi know-how not related to manufacturing under certain conditions for a period of up to 10 years in markets where the new chemical entity patent has expired or was not issued.

Tradipitant. In April 2012, the Company entered into a license agreement with Eli Lilly and Company (Lilly) pursuant to which the Company acquired an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize an NK-1R antagonist, tradipitant, for all human indications. The patent describing tradipitant as a new chemical entity expires in April 2023, except in the U.S., where it expires in June 2024 absent any applicable patent term adjustments. Lilly is eligible to receive future payments based upon achievement of specified development and commercialization milestones as well as tiered-royalties on net sales at percentage rates up to the low double digits. These milestones include $4.0 million for pre-NDA approval milestones and up to $95.0 million for future regulatory approval and sales milestones. The $4.0 million of pre-NDA approval milestones includes $2.0 million due upon enrollment of the first subject into a Phase III study for tradipitant and $2.0 million due upon the filing of the first marketing authorization for tradipitant in either the U.S. or the E.U. The likelihood of achieving the enrollment of the first subject into a Phase III study for tradipitant was determined to be probable during 2017. As a result, the future obligation of $2.0 million tied to such milestone was recorded as research and development expense in the consolidated statement of operations for the year ended December 31, 2017 and a current liability in the consolidated balance sheet as of December 31, 2017. The Company is obligated to use its commercially reasonable efforts to develop and commercialize tradipitant.

VQW-765 (formerly AQW-051). In connection with a settlement agreement with Novartis relating to Fanapt^®, the Company received an exclusive worldwide license under certain patents and patent applications, and other licenses to intellectual property, to develop and commercialize VQW-765, a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist. Pursuant to the license agreement, the Company is obligated to use its commercially reasonable efforts to develop and commercialize VQW-765 and is responsible for all development costs. The Company has no milestone obligations; however, Novartis is eligible to receive tiered-royalties on net sales at percentage rates up to the mid-teens.

Portfolio of CFTR activators and inhibitors. In March 2017, the Company entered into a license agreement with the University of California San Francisco (UCSF), under which Vanda acquired an exclusive worldwide license to develop and commercialize a portfolio of CFTR activators and inhibitors. Pursuant to the license agreement, the Company will develop and commercialize the CFTR activators and inhibitors and is responsible for all development costs under the license agreement, including current pre-investigational new drug development work. The license agreement provides for an initial license fee of $1.0 million that was paid by the Company in the first quarter of 2017, annual maintenance fees and up to $46.0 million in potential regulatory and sales milestone obligations. UCSF is eligible to receive single-digit tiered royalties on net sales.

Research and Development and Marketing Agreements

In the course of its business, the Company regularly enters into agreements with clinical organizations to provide services relating to clinical development and clinical manufacturing activities under fee service arrangements. The Company’s current agreements for clinical services may be terminated on generally 60 days’ notice without incurring additional charges, other than charges for work completed but not paid for through the effective date of termination and other costs incurred by the Company’s contractors in closing out work in progress as of the effective date of termination.

Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes

12. Income Taxes

The Company recorded total tax expense of $0.1 million on consolidated pretax loss of $15.4 million, consisting of $15.7 million of pretax loss in the U.S. and $0.3 million of pretax income from foreign subsidiaries for the year ended December 31, 2017. The Company recorded total tax expense of $0.1 million on consolidated pretax loss of $17.9 million, consisting of $18.1 million of pretax loss in the U.S. and $0.2 million of pretax income from foreign subsidiaries for the year ended December 31, 2016. The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
*(in thousands)*	2017			2016			2015
Current:
Federal	$	—		$	—		$	—
State		65			66			—
Foreign		(66	)		142
Deferred:
Federal		—			—			—
State		—			—
Foreign		137			(104	)		—

Provision for income taxes	$	136		$	104		$	—

Deferred tax assets are reduce by a tax valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The fact that the Company has historically generated pretax losses in the U.S. serves as strong evidence that it is more likely than not that deferred tax assets in the U.S. will not be realized in the future. Therefore, the Company had a full tax valuation allowance against all deferred tax assets in the U.S. as of December 31, 2017 and 2016. As a result of the tax valuation allowance against deferred tax assets in the U.S., there was no benefit for income taxes associated with the loss before income taxes for each of the years ended December 31, 2017, 2016 and 2015. The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
	2017			2016			2015
Federal tax at statutory rate		35.0	%		35.0	%		35.0	%
State taxes		1.7	%		0.8	%		-0.1	%
The U.S. Tax Cuts and Job Act (1)		-262.6	%		0.0	%		0.0	%
Change in valuation allowance - U.S. Tax Cuts and Jobs Act		262.6	%		0.0	%		0.0	%
Other change in valuation allowance		-47.8	%		-38.4	%		-25.4	%
Research and development credit		9.0	%		3.8	%		1.5	%
Orphan drug credit		6.3	%		7.6	%		1.6	%
Section 162(m) limitation		8.1	%		0.0	%		-5.7	%
Other tax rate changes		-2.6	%		3.9	%		-0.3	%
Change in state NOLs		5.1	%		0.0	%		-1.4	%
Stock-based compensation		-13.0	%		-12.5	%		-5.1	%
Other items		-2.7	%		-0.8	%		-0.1	%

Effective tax rate		-0.9	%		-0.6	%		0.0	%

(1)	The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate.

The following is a summary of the components of the Company’s deferred tax assets, net, and the related tax valuation allowance as of December 31, 2017 and 2016:


	December 31,
*(in thousands)*	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	59,222		$	84,177
Stock-based compensation		5,383			12,443
Accrued and deferred expenses		1,967			2,558
Research and development and orphan drug credit carryforwards		43,976			41,104
Intangible assets		3,745			5,477
Other		2,174			1,019

Total deferred tax assets		116,467			146,778
Deferred tax liabilities:
Other		(386	)		(666	)

Total deferred tax liabilities		(386	)		(666	)
Deferred tax assets, net		116,081			146,112
Valuation allowance		116,110			146,012

Net deferred tax assets (liabilities)	$	(29	)	$	100

The Company’s net deferred tax liability of less than $0.1 million as of December 31, 2017 is included as a component of other non-current liabilities. The Company’s net deferred tax asset of $0.1 million as of December 31, 2016 is included as a component of non-current inventory and other in the consolidated balance sheet.

The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2017, 2016 and 2015:


	Balance at							Balance at
	Beginning							End of
*(in thousands)*	of Year		Additions		Reductions			Year
Year Ended:
December 31, 2017	$	146,012	$	12,403	$	(42,305	)	$	116,110
December 31, 2016		139,037		11,031		(4,056	)		146,012
December 31, 2015		128,890		17,002		(6,855	)		139,037

The Company has net operating loss (NOL) and other tax credit carryforwards in several jurisdictions. As of December 31, 2017, the Company has $49 million of deferred tax assets relating to U.S. federal NOL carryforwards, along with deferred tax assets of $9 million and $35 million related to U.S. federal research and development credits and orphan drug credits, respectively. These tax attributes will begin to expire in 2028, 2024 and 2030, respectively. In addition, the Company has $10 million of deferred tax assets relating to U.S. state NOL carryforwards, which primarily relate to the District of Columbia. State NOLs for the District of Columbia will begin to expire in 2031 and other state NOLs will begin to expire in 2018. A valuation allowance is recorded against these U.S. federal and U.S. state deferred tax assets.

Because the Company has generated NOLs from inception through December, 31, 2017, all income tax returns filed by the Company are open to examination by tax jurisdictions. As of December 31, 2017, the Company’s income tax returns had not been under examination by any federal or state tax jurisdictions. As of December 31, 2017 and 2016, the Company had no uncertain tax positions.

Certain tax attributes of the Company, including NOLs and credits, would be subject to a limitation should an ownership change as defined under the Internal Revenue Code of 1986, as amended (IRC), Section 382, occur. The limitations resulting from a change in ownership could affect the Company’s ability to utilize its NOLs and credit carryforward (tax attributes). Ownership changes occurred in the years ending December 31, 2014 and December 31, 2008. The Company believes that the ownership changes in 2014 and 2008 will not impact its ability to utilize NOL and credit carryforwards; however, future ownership changes may cause the Company’s existing tax attributes to have additional limitations. Because the Company maintains a valuation allowance on its U.S. tax attributes, any limitation as a result of application of IRC Section 382 limitation would not have a material impact on the Company’s provision for income taxes for the year ended December 31, 2017.

The Tax Cuts and Jobs Act (TCJA) was enacted in December 2017. The TCJA reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2017, the Company has not completed our accounting for the tax effects of the TCJA. Certain U.S. federal deferred tax assets and liabilities were remeasured based on the rates at which they are expected to reverse in the future, which is generally 21%. However, the Company is still analyzing certain aspects of the U.S. international and executive compensation provisions of the TCJA and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Because the Company has recorded a valuation allowance against deferred tax assets in the U.S., future adjustments recorded as we complete our analysis will not have a material impact to our net deferred tax asset or liability.

Accumulated Other Comprehensive Income (Loss)

12 Months Ended

Dec. 31, 2017

Accumulated Other Comprehensive Income (Loss)

13. Accumulated Other Comprehensive Income (Loss)

The accumulated balances related to each component of other comprehensive income (loss) were as follows for the years ended December 31, 2017 and 2016:


	December 31,			December 31,
*(in thousands)*	2017			2016
Foreign currency translation	$	29		$	(1	)
Available-for-sale securities		(63	)		59

	$	(34	)	$	58

There were no reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2017, 2016 and 2015.

Equity Incentive Plans

12 Months Ended

Dec. 31, 2017

Equity Incentive Plans

14. Equity Incentive Plans

As of December 31, 2017, there were 6,077,622 shares that were subject to outstanding options and RSUs under the 2006 Equity Incentive Plan (2006 Plan) and the 2016 Equity Incentive Plan (2016 Plan, and together with the 2006 Plan, Plans). The 2006 Plan expired by its terms on April 12, 2016, and the Company adopted the 2016 Plan. Outstanding options and RSUs under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan. In June 2016, the Company’s stockholders approved the 2016 Plan under which 2,000,000 shares of common stock were reserved for issuance. In June 2017, the Company’s stockholders approved the amendment and restatement of the 2016 Plan pursuant to which an additional 2,700,000 shares were reserved for issuance, among other administrative changes. As a result, there are a total of 4,700,000 shares of common stock reserved for issuance under the 2016 Plan, 3,168,565 shares of which remained available for future grant as of December 31, 2017.

Stock Options

The Company has granted option awards under the Plans with service conditions (service option awards) that are subject to terms and conditions established by the compensation committee of the board of directors. Service option awards have 10-year contractual terms and all service option awards granted prior to December 31, 2006, service option awards granted to new employees, and certain service option awards granted to existing employees vest and become exercisable on the first anniversary of the grant date with respect to the 25% of the shares subject to service option awards. The remaining 75% of the shares subject to the service option awards vest and become exercisable monthly in equal installments thereafter over three years. Certain service option awards granted to existing employees after December 31, 2006 vest and become exercisable monthly in equal installments over four years. The initial service option awards granted to directors upon their election vest and become exercisable in equal monthly installments over a period of four years, while the subsequent annual service option awards granted to directors vest and become exercisable in equal monthly installments over a period of one year. Certain service option awards to executives and directors provide for accelerated vesting if there is a change in control of the Company. Certain service option awards to employees and executives provide for accelerated vesting if the respective employee’s or executive’s service is terminated by the Company for any reason other than cause or permanent disability. As of December 31, 2017, $7.3 million of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of 1.2 years. No option awards are classified as a liability as of December 31, 2017.

The Company’s equity incentive plan, the Second Amended and Restated Management Equity Plan (2004 Plan), expired by its terms in 2014 and no additional options will be granted under the 2004 Plan. There were no shares subject to outstanding options granted under the 2004 Plan as of December 31, 2017 and 2016. The following is a summary of option activity for the 2004 Plan for the year ended December 31, 2015:


				Weighted Average		Weighted Average		Aggregate
2004 Plan	Number of			Exercise Price at		Remaining Term		Intrinsic
*(in thousands, except for share and per share amounts)*	Shares			Grant Date		(Years)		Value
Outstanding at December 31, 2014		652,810		$	1.74		0.78	$	8,212
Exercised		(652,810	)		1.74				6,129

Outstanding at December 31, 2015		—

The following is a summary of option activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015:


				Weighted Average		Weighted Average		Aggregate
2006 and 2016 Plans	Number of			Exercise Price at		Remaining Term		Intrinsic
*(in thousands, except for share and per share amounts)*	Shares			Grant Date		(Years)		Value
Outstanding at December 31, 2014		6,227,112		$	11.58		6.71	$	28,523
Granted		1,056,500			11.74
Forfeited		(496,854	)		10.75
Expired		(64,336	)		25.69
Exercised		(469,974	)		7.02				2,594

Outstanding at December 31, 2015		6,252,448			11.87		6.16		7,498
Granted		866,011			8.43
Forfeited		(392,700	)		11.23
Expired		(279,766	)		17.38
Exercised		(897,657	)		8.63				4,264

Outstanding at December 31, 2016		5,548,336			11.62		5.58		32,453
Granted		643,000			14.44
Forfeited		(290,729	)		10.73
Expired		(605,617	)		29.87
Exercised		(575,206	)		9.13				3,140

Outstanding at December 31, 2017		4,719,784			10.03		5.63		24,421

Exercisable at December 31, 2017		3,540,804			9.35		4.73		20,715

Vested and expected to vest at December 31, 2017		4,589,591			9.94		5.56		24,129

The weighted average grant-date fair value of options granted was $7.81, $4.53 and $6.59 per share for the years ended December 31, 2017, 2016 and 2015, respectively. Proceeds from the exercise of stock options amounted to $5.3 million, $7.8 million and $4.4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Restricted Stock Units

An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs under the Plans with service conditions (service RSUs) that vest in four equal annual installments provided that the employee remains employed with the Company. As of December 31, 2017, $12.1 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 1.7 years. No RSUs are classified as a liability as of December 31, 2017.

The following is a summary of RSU activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015:


	Number of			Weighted
	Shares			Average
	Underlying			Grant Date
RSUs	RSUs			Fair Value
Unvested at December 31, 2014		1,025,961		$	9.94
Granted		417,000			11.51
Forfeited		(189,187	)		10.60
Vested		(231,093	)		7.96

Unvested at December 31, 2015		1,022,681			10.90
Granted		657,742			8.71
Forfeited		(254,329	)		10.38
Vested		(287,666	)		9.65

Unvested at December 31, 2016		1,138,428			10.07
Granted		857,336			14.57
Forfeited		(275,613	)		11.41
Vested		(362,313	)		9.78

Unvested at December 31, 2017		1,357,838			12.72

The grant date fair value for the 362,313 shares underlying RSUs that vested during the year ended December 31, 2017 was $3.5 million.

Stock-Based Compensation Expense

Stock-based compensation expense recognized for the years ended December 31, 2017, 2016 and 2015 was allocated as follows:


	Year Ended December 31,
*(in thousands)*	2017		2016		2015
Research and development	$	1,152	$	2,087	$	2,269
Selling, general and administrative		9,313		6,456		5,692

	$	10,465	$	8,543	$	7,961

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has not paid dividends to its stockholders since its inception (other than a dividend of preferred share purchase rights, which was declared in September 2008) and does not plan to pay dividends in the foreseeable future. Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
	2017			2016			2015
Expected dividend yield		0	%		0	%		0	%
Weighted average expected volatility		57	%		57	%		60	%
Weighted average expected term (years)		5.89			6.08			6.00
Weighted average risk-free rate		1.97	%		1.37	%		1.67	%

Employee Benefit Plan

12 Months Ended

Dec. 31, 2017

Employee Benefit Plan

15. Employee Benefit Plan

The Company has a defined contribution plan under IRC Section 401(k). This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Currently, the Company matches 50 percent up to the first six percent of employee contributions. All matching contributions have been paid by the Company. The Company match vests over a four-year period and amounted to $0.8 million, $0.4 million and $0.3 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Legal Matters

12 Months Ended

Dec. 31, 2017

Legal Matters

16. Legal Matters

In June 2014, the Company filed suit against Roxane Laboratories, Inc. (Roxane) in the U.S. District Court for the District of Delaware (Delaware District Court). The suit seeks an adjudication that Roxane has infringed one or more claims of the Company’s U.S. Patent No. 8,586,610 (‘610 Patent) by submitting to the FDA an Abbreviated New Drug Application (ANDA) for a generic version of Fanapt^® prior to the expiration of the ‘610 Patent in November 2027. In addition, pursuant to a settlement agreement with Novartis, the Company assumed Novartis’ patent infringement action against Roxane in the Delaware District Court. That suit alleges that Roxane has infringed one or more claims of U.S. Patent RE39198 (‘198 Patent), which is licensed exclusively to the Company, by filing an ANDA for a generic version of Fanapt^® prior to the expiration of the ‘198 Patent in November 2016. These two cases against Roxane were consolidated by agreement of the parties and were tried together in a five-day bench trial that concluded on March 4, 2016. On August 25, 2016, the Delaware District Court ruled in favor of the Company, finding that Roxane’s ANDA product infringed the asserted claims of the ‘610 Patent and the ‘198 Patent. The Delaware District Court ruled that the Company is entitled to a permanent injunction against Roxane enjoining Roxane from infringing the ‘610 Patent, including the manufacture, use, sale, offer to sell, sale, distribution or importation of any generic iloperidone product described in the ‘610 Patent ANDA until the expiration of the ‘610 Patent in November 2027. If the Company obtains pediatric exclusivity, the injunction against Roxane would be extended until May 2028 under the Delaware District Court’s order. On September 23, 2016, Roxane filed a notice of appeal with the Federal Circuit Court of Appeals (Federal Circuit). Roxane filed its opening appellate brief on February 7, 2017. The Company filed its responsive brief on April 19, 2017, and Roxane filed its reply brief on May 3, 2017. On July 27, 2017, Roxane, now a subsidiary of Hikma Pharmaceuticals PLC (Hikma), petitioned the Federal Circuit to substitute Roxane with new defendants West-Ward Pharmaceuticals International Limited and West-Ward Pharmaceuticals Corp. (each of which is a subsidiary of Hikma and both of which are referred to collectively herein as West-Ward). The Company did not oppose the substitution of West-Ward for Roxane. The appeal is fully briefed, and oral argument was held on December 5, 2017. The Federal Circuit has not yet issued a decision.

In 2015, the Company filed six separate patent infringement lawsuits in the Delaware District Court against Roxane, Inventia Healthcare Pvt. Ltd. (Inventia), Lupin Ltd. and Lupin Pharmaceuticals, Inc. (Lupin), Taro Pharmaceuticals USA, Inc. and Taro Pharmaceutical Industries, Ltd. (Taro), and Apotex Inc. and Apotex Corp. (collectively, the Defendants). The lawsuits each seek an adjudication that the respective Defendants infringed one or more claims of the ‘610 Patent and/or the Company’s U.S. Patent No. 9,138,432 (‘432 Patent) by submitting to the FDA an ANDA for a generic version of Fanapt^® prior to the expiration of the ‘610 Patent in November 2027 or the ‘432 Patent in September 2025. The Defendants have denied infringement and counterclaimed for declaratory judgment of invalidity and noninfringement of the ‘610 Patent and the ‘432 Patent. Certain Defendants have since entered into agreements resolving these lawsuits, as discussed below. The remaining parties have agreed, and the Delaware District Court has ordered, that within 14 days after any decision on the merits in the Roxane appeal, the parties will submit to the Delaware District Court a status report and request a schedule for trial. The Company entered into a confidential stipulation with Inventia regarding any potential launch of Inventia’s generic ANDA product. The Company also entered into a confidential stipulation with Lupin regarding any potential launch of Lupin’s generic ANDA product.

Lupin filed counter claims for declaratory judgment of invalidity and noninfringement of seven of the Company’s method of treatment patents that are listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) related to Fanapt^® (such seven patents, the Method of Treatment Patents). The Company has not sued Lupin for infringing the Method of Treatment Patents. On October 13, 2016, the Company and Lupin filed a Stipulation of Dismissal in the Delaware District Court pursuant to which Lupin’s counterclaims relating to the Method of Treatment Patents were dismissed without prejudice in recognition of an agreement reached between the parties by which the Company would not assert those patents against Lupin absent certain changes in Lupin’s proposed prescribing information for its iloperidone tablets.

On October 24, 2016, the Company entered into a License Agreement with Taro to resolve the Company’s patent litigation against Taro regarding Taro’s ANDA seeking approval of its generic version of Fanapt^® (Taro License Agreement). Under the Taro License Agreement, the Company granted Taro a non-exclusive license to manufacture and commercialize Taro’s version of Fanapt^® in the U.S. effective November 2, 2027, unless prior to that date the Company obtains pediatric exclusivity for Fanapt^®, in which case, the license will be effective May 2, 2028. Taro may enter the market earlier under certain limited circumstances. The Taro License Agreement, which is subject to review by the U.S. Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ), provides for a full settlement and release by the Company and Taro of all claims that are the subject of the litigation.

On December 7, 2016, the Company entered into a License Agreement with Apotex to resolve the Company’s patent litigation against Apotex regarding Apotex’s ANDA seeking approval of its generic version of Fanapt^® (Apotex License Agreement). Under the Apotex License Agreement, the Company granted Apotex a non-exclusive license to manufacture and commercialize Apotex’s version of Fanapt^® in the U.S. effective November 2, 2027, unless prior to that date the Company obtains pediatric exclusivity for Fanapt^®, in which case, the license will be effective May 2, 2028. Apotex may enter the market earlier under certain limited circumstances. The Apotex License Agreement, which is subject to review by the FTC and the DOJ, provides for a full settlement and release by the Company and Apotex of all claims that are the subject of the litigation.

On February 26, 2016, Roxane filed suit against the Company in the U.S. District Court for the Southern District of Ohio (Ohio District Court). The suit sought a declaratory judgment of invalidity and noninfringement of the Method of Treatment Patents. The Company has not sued Roxane for infringing the Method of Treatment Patents. The Company filed a motion to dismiss this lawsuit for lack of personal jurisdiction or to transfer the lawsuit to the Delaware District Court. On December 20, 2016, the Ohio District Court ruled in the Company’s favor, dismissing Roxane’s suit without prejudice for lack of personal jurisdiction.

On February 26, 2016, Roxane filed a Petition for Inter Partes Review (IPR) of the ‘432 Patent with the Patent Trials and Appeals Board (PTAB) of the U.S. Patent and Trademark Office. The Company filed a Preliminary Response on June 7, 2016, and on August 30, 2016 the PTAB denied the request by Roxane to institute an IPR of the ‘432 Patent. On September 29, 2016, Roxane filed a Petition for Rehearing with the PTAB, and on October 13, 2016 the Company filed a Response to Roxane’s Petition. On November 4, 2016, the PTAB denied Roxane’s Petition for Rehearing.

Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data (Unaudited)

17. Quarterly Financial Data (Unaudited)

The following is a summary of quarterly financial data for the years ended December 31, 2017 and 2016:


	First			Second			Third			Fourth
*(in thousands, except for per share amounts)*	Quarter			Quarter			Quarter			Quarter
Year Ended December 31, 2017
Revenues	$	37,415		$	42,056		$	41,336		$	44,276
Gross profit (1)		32,958			37,095			36,379			39,053
Loss from operations		(7,906	)		(1,924	)		(4,923	)		(2,150	)
Net loss		(7,645	)		(1,534	)		(4,550	)		(1,838	)
Net loss per share, basic and diluted	$	(0.17	)	$	(0.03	)	$	(0.10	)	$	(0.04	)
Year Ended December 31, 2016
Revenues	$	33,262		$	36,029		$	38,482		$	38,244
Gross profit (1)		24,363			26,593			28,549			30,867
Loss from operations		(12,475	)		(4,789	)		(653	)		(654	)
Net loss		(12,358	)		(4,618	)		(430	)		(604	)
Net loss per share, basic and diluted	$	(0.29	)	$	(0.11	)	$	(0.01	)	$	(0.01	)

(1)	Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization.

Business Organization and Presentation (Policies)

12 Months Ended

Dec. 31, 2017

Business organization

Business organization

•

VTR-297 (formerly Trichostatin A), a small molecule histone deacetylase (HDAC) inhibitor.

•

VQW-765 (formerly AQW-051), a Phase II alpha-7 nicotinic acetylcholine receptor partial agonist.

•

Portfolio of Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) activators and inhibitors.

Basis of Presentation

Basis of presentation

Use of Estimates

Use of Estimates

Cash and Cash Equivalents

Cash and Cash Equivalents

Marketable Securities

Marketable Securities

Inventory

Inventory

Intangible Assets

Intangible Assets

Property and Equipment

Property and Equipment

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

Net Product Sales

Net Product Sales

The Company’s net product sales consist of sales of HETLIOZ^® and Fanapt^®. Net sales by product for the years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
(*in thousands*)	2017		2016		2015
HETLIOZ^® product sales, net	$	89,978	$	71,671	$	44,302
Fanapt^® product sales, net		75,105		74,346		65,623

	$	165,083	$	146,017	$	109,925

Major Customers

Major Customers


	Year Ended December 31,
Percent of Net Product Sales	2017			2016			2015
Distributor A		32	%		23	%		14	%
Distributor B		15	%		16	%		18	%
Distributor C		15	%		16	%		19	%
Distributor D		12	%		15	%		17	%
Distributor E		11	%		16	%		14	%
Distributor F		10	%		1	%		0	%
Distributor G		—			9	%		12	%

The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016:


	December 31,
Percent of Accounts Receivable, Net	2017			2016
Distributor A		28	%		22	%
Distributor B		18	%		19	%
Distributor C		10	%		15	%
Distributor D		21	%		25	%
Distributor E		8	%		11	%

Product Sales Discounts and Allowances

Product Sales Discounts and Allowances


*(in thousands)*
Balance at December 31, 2014	$	85
Additions		986
Credits/payments		(12	)

Balance at December 31, 2015		1,059
Additions		2,507
Credits/payments		(486	)

Balance at December 31, 2016		3,080
Additions		5,978
Credits/payments		(4,939	)

Balance at December 31, 2017	$	4,119

Cost of Goods Sold

Cost of Goods Sold

Research and Development Expenses

Research and Development Expenses

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses

Stock-Based Compensation

Stock-Based Compensation

Advertising Expense

Advertising Expense

Foreign Currency

Foreign Currency

Income Taxes

Income Taxes

Non-Cash Investing and Financing Activities

Non-Cash Investing and Financing Activities

Certain Risks and Uncertainties

Certain Risks and Uncertainties

Concentrations of Credit Risk

Concentrations of Credit Risk

Segment and Geographic Information

Segment and Geographic Information

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Net Sales by Product

The Company’s net product sales consist of sales of HETLIOZ^® and Fanapt^®. Net sales by product for the years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
(*in thousands*)	2017		2016		2015
HETLIOZ^® product sales, net	$	89,978	$	71,671	$	44,302
Fanapt^® product sales, net		75,105		74,346		65,623

	$	165,083	$	146,017	$	109,925

Schedule of Major Customers that Represented More Than 10% of Total Revenues

The following table presents each major customer that represented more than 10% of total revenues for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
Percent of Net Product Sales	2017			2016			2015
Distributor A		32	%		23	%		14	%
Distributor B		15	%		16	%		18	%
Distributor C		15	%		16	%		19	%
Distributor D		12	%		15	%		17	%
Distributor E		11	%		16	%		14	%
Distributor F		10	%		1	%		0	%
Distributor G		—			9	%		12	%

Schedule of Major Customers that Represented More Than 10% of Accounts Receivable, Net

The following table presents each major customer that represented more than 10% of accounts receivable, net, as of December 31, 2017 and 2016:


	December 31,
Percent of Accounts Receivable, Net	2017			2016
Distributor A		28	%		22	%
Distributor B		18	%		19	%
Distributor C		10	%		15	%
Distributor D		21	%		25	%
Distributor E		8	%		11	%

Summary of Product Return Allowance

The following table summarizes activity for product returns as of and for the years ended December 31, 2017, 2016 and 2015:


*(in thousands)*
Balance at December 31, 2014	$	85
Additions		986
Credits/payments		(12	)

Balance at December 31, 2015		1,059
Additions		2,507
Credits/payments		(486	)

Balance at December 31, 2016		3,080
Additions		5,978
Credits/payments		(4,939	)

Balance at December 31, 2017	$	4,119

Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2017

Basic and Diluted Net Income (Loss) Per Share of Common Stock

The following table presents the calculation of basic and diluted net income (loss) per share of common stock for the years ended December 31, 2017, 2016, and 2015:


	Year Ended December 31,
*(in thousands, except for share and per share amounts)*	2017			2016			2015
Numerator:
Net loss	$	(15,567	)	$	(18,010	)	$	(39,865	)

Denominator:
Weighted average shares outstanding, basic and diluted		44,735,146			43,449,441			42,250,254

Net loss per share, basic and diluted:
Basic	$	(0.35	)	$	(0.41	)	$	(0.94	)

Diluted	$	(0.35	)	$	(0.41	)	$	(0.94	)

Antidilutive securities excluded from calculations of diluted net income (loss) per share		3,136,515			4,943,797			5,660,199

Marketable Securities (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Available-for-Sale Marketable Securities

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2017, all of which have contract maturities of less than one year:


			Gross		Gross			Fair
December 31, 2017	Amortized		Unrealized		Unrealized			Market
*(in thousands)*	Cost		Gains		Losses			Value
U.S. Treasury and government agencies	$	60,681	$	—	$	(63	)	$	60,618
Corporate debt		49,168		12		(12	)		49,168

	$	109,849	$	12	$	(75	)	$	109,786

The following is a summary of the Company’s available-for-sale marketable securities as of December 31, 2016:


			Gross		Gross			Fair
December 31, 2016	Amortized		Unrealized		Unrealized			Market
*(in thousands)*	Cost		Gains		Losses			Value
U.S. Treasury and government agencies	$	50,661	$	3	$	(17	)	$	50,647
Corporate debt		50,194		89		(16	)		50,267

	$	100,855	$	92	$	(33	)	$	100,914

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Assets Measured at Fair Value on Recurring Basis

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2017, as follows:


			Fair Value Measurement as of December 31, 2017 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
*(in thousands)*	2017		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies		60,618		60,618		—		—
Corporate debt		53,164		—		53,164		—

	$	113,782	$	60,618	$	53,164	$	—

The Company held certain assets that are required to be measured at fair value on a recurring basis as of December 31, 2016, as follows:


			Fair Value Measurement as of December 31, 2016 Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	December 31,		Identical Assets		Observable Inputs		Inputs
*(in thousands)*	2016		(Level 1)		(Level 2)		(Level 3)
U.S. Treasury and government agencies	$	50,647	$	50,647	$	—	$	—
Corporate debt		50,267		—		50,267		—

	$	100,914	$	50,647	$	50,267	$	—

Inventory (Tables)

12 Months Ended

Dec. 31, 2017

Inventory

Inventory consisted of the following as of December 31, 2017 and 2016:


	December 31,		December 31,
*(in thousands)*	2017		2016
Current assets
Work-in-process	$	80	$	17
Finished goods		760		762

	$	840	$	779

Non-Current assets
Raw materials	$	87	$	127
Work-in-process		2,821		2,225
Finished goods		408		83

	$	3,316	$	2,435

Prepaid Expenses and Other Current Assets (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Prepaid Expenses, and Other Current Assets

The following is a summary of the Company’s prepaid expenses and other current assets as of December 31, 2017 and 2016:


	December 31,		December 31,
*(in thousands)*	2017		2016
Research and development expenses	$	2,415	$	2,397
Consulting and other professional fees		2,876		6,051
Prepaid royalties		—		1,761
Other		2,712		1,579

	$	8,003	$	11,788

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Property and Equipment-at Cost

The following is a summary of the Company’s property and equipment, at cost, as of December 31, 2017 and 2016:


	Estimated
	Useful Life		December 31,
*(in thousands)*	(Years)		2017			2016
Computer and other equipment		3	$	3,342		$	2,426
Furniture and fixtures		5 - 7		1,929			1,412
Leasehold improvements		5 - 11		4,515			4,408

				9,786			8,246
Accumulated depreciation and amortization				(4,480	)		(3,231	)

			$	5,306		$	5,015

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Intangible Assets

The following is a summary of the Company’s intangible assets as of December 31, 2017:


			December 31, 2017
	Estimated		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying
*(in thousands)*	(Years)		Amount		Amortization		Amount
HETLIOZ^®		May 2034	$	33,000	$	6,931	$	26,069
Fanapt^®		November 2016		27,941		27,941		—

			$	60,941	$	34,872	$	26,069

The following is a summary of the Company’s intangible assets as of December 31, 2016:


			December 31, 2016
	Estimated		Gross				Net
	Useful Life		Carrying		Accumulated		Carrying
*(in thousands)*	(Years)		Amount		Amortization		Amount
HETLIOZ^®		January 2033	$	33,000	$	5,181	$	27,819
Fanapt^®		November 2016		27,941		27,941		—

			$	60,941	$	33,122	$	27,819

Summary of Amortization Expense

Amortization expense for the years ended December 31, 2017, 2016 and 2015 was as follows:


	Year Ended December 31,
*(in thousands)*	2017		2016		2015
HETLIOZ^®	$	1,750	$	1,721	$	2,922
Fanapt^®		—		9,212		10,050

	$	1,750	$	10,933	$	12,972

Summary of Future Intangible Asset Amortization

The following is a summary of the future intangible asset amortization schedule as of December 31, 2017:


*(in thousands)*	Total		2018		2019		2020		2021		2022		Thereafter
HETLIOZ^®	$	26,069	$	1,545	$	1,591	$	1,591	$	1,591	$	1,591	$	18,160

Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Accounts Payable and Accrued Liabilities

The following is a summary of the Company’s accounts payable and accrued liabilities as of December 31, 2017 and 2016:


	December 31,		December 31,
*(in thousands)*	2017		2016
Research and development expenses	$	4,663	$	3,024
Consulting and other professional fees		3,961		3,192
Compensation and employee benefits		5,323		4,291
Royalties payable		4,394		4,555
Other		1,994		1,134

	$	20,335	$	16,196

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Provision (Benefit) for Income Taxes

The following is a summary of the provision (benefit) for income taxes for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
*(in thousands)*	2017			2016			2015
Current:
Federal	$	—		$	—		$	—
State		65			66			—
Foreign		(66	)		142
Deferred:
Federal		—			—			—
State		—			—
Foreign		137			(104	)		—

Provision for income taxes	$	136		$	104		$	—

Reconciliation Between Statutory Tax Rate and Effective Tax Rate

The following is reconciliation between the federal statutory tax rate and the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
	2017			2016			2015
Federal tax at statutory rate		35.0	%		35.0	%		35.0	%
State taxes		1.7	%		0.8	%		-0.1	%
The U.S. Tax Cuts and Job Act (1)		-262.6	%		0.0	%		0.0	%
Change in valuation allowance - U.S. Tax Cuts and Jobs Act		262.6	%		0.0	%		0.0	%
Other change in valuation allowance		-47.8	%		-38.4	%		-25.4	%
Research and development credit		9.0	%		3.8	%		1.5	%
Orphan drug credit		6.3	%		7.6	%		1.6	%
Section 162(m) limitation		8.1	%		0.0	%		-5.7	%
Other tax rate changes		-2.6	%		3.9	%		-0.3	%
Change in state NOLs		5.1	%		0.0	%		-1.4	%
Stock-based compensation		-13.0	%		-12.5	%		-5.1	%
Other items		-2.7	%		-0.8	%		-0.1	%

Effective tax rate		-0.9	%		-0.6	%		0.0	%

(1)	The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate.

Components of Deferred Tax Assets, Net, and Related Valuation Allowance

The following is a summary of the components of the Company’s deferred tax assets, net, and the related tax valuation allowance as of December 31, 2017 and 2016:


	December 31,
*(in thousands)*	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	59,222		$	84,177
Stock-based compensation		5,383			12,443
Accrued and deferred expenses		1,967			2,558
Research and development and orphan drug credit carryforwards		43,976			41,104
Intangible assets		3,745			5,477
Other		2,174			1,019

Total deferred tax assets		116,467			146,778
Deferred tax liabilities:
Other		(386	)		(666	)

Total deferred tax liabilities		(386	)		(666	)
Deferred tax assets, net		116,081			146,112
Valuation allowance		116,110			146,012

Net deferred tax assets (liabilities)	$	(29	)	$	100

Summary of Changes in Tax Valuation Allowance

The following is a summary of changes in the Company’s tax valuation allowance for the years ended December 31, 2017, 2016 and 2015:


	Balance at							Balance at
	Beginning							End of
*(in thousands)*	of Year		Additions		Reductions			Year
Year Ended:
December 31, 2017	$	146,012	$	12,403	$	(42,305	)	$	116,110
December 31, 2016		139,037		11,031		(4,056	)		146,012
December 31, 2015		128,890		17,002		(6,855	)		139,037

Equity Incentive Plans (Tables)

12 Months Ended

Dec. 31, 2017

Summary of RSU Activity for 2006 Plan and 2016 Plan

The following is a summary of RSU activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015:


	Number of			Weighted
	Shares			Average
	Underlying			Grant Date
RSUs	RSUs			Fair Value
Unvested at December 31, 2014		1,025,961		$	9.94
Granted		417,000			11.51
Forfeited		(189,187	)		10.60
Vested		(231,093	)		7.96

Unvested at December 31, 2015		1,022,681			10.90
Granted		657,742			8.71
Forfeited		(254,329	)		10.38
Vested		(287,666	)		9.65

Unvested at December 31, 2016		1,138,428			10.07
Granted		857,336			14.57
Forfeited		(275,613	)		11.41
Vested		(362,313	)		9.78

Unvested at December 31, 2017		1,357,838			12.72

Stock-Based Compensation Expense

Stock-based compensation expense recognized for the years ended December 31, 2017, 2016 and 2015 was allocated as follows:


	Year Ended December 31,
*(in thousands)*	2017		2016		2015
Research and development	$	1,152	$	2,087	$	2,269
Selling, general and administrative		9,313		6,456		5,692

	$	10,465	$	8,543	$	7,961

Black-Scholes-Merton Option Pricing Model for Employee and Director Stock Options Granted

Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the years ended December 31, 2017, 2016 and 2015 were as follows:


	Year Ended December 31,
	2017			2016			2015
Expected dividend yield		0	%		0	%		0	%
Weighted average expected volatility		57	%		57	%		60	%
Weighted average expected term (years)		5.89			6.08			6.00
Weighted average risk-free rate		1.97	%		1.37	%		1.67	%

2004 Plan

Summary of Option Activity Plan

The following is a summary of option activity for the 2004 Plan for the year ended December 31, 2015:


				Weighted Average		Weighted Average		Aggregate
2004 Plan	Number of			Exercise Price at		Remaining Term		Intrinsic
*(in thousands, except for share and per share amounts)*	Shares			Grant Date		(Years)		Value
Outstanding at December 31, 2014		652,810		$	1.74		0.78	$	8,212
Exercised		(652,810	)		1.74				6,129

Outstanding at December 31, 2015		—

2006 Plan and 2016 Plan

Summary of Option Activity Plan

The following is a summary of option activity for the 2006 Plan and the 2016 Plan for the years ended December 31, 2017, 2016, and 2015:


				Weighted Average		Weighted Average		Aggregate
2006 and 2016 Plans	Number of			Exercise Price at		Remaining Term		Intrinsic
*(in thousands, except for share and per share amounts)*	Shares			Grant Date		(Years)		Value
Outstanding at December 31, 2014		6,227,112		$	11.58		6.71	$	28,523
Granted		1,056,500			11.74
Forfeited		(496,854	)		10.75
Expired		(64,336	)		25.69
Exercised		(469,974	)		7.02				2,594

Outstanding at December 31, 2015		6,252,448			11.87		6.16		7,498
Granted		866,011			8.43
Forfeited		(392,700	)		11.23
Expired		(279,766	)		17.38
Exercised		(897,657	)		8.63				4,264

Outstanding at December 31, 2016		5,548,336			11.62		5.58		32,453
Granted		643,000			14.44
Forfeited		(290,729	)		10.73
Expired		(605,617	)		29.87
Exercised		(575,206	)		9.13				3,140

Outstanding at December 31, 2017		4,719,784			10.03		5.63		24,421

Exercisable at December 31, 2017		3,540,804			9.35		4.73		20,715

Vested and expected to vest at December 31, 2017		4,589,591			9.94		5.56		24,129

Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Data

The following is a summary of quarterly financial data for the years ended December 31, 2017 and 2016:


	First			Second			Third			Fourth
*(in thousands, except for per share amounts)*	Quarter			Quarter			Quarter			Quarter
Year Ended December 31, 2017
Revenues	$	37,415		$	42,056		$	41,336		$	44,276
Gross profit (1)		32,958			37,095			36,379			39,053
Loss from operations		(7,906	)		(1,924	)		(4,923	)		(2,150	)
Net loss		(7,645	)		(1,534	)		(4,550	)		(1,838	)
Net loss per share, basic and diluted	$	(0.17	)	$	(0.03	)	$	(0.10	)	$	(0.04	)
Year Ended December 31, 2016
Revenues	$	33,262		$	36,029		$	38,482		$	38,244
Gross profit (1)		24,363			26,593			28,549			30,867
Loss from operations		(12,475	)		(4,789	)		(653	)		(654	)
Net loss		(12,358	)		(4,618	)		(430	)		(604	)
Net loss per share, basic and diluted	$	(0.29	)	$	(0.11	)	$	(0.01	)	$	(0.01	)

(1)	Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization.

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Summary Of Significant Accounting Policies [Line Items]
Restricted cash, current and non-current	$ 0.7	$ 0.8
Percentage of insurance coverage gap allocated for prescription drugs under Medicare Part D	50.00%
Advertising expenses	$ 1.3	1.4	$ 3.4
Purchases of property, plant and equipment and the related current liability	0.0	0.2	0.2
Acquisition of intangible asset accrued in non-current liabilities			25.0
Other Income
Summary Of Significant Accounting Policies [Line Items]
Foreign currency transaction gains and losses	$ 0.1	$ (0.2)	$ 0.0

Net Sales by Product (Detail) - USD ($) $ in Thousands	12 Months Ended
Net Sales by Product (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenue from External Customer [Line Items]
Net product sales	$ 165,083	$ 146,017	$ 109,925
HETLIOZ
Revenue from External Customer [Line Items]
Net product sales	89,978	71,671	44,302
Fanapt
Revenue from External Customer [Line Items]
Net product sales	$ 75,105	$ 74,346	$ 65,623

Schedule of Major Customers that Represented More Than 10% of Total Revenues (Detail) - Customer Concentration Risk - Sales Revenue, Net	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Distributor A
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	32.00%	23.00%	14.00%
Distributor B
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	15.00%	16.00%	18.00%
Distributor C
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	15.00%	16.00%	19.00%
Distributor D
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	12.00%	15.00%	17.00%
Distributor E
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	11.00%	16.00%	14.00%
Distributor F
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage	10.00%	1.00%	0.00%
Distributor G
Revenue, Major Customer [Line Items]
Concentration Risk, Percentage		9.00%	12.00%

Schedule of Major Customers that Represented More Than 10% of Accounts Receivable, Net (Detail) - Credit Concentration Risk - Accounts Receivable	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Distributor A
Concentration Risk [Line Items]
Concentration Risk, Percentage	28.00%	22.00%
Distributor B
Concentration Risk [Line Items]
Concentration Risk, Percentage	18.00%	19.00%
Distributor C
Concentration Risk [Line Items]
Concentration Risk, Percentage	10.00%	15.00%
Distributor D
Concentration Risk [Line Items]
Concentration Risk, Percentage	21.00%	25.00%
Distributor E
Concentration Risk [Line Items]
Concentration Risk, Percentage	8.00%	11.00%

Summary of Product Return Allowance (Detail) - Product Return Allowance - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning balance	$ 3,080	$ 1,059	$ 85
Additions	5,978	2,507	986
Credits/payments	(4,939)	(486)	(12)
Ending balance	$ 4,119	$ 3,080	$ 1,059

Basic and Diluted Net Income (Loss) Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Numerator:
Net loss	$ (1,838)	$ (4,550)	$ (1,534)	$ (7,645)	$ (604)	$ (430)	$ (4,618)	$ (12,358)	$ (15,567)	$ (18,010)	$ (39,865)
Denominator:
Weighted average shares outstanding, basic and diluted									44,735,146	43,449,441	42,250,254
Net loss per share, basic and diluted:
Basic									$ (0.35)	$ (0.41)	$ (0.94)
Diluted									$ (0.35)	$ (0.41)	$ (0.94)
Antidilutive securities excluded from calculations of diluted net income (loss) per share									3,136,515	4,943,797	5,660,199

Summary of Available-For-Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Fair Market Value	$ 109,786	$ 100,914
Current Investment
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	109,849	100,855
Gross Unrealized Gains	12	92
Gross Unrealized Losses	(75)	(33)
Fair Market Value	109,786	100,914
Current Investment \| U.S. Treasury and government agencies
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	60,681	50,661
Gross Unrealized Gains		3
Gross Unrealized Losses	(63)	(17)
Fair Market Value	60,618	50,647
Current Investment \| Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	49,168	50,194
Gross Unrealized Gains	12	89
Gross Unrealized Losses	(12)	(16)
Fair Market Value	$ 49,168	$ 50,267

Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 113,782	$ 100,914
U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	60,618	50,647
Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	53,164	50,267
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	60,618	50,647
Quoted Prices in Active Markets for Identical Assets (Level 1) \| U.S. Treasury and government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	60,618	50,647
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	53,164	50,267
Significant Other Observable Inputs (Level 2) \| Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets measured at fair value	$ 53,164	$ 50,267

Inventory (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets
Work-in-process	$ 80	$ 17
Finished goods	760	762
Total	840	779
Non-Current assets
Raw materials	87	127
Work-in-process	2,821	2,225
Finished goods	408	83
Total	$ 3,316	$ 2,435

Summary of Prepaid Expenses and Other Current Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Prepaid Expenses And Other Current Assets [Line Items]
Research and development expenses	$ 2,415	$ 2,397
Consulting and other professional fees	2,876	6,051
Prepaid royalties		1,761
Other	2,712	1,579
Prepaid expenses and other current assets	$ 8,003	$ 11,788

Summary of Property and Equipment-at Cost (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 9,786	$ 8,246
Accumulated depreciation and amortization	(4,480)	(3,231)
Property and equipment, net	$ 5,306	5,015
Computer and Other Equipment
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Property and equipment, gross	$ 3,342	2,426
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,929	1,412
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	7 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 4,515	$ 4,408
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	11 years

Intangible Assets (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Milestone obligation under license agreement			$ 27,000
Milestone obligation under license agreement, non-current				$ 25,000
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets		$ 8,000
Intangible assets, estimated future useful life			2034-05	2033-01
Cumulative worldwide sales milestone			$ 250,000
Milestone obligation under license agreement			25,000
Milestone obligation under license agreement, non-current				$ 25,000
Intangible assets capitalized	$ 25,000		$ 25,000

Intangible Assets (Textual 3 - Fanapt) - Additional Information (Detail) - Fanapt - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2009	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Acquisition of intangible assets			$ 12.0
Intangible assets, estimated useful life	2016-11	2016-11
Assets acquired and recorded at fair value, Intangible re-acquired right				$ 15.9

Summary of Intangible Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 60,941	$ 60,941
Accumulated Amortization	34,872	33,122
Net Carrying Amount	$ 26,069	$ 27,819
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated future useful life	2034-05	2033-01
Gross Carrying Amount	$ 33,000	$ 33,000
Accumulated Amortization	6,931	5,181
Net Carrying Amount	$ 26,069	$ 27,819
Fanapt
Finite-Lived Intangible Assets [Line Items]
Intangible assets, estimated useful life	2016-11	2016-11
Gross Carrying Amount	$ 27,941	$ 27,941
Accumulated Amortization	$ 27,941	$ 27,941

Summary of Amortization Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization	$ 1,750	$ 10,933	$ 12,972
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization	$ 1,750	1,721	2,922
Fanapt
Finite-Lived Intangible Assets [Line Items]
Intangible asset amortization		$ 9,212	$ 10,050

Summary of Future Intangible Asset Amortization (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Total	$ 26,069	$ 27,819
HETLIOZ
Finite-Lived Intangible Assets [Line Items]
Total	26,069	$ 27,819
2018	1,545
2019	1,591
2020	1,591
2021	1,591
2022	1,591
Thereafter	$ 18,160

Summary of Accounts Payable and Accrued Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accounts Payable and Accrued Liabilities [Line Items]
Research and development expenses	$ 4,663	$ 3,024
Consulting and other professional fees	3,961	3,192
Compensation and employee benefits	5,323	4,291
Royalties payable	4,394	4,555
Other	1,994	1,134
Accounts payable and accrued liabilities	$ 20,335	$ 16,196

Commitments and Contingencies - Additional Information (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) ft²	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2011 ft²
Commitments and Contingencies Disclosure [Line Items]
Rent expense \| $	$ 3.2	$ 2.5	$ 1.9
Washington DC Leases and Sublease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	40,188			21,400
Expiration date of leases for office space	2026
Washington DC Leases and Sublease \| Sublease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	9,928
Washington DC Lease Amendment
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	30,260
Renewal term of lease agreement	5 years
London Lease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	2,880
Noncancellable lease term ending date	2021
Berlin Lease
Commitments and Contingencies Disclosure [Line Items]
Leased square footage	1,249

Summary of Minimum Annual Future Payments Under Operating Leases and Subleases for Office Space (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Operating Leased Assets [Line Items]
Operating leases, Total	$ 19,789
Operating leases, 2018	2,311
Operating leases, 2019	2,295
Operating leases, 2020	2,351
Operating leases, 2021	2,174
Operating leases, 2022	2,187
Operating leases, Thereafter	$ 8,471

Commitments and Contingencies (Textual 2 - HETLIOZ) - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2017
HETLIOZ
Percentage of future sublicense fees payable to third-party			Mid-twenties
HETLIOZ
HETLIOZ
Acquisition of intangible assets		$ 8.0
Milestone obligation under license agreement			$ 25.0
Royalty payable percentage on net sales			10.00%
Cumulative worldwide sales milestone			$ 250.0
Intangible assets capitalized	$ 25.0		$ 25.0

Commitments and Contingencies (Textual 3 - Fanapt) - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fanapt
Prepaid royalty		$ 1,761,000
Royalty Rate for Annual Sales up to $200 million through November 2016
Fanapt
Royalty percentage payable on net sales below annual threshold		23.00%
Royalty Rate for Annual Sales up to $200 million through November 2016 \| Maximum
Fanapt
Agreed upon sales threshold level for royalty rate		$ 200,000,000
Royalty Rate for Annual Sales in Excess of $200 million through November 2016
Fanapt
Royalty percentage payable on net sales above annual threshold		Mid-twenties
Royalty Rate for Annual Sales in Excess of $200 million through November 2016 \| Maximum
Fanapt
Agreed upon sales threshold level for royalty rate		$ 200,000,000
November 16,2016 through December 31,2019
Fanapt
Royalty payable percentage on net sales		3.00%
Prepaid royalty		$ 2,000,000
Fanapt
Fanapt
Royalty payable percentage on net sales	6.00%
Royalty payment period	10 years

Commitments and Contingencies (Textual 4 - Tradipitant) - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)
Commitments and Contingencies [Line Items]
Milestone obligation under license agreement	$ 27,000
Tradipitant
Commitments and Contingencies [Line Items]
Future percentage of royalty payments based net sales	Low double digits
Possible future milestone payment	$ 4,000
Milestone obligation under license agreement	2,000
Tradipitant \| Research and development
Commitments and Contingencies [Line Items]
Milestone obligation under license agreement	2,000
Tradipitant \| Development and Milestone Payments of Phase III Study Potentially Due to Third Party
Commitments and Contingencies [Line Items]
Possible future milestone payment	2,000
Tradipitant \| Development and Milestone Payment for First Marketing Authorization Potentially Due to Third Party
Commitments and Contingencies [Line Items]
Possible future milestone payment	2,000
Tradipitant \| Future Regulatory Approval and Sales Milestones
Commitments and Contingencies [Line Items]
Possible future milestone payment	$ 95,000

Commitments and Contingencies (Textual 5 - CFTR Activators and Inhibitors - Additional Information (Detail) - CFTR Activators and Inhibitors - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2017
CFTR activators and inhibitors
Milestone payment under license agreement	$ 1.0
Possible future milestone payments		$ 46.0
Tiered royalties payable on future net sales		Single-digit

Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Taxes [Line Items]
Provision for income taxes		$ 136	$ 104
Income (loss) before income taxes		(15,431)	(17,906)	$ (39,865)
Pretax loss in U.S		(15,700)	(18,100)
Pretax income from foreign subsidiaries		300	200
Income tax benefit associated with the loss before income taxes		0	0	$ 0
Net deferred tax assets			100
Net deferred tax liability		29
Net operating loss carryforwards		59,222	$ 84,177
Deferred tax assets related to U.S. federal research and development credits		$ 9,000
Net operating loss carryforwards beginning expiration year		2028
U.S. research and development credit beginning expiration year		2024
Orphan drug credit beginning expiration year		2030
Federal tax at statutory rate		35.00%	35.00%	35.00%
Percentage at which certain U.S. federal deferred tax assets and liabilities remeasured		21.00%
U.S. Federal
Income Taxes [Line Items]
Net operating loss carryforwards		$ 49,000
Orphan Drug
Income Taxes [Line Items]
Net deferred tax assets		$ 35,000
Scenario, Forecast
Income Taxes [Line Items]
Federal tax at statutory rate	21.00%
District of Columbia
Income Taxes [Line Items]
Net operating loss carryforwards beginning expiration year		2031
Deferred tax assets relating to U.S. state NOL carryforwards		$ 10,000
Other States
Income Taxes [Line Items]
Net operating loss carryforwards beginning expiration year		2018
Non-current inventory and other
Income Taxes [Line Items]
Net deferred tax assets			$ 100
Other Non-current Liabilities \| Maximum
Income Taxes [Line Items]
Net deferred tax liability		$ 100

Summary of Provision (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current:
Federal	$ 0	$ 0	$ 0
State	65	66
Foreign	(66)	142
Deferred:
Federal	0	0	0
State	0	0	$ 0
Foreign	137	(104)
Provision for income taxes	$ 136	$ 104

Reconciliation Between Statutory Tax Rate and Effective Tax Rate (Detail)

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Income Tax Rate Reconciliation [Line Items]

Federal tax at statutory rate

35.00%

State taxes

1.70%

0.80%

(0.10%)

The U.S. Tax Cuts and Job Act

^[1]

(262.60%)

0.00%

Change in valuation allowance - U.S. Tax Cuts and Jobs Act

262.60%

0.00%

Other change in valuation allowance

(47.80%)

(38.40%)

(25.40%)

Research and development credit

9.00%

3.80%

1.50%

Orphan drug credit

6.30%

7.60%

1.60%

Section 162(m) limitation

8.10%

0.00%

(5.70%)

Other tax rate changes

(2.60%)

3.90%

(0.30%)

Change in state NOLs

5.10%

0.00%

(1.40%)

Stock-based compensation

(13.00%)

(12.50%)

(5.10%)

Other items

(2.70%)

(0.80%)

(0.10%)

Effective tax rate

(0.90%)

(0.60%)

0.00%

[1]	The effective tax rate for the year ended December 31, 2017 includes the estimate of the effect of the U.S. Tax Cuts and Jobs Act, which primarily relates to the remeasurement of existing deferred taxes as a result of the change to the U.S. federal tax rate.

Components of Deferred Tax Assets, Net and Related Valuation Allowance (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Net operating loss carryforwards	$ 59,222	$ 84,177
Stock-based compensation	5,383	12,443
Accrued and deferred expenses	1,967	2,558
Research and development and orphan drug credit carryforwards	43,976	41,104
Intangible assets	3,745	5,477
Other	2,174	1,019
Total deferred tax assets	116,467	146,778
Deferred tax liabilities:
Other	(386)	666
Total deferred tax liabilities	(386)	(666)
Deferred tax assets, net	116,081	146,112
Valuation allowance	116,110	146,012	$ 139,037	$ 128,890
Net deferred tax liabilities	$ (29)
Net deferred tax assets		$ 100

Valuation Allowance Activity on Deferred Tax Assets (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Valuation Allowance [Line Items]
Balance at Beginning of Year	$ 146,012	$ 139,037	$ 128,890
Additions	12,403	11,031	17,002
Reductions	(42,305)	(4,056)	(6,855)
Balance at End of Year	$ 116,110	$ 146,012	$ 139,037

Summary of Accumulated Balances Related to Each Component of Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Foreign currency translation	$ 29	$ (1)
Available-for-sale securities	(63)	59
Accumulated other comprehensive income (loss)	$ (34)	$ 58

Accumulated Other Comprehensive Income (Loss) - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reclassification Out of Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Reclassifications out of accumulated other comprehensive income (loss)	$ 0	$ 0	$ 0

Equity Incentive Plans (Textual 1 - Equity Incentive Plans) - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2016
2006 Plan and 2016 Plan \| Outstanding options and RSUs granted (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares subject to outstanding options and RSUs	6,077,622
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance	4,700,000	2,000,000
Number of shares of common stock available for future grant	3,168,565
2016 Plan Amendment
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance	2,700,000

Equity Incentive Plans (Textual 2 Stock Option) - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation option awards contractual term	10 years
Portion of initial stock options granted to employees that vests on employee's first anniversary	25.00%
Portion of initial stock options granted to employees that vests ratably over three years after completion of first year of service	75.00%
Option awards vesting period, after completion of one year of service	3 years
Vesting period	4 years
Vesting period for initial stock options granted to directors	4 years
Vesting period for subsequent stock options granted to directors	1 year
Proceeds from exercise of employee stock options	$ 5,251	$ 7,751	$ 4,374
Options granted, weighted average fair value per share	$ 7.81	$ 4.53	$ 6.59
Service option awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 7,300
Unrecognized compensation expenses, weighted average period	1 year 2 months 12 days

Summary of Option Activity for 2004 Plan (Detail) - 2004 Plan - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Beginning balance	652,810
Exercised	(652,810)
Weighted Average Remaining Term (Years)
Weighted Average Remaining Term		9 months 11 days
Ending balance		652,810
Aggregate Intrinsic Value
Beginning balance		$ 8,212
Exercised	$ 6,129
Weighted Average Exercise Price at Grant Date
Beginning balance		$ 1.74
Exercised	$ 1.74

Summary of Option Activity for 2006 Plan and the 2016 Plan (Detail) - 2006 Plan and 2016 Plan - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Beginning balance	5,548,336	6,252,448	6,227,112
Granted	643,000	866,011	1,056,500
Forfeited	(290,729)	(392,700)	(496,854)
Expired	(605,617)	(279,766)	(64,336)
Exercised	(575,206)	(897,657)	(469,974)
Ending balance	4,719,784	5,548,336	6,252,448	6,227,112
Exercisable	3,540,804
Vested and expected to vest at December 31, 2017	4,589,591
Weighted Average Exercise Price at Grant Date
Beginning balance	$ 11.62	$ 11.87	$ 11.58
Granted	14.44	8.43	11.74
Forfeited	10.73	11.23	10.75
Expired	29.87	17.38	25.69
Exercised	9.13	8.63	7.02
Ending balance	10.03	$ 11.62	$ 11.87	$ 11.58
Exercisable	9.35
Vested and expected to vest at December 31, 2017	$ 9.94
Weighted Average Remaining Term (Years)
Weighted Average Remaining Term	5 years 7 months 17 days	5 years 6 months 29 days	6 years 1 month 27 days	6 years 8 months 16 days
Exercisable	4 years 8 months 23 days
Vested and expected to vest at December 31, 2017	5 years 6 months 21 days
Aggregate Intrinsic Value
Beginning balance	$ 32,453	$ 7,498	$ 28,523
Exercised	3,140	4,264	2,594
Ending balance	24,421	$ 32,453	$ 7,498	$ 28,523
Exercisable	20,715
Vested and expected to vest at December 31, 2017	$ 24,129

Equity Incentive Plans (Textual 3 RSU) - Additional Information (Detail) - Restricted Stock Units (RSU) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of RSU awards in equal installments	4 years
Unrecognized compensation expenses, weighted average period	1 year 8 months 12 days
Unrecognized compensation expenses related to unvested RSUs	$ 12.1
Grant date fair value of common stock vested, shares	362,313	287,666	231,093
Grant date fair value of common stock vested	$ 3.5

Summary of RSU Activity Plan (Detail) - Restricted Stock Units (RSU) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Number of Shares Unvested
Beginning balance	1,138,428	1,022,681	1,025,961
Granted	857,336	657,742	417,000
Forfeited	(275,613)	(254,329)	(189,187)
Vested	(362,313)	(287,666)	(231,093)
Ending balance	1,357,838	1,138,428	1,022,681
Weighted Average Price/Share Unvested
Beginning balance	$ 10.07	$ 10.90	$ 9.94
Granted	14.57	8.71	11.51
Forfeited	11.41	10.38	10.60
Vested	9.78	9.65	7.96
Ending balance	$ 12.72	$ 10.07	$ 10.90

Total Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 10,465	$ 8,543	$ 7,961
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	1,152	2,087	2,269
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 9,313	$ 6,456	$ 5,692

Black-Scholes-Merton Option Pricing Model for Stock Options Granted (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share Based Payment Award Stock Options Valuation Assumptions [Line Items]
Expected dividend yield	0.00%	0.00%	0.00%
Weighted average expected volatility	57.00%	57.00%	60.00%
Weighted average expected term (years)	5 years 10 months 21 days	6 years 29 days	6 years
Weighted average risk-free rate	1.97%	1.37%	1.67%

Employee Benefit Plan - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Employee Benefit Plans [Line Items]
Defined contribution plan employer matching percent	50.00%
Defined contribution plan maximum employee contribution percent	6.00%
Defined contribution plan vesting period	4 years
Defined contribution plan matching amount	$ 0.8	$ 0.4	$ 0.3

Quarterly Financial Data (Detail) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Dec. 31, 2017

Sep. 30, 2017

Jun. 30, 2017

Mar. 31, 2017

Dec. 31, 2016

Sep. 30, 2016

Jun. 30, 2016

Mar. 31, 2016

Dec. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Quarterly Financial Data [Line Items]

Revenues

$ 44,276

$ 41,336

$ 42,056

$ 37,415

$ 38,244

$ 38,482

$ 36,029

$ 33,262

$ 165,083

$ 146,017

$ 109,925

Gross profit

^[1]

39,053

36,379

37,095

32,958

30,867

28,549

26,593

24,363

Loss from operations

(2,150)

(4,923)

(1,924)

(7,906)

(654)

(653)

(4,789)

(12,475)

(16,903)

(18,571)

(40,185)

Net loss

$ (1,838)

$ (4,550)

$ (1,534)

$ (7,645)

$ (604)

$ (430)

$ (4,618)

$ (12,358)

$ (15,567)

$ (18,010)

$ (39,865)

Net loss per share, basic and diluted

$ (0.04)

$ (0.10)

$ (0.03)

$ (0.17)

$ (0.01)

$ (0.11)

$ (0.29)

[1]	Gross profit includes revenues less cost of goods sold, excluding amortization, and less intangible asset amortization.

Business Organization and Presentation - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 Segment
Organization and Summary of Significant Accounting Policies Disclosure [Line Items]
Number of operating segments	1